The senior citizens deserve a special place in every society and especially in Indian culture the elders are given special status and always considered to be head of the family. In order to acknowledge their contributions & make their golden years better, the Govt. of India has honored its senior citizens with many wide collections of attractive programs and facilities. The senior citizen saving scheme is one of these schemes. The Senior Citizen Savings Scheme (SCSS) is a government sponsored scheme meant for the senior citizens to secure additional retirement benefits while availing day to day cash requirements. Since the scheme is offered by the Government of India, it is considered to be one of the safest Investment Products for Senior Citizens.
The scheme is offered to the public through two channels which are authorized Public / Private sector banks and India Post Offices. The terms, account rules and regulation are common irrespective of whether the investment channel chosen is a bank/ post office. Thus the account holder can avail benefit at a center of their choice. The rate of interest offered on accounts is decided by the finance ministry regularly and the current rate offered is 8.5%. The account is offered to any individual who is more than 60 yrs and has retired on either superannuation or under VRS. The one important condition being that the account should be opened within 1 month of receiving the retirement benefits. The maximum permissible amount should not be more than the gross retirement amount offered to the investor.
Senior Citizen Savings Scheme Overview
SCSS accounts are robust with a long term savings goal. The scheme has been crafted keeping in mind those elderly citizens who have spent their lifetimes supporting others. This ensures a happy retired life and manages their financial requirement with effective savings options. The SCSS is an effective and long term savings option with unmatched security features especially designed for individuals over 60 years of age. This carries all other benefits and perks that are generally allied with various government-sponsored savings schemes. The schemes are made available through a huge network of certified public and private sector banks and post offices all over India. The SCSS accounts usually have tenure of 5 years and can be further renewed for another 3 years at a time. The depositors are allowed to make deposits only once a year in a lump sum and it should be in multiple of 1,000 with maximum annual limit of Rs.15 lakhs.
The Benefits of Senior Citizen Schemes
The SCSS can be considered as a superlative product for the senior citizen in India. Apart from its exceptional interest rate feature, the SCSS has been customized to best suit the precise requirements of senior citizen. The benefits of this scheme are as follows-
- Hassle free processing – An interested applicant have to just fill up an application form at their local bank or India Post Office along with the initial deposit to get the account opened.
- Trustworthiness- This being a government-backed scheme comes with all the protection and assertion associated with all government schemes.
- Option of Multiple Accounts- The SCSS account applicant can have multiple accounts, which could be either operated as singly or jointly with a spouse.
- Superior Returns- the scheme brings an exceptional interest rate of 8.6% per annum.
- Flexible Term – The account comes with initial maturity term of 5 years however this can be further extended to another 3 years. This encourages senior citizens to have this saving scheme as a medium or a long term investment product in their financial kitty.
- Tax Saving – The investment done under this scheme is entitled for tax rebate under Section 80C, of the Income Tax Act, 1961. Apart from being a secure and scalable option with potential of high returns, the SCSS is extremely helpful in saving tax.
- Flexibility in Investment amount – One can investment any amount in multiples of Rs. 1000 up to the maximum cap of 15 lakhs. This however can be done only once.
- The accrued interest can be directly credited into the depositor’s savings bank account held with the bank branch or to the linked Post Office Savings account.
- Standard account statements are forwarded to the depositor through post or email.
- 24 by 7 customer service through phone banking services.
- As of 2004, a total of 24 public sector banks and 1 private sector bank is authorized to tender the Senior citizen scheme.
- Premature Withdrawal – In the event of any financial compulsion, the account holder can prematurely close the account after a minimum term of one year. This however attracts a premature penalty of 1.5% of the funds till 2nd year of completion and post 2 years till the 5th year the penalty would be 1 % of the maturity value. However in case of renewal post completion of the initial term of 5 years, no premature penalty is levied for any withdrawal of funds.
- Simple Documentation- The account opening documents required to avail the SCSS is minimal and keeps in mind the offer of hassle-free experience to senior citizens. The major requirements are age-cum ID proof which could be Passport, Voter’s ID, Birth Certificate, Aadhaar Card, PAN card, Senior Citizens Card etc.
Eligibility for Senior Citizens Saving Schemes
In order to avail the saving schemes for resident Indians the following conditions need to be met.
- The scheme is available to any resident individual aged 60 years and above.
- Also individuals who have attained 55 years but are still less than sixty years are also eligible to apply for the senior citizens savings scheme, provided they have retired as per superannuation or VRS. In such cases, the account should be open within 1 month of the receipt of retirement benefits.
- The scheme is also available for the retired defense personnel irrespective of above mentioned age limits however subject to fulfillment of other terms & conditions.
- Non Resident Indians are not entitled to open the account under this Scheme.
- Also Hindu Undivided Family members are not entitled to open the account under these rules.
Other Terms & Conditions of SCSS
The current interest rate offered on the senior citizen savings schemes is 8.6% per annum (for FY 2016-2017). This interest rate is substantially higher as compared to regular savings account. The scheme is also superior compared to other high return products such as mutual funds when you consider the risk proposition.
- The investments made in a Senior Citizen Savings Scheme account are entitled for income tax rebate under Section 80C of the Indian Income Tax Act, year 1961.
- This is subject to the condition that the gross interest earned on the account within the financial year should not exceed Rs.10, 000. In case the interest amount earned is more than Rs. 10,000, then the Tax Deducted at Source i.e. TDS shall be applicable to the interest earned.
- In other words , the SCSS is not only a money spinning option , but is rewarding as well when it comes to tax saving.
How to open SCSS Accounts
The Indian Postal Service has an unprecedented reach in India even in rural areas, hence is an ideal vehicle for schemes such as SCSS. Even in this age of digital communication & internet, The Indian Postal Service has a huge relevance in delivering various financial products to rural as well as urban India. This is one the main reasons why the government has actively employed the India Post to promote various financial programs. The SCSS is hence also offered at all the Post Offices. The interest earned from the SCSS account is credited to a savings account which is created in the same postal office using either PDCs or any money order. One of the core reasons why this scheme has flourished at Post offices amongst the non-urban population is the easy accessibility, less inflow of initial investments hassles and wider reach even in relatively unbanked areas.
Apart from the post offices, the SCSS account is also offered at select Public/ Private sector banks. The Indian banking industry has witnessed a complete revolution in its working methodology with the introduction of the latest banking technology, upgrade of public sector banking infrastructure and competitive private sector banks. In today’s scenario the urban & semi-urban population, have all round the clock access to multiple nearby bank branches. The government of India has authorized various public and private sector banks to provide Senior Citizen Savings Scheme accounts to vast segments of the population. For a senior citizen, opening the senior citizen account is a win –win situation as the SCSS can be easily added to their existing portfolio with the same bank branch.
The SCSS at banks does bring a host of preferred services to the senior citizen:
- The accrued interest can be directly credited into the depositor’s savings bank account held with the bank branch.
- Standard account statements are forwarded to depositor through post or email.
- 24 by 7 customer service through phone banking services.
- As in 2004, a gamut of total 24 public sector banks and 1 private sector bank is authorized to tender the Senior Citizen Savings Scheme.
The following is list of banks where one can open a SCSS Account-
Public Sector Banks:
- Allahabad Bank
- Andhra bank
- State Bank of India
- State Bank of Mysore
- State Bank of Bikaner and Jaipur
- State Bank of Patiala
- State Bank of Travancore
- State Bank of Hyderabad
- Bank of Maharashtra
- Bank of Baroda
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Vijaya Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- United Bank of India
Private Sector Bank: ICICI Bank Ltd.
Other Important Terms and Conditions
- There can be only a single deposit in the SCSS account and in multiples of Rs. 1000 upto the maximum cap Rs. 15 lakhs.
- The premature withdrawal is permitted however only after 1 year of account opening subject to penalty.
- The deposit in the SCSS accounts can be done in cash, if the deposit amount is less than Rs. 1 lakh.
If the deposit amount is more than Rs. 1 lakh, it can be done by cheque or DD drawn in favor of the account holder and endorsed in favor of the deposit office.
- The depositor can be extended for a further period of 3 years post the maturity period of 5 years. The account holder is required to submit an application in form within a period of one year post the date of the maturity period.
- The deposit under this account will earn interest @ 8.60% per annum from date of deposit and is payable at the end of each quarter e.g. 31st March / 30th June / 30th September / 31st December.
- As per the government rules, the depositor may nominate any one individual or more than one person when opening the account or even after opening the account.
- A passbook is duly issued in name of the account holder to keep track record of the onwards transactions in the account.
- Nomination made at the time of account opening by the depositor can be later on cancelled or altered as per the requirement of the primary holder.
- The initial deposit made while opening of account is paid out by the deposit office after the expiry of 5 years from the date of account opening on production of passbook along with a written application/withdrawal form.
- In case an account holder wishes to either close the account on the date of maturity or does not want to extend the account, the SCSS account will be considered as matured.
- The depositor is entitled to close the SCSS account at any point of time provided that the post maturity interest will be at a rate which is applicable to the deposits under the Post Office Savings Accounts and these rates are revised annually
- In the event of death of the depositor before actual maturity of the account, the account will be closed and all the maturity proceeds will be refunded to the legal heir/nominee. For deceased claims, the nominee or the legal heir will have to provide a written application in prescribed format along with Death Certificate to facilitate withdrawal.
- In case the total maturity proceeds including gross interest payable is capped at Rs. 1 lakh, the same will be paid to the legal heirs or nominee on the production of the following key documents:
- An indemnity,
- An affidavit
- A letter for disclaimer on the affidavit
- A certificate of death of the depositor on stamp paper
- Annexure to bank Form.