Senior Citizen Savings Scheme is one of the scheme under National Saving Institute of Government of India. Senior Citizen Savings Scheme mobilise savings through post office and designated banks branches. Recently, certain changes have been made in Senior Citizen Savings Scheme. We will discuss in this post the Senior Citizen Savings Scheme with latest updates.
What is Senior Citizen Savings Scheme
Senior Citizens Savings Scheme (SCSS) as the name suggest is meant for senior citizens who have attained age 55 and below 60 years. Senior citizens can deposit money received on retirement under this scheme for availing special benefits offered by the Government.
Features of Senior Citizen saving scheme
The general features of the Senior Citizen Savings Scheme are as below:
- The deposit will mature after 5 years and can be extended for another 3 years. The extension of the account can be done one year from the date of maturity.
- Currently interest rate is 8.20% p.a. It is decided and declared by Government of India every quarter. On the first instance, the interest is payable on the deposit date of March 31, September 30, and December 31, thereafter, interest is payable on March 31, June 30, September 30, and December 31.
- Quarterly interest is paid on the initial working day of April, July, October, and January. Investment Amount Maximum amount that can be deposited is Rs.30 lakh (enhanced from earlier limit of ₹15 lakh w.e.f April 1, 2023).
- Premature Withdrawal Allowed subject to following conditions
– If withdrawn within 1 year, no interest will be paid.
– If withdrawn after 1 year but before 2 year, an amount equivalent to 1.5% of principal will be deducted.
– If withdrawn after 2 year, but before 5 year an amount equivalent to 1% of principal will be deducted. - Eligibility i) An individual who has attained the age of 60 years or above at the time of opening an account. ii) Individuals who have reached the age of 55 years old but are below the age of 60 years old and have retired on superannuation and iii) Retired defense employee above 50 years and below 60 years.
– Non-Resident Indians (NRIs) and Hindu Undivided Families (HUF) are not eligible. - Number of accounts: Individuals are allowed to operate more than one account by themselves or open a joint account with their spouse. However, joint accounts can be opened only with the spouse and the initial depositor is the investor of the joint account.
- Minimum and maximum amount: Only a single deposit is allowed to be made in the account. It can be in the multiples of ₹ 1,000 and the maximum amount that can be deposited is ₹ 30 lakh.
- Deposit amounts less than ₹ 1 lakh can be paid by cash, while amounts more than ₹ 1 lakh must be paid by cheque. In the case of cheque payments, the date the cheque realises will be the opening date of the account.
Account opening process under Senior Citizen Saving Scheme
Account under this scheme can be opened by visiting a bank branch or post office. The depositor requires to
• Visit the nearest post office or bank branch.
• Submit the completely filled application form along with the KYC documents and two passport size photograph. The KYC document include identity proof like passport or Permanent Account Number (PAN)PAN card, proof of address like Aadhar card or telephone bill, age proof document like PAN card, voter ID card, Birth Certificate, Senior Citizen Card, Passport, retirement card etc.
• A cheque for the amount that is being deposited must be provided.
• Add nominees to the account.
• All the documents that are submitted to open an account must be self-attested.
How Senior Citizen Saving Scheme work?
The process of operating an account under Senior Citizen Saving scheme is as below:
• Once the account is opened under the scheme, the depositor can deposit an amount of ₹ 1000 up to ₹30 lakh.
• If the deposited amount is received on retirement, than it has to be deposited within one month from the date of receiving the retirement benefit from the employer.
• The retirement benefit includes
– Retirement or superannuation gratuity
– Leave encashment
– Retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme
– Ex-gratia payments under a voluntary or a special voluntary retirement scheme
– Provident fund dues
– Commuted value of pension
– Savings element of Group Savings Linked Insurance Scheme payable by the employer on retirement.
• The accumulated interest will be paid in the linked saving account at the end of each quarter.
• The principal amount can be withdrawn at the end of 5th year. Alternatively, the depositor can extend the tenure for another 3 years.
Benefits under Senior Citizen Saving Scheme
The major benefits of the Senior Citizen Savings scheme are:
• Since the scheme is backed by Government of India, it safe to invest and risk free.
• Under Section 80C of the Income Tax Act 1961, income tax deduction can be availed for this scheme of up to ₹ 1.5 lakh. In case the interest generated is more than ₹ 10,000 p.a., the tax will be deducted at source.
• The senior citizen savings scheme offers higher rate of interest as compared to any other deposit schemes of the government.
• Premature withdrawal is allowed subject to deductions mentioned above.
• The account can be transferred across the country. Senior Citizen Savings Scheme account can also be transferred from a bank to a post office and vice versa.
• While depositor’s maximum limit is ₹30 lakh, but a joint account with both retired husband and wife is ₹60 lakh.
Disadvantage of Senior Citizen Saving Scheme
The major disadvantages of Senior Citizen Saving Scheme are
1) This is scheme is available who are at age 60 and above. It is available from age 50 & 55 year if retired from defense and superannuated at 55 years respectively.
2) The deposited money is locked for 5 years. Premature withdrawal is permitted with penalty.
3) There is cap to maximum money one can invest under the scheme.
4) There is no exemption on interest earned on the deposited amount.
5) Online investment facility is not available. It is one of the post office scheme. Investors must download the form and submit to the nearest post office or authorised bank branch.