There are several options in India for investing funds. One such option is the Senior Citizen Savings Scheme (SCSS). It allows individuals to secure a stream of income after their retirement. Like any investment option, individuals who avail themselves of this scheme have to comply with the SCSS rules to be eligible candidates.
Also read: Senior citizen savings scheme
What are the senior citizen savings scheme
SCSS is intended specifically for senior citizens or retirees. It shares the features of a standard savings scheme. Under this plan, individuals can deposit an amount against which they periodically earn interest.
Interest is earned based on the rate applicable at the time of investment. If the rate is revised in a later quarter, it will not apply to investments that have already been made. For instance, if an individual deposits Rs. 2 lakh in Q3 of FY 2019–20, they would incur interest at a rate of 8.6% throughout the tenure. This is one of the essential SCSS rules.
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Documents required for SCSS
Eligible individuals who are within 55–60 years of age will require the following documents to open an SCSS account:
- 2 passport-size photos
- Identity proof, such as an Aadhaar card, PAN card, Voter ID, or passport
- Address proof, such as an Aadhaar card or telephone bills
- Age proof, such as a PAN card, birth certificate, voter ID, or senior citizen card
- Documents showing the date on which the eligible individual received the retirement benefits
- Employer certificate conveying the details of retirement under superannuation
All the documents must be self-attested. Alongside the ones mentioned above, individuals may also need to submit other documents. Hence, it would be convenient to keep all retirement-related papers handy.
Also read: Senior citizen FD rates
Eligibility criteria
According to SCSS rules, the following individuals can open an SCSS account with a bank or post office:
- Individuals over the age of 60 years
- Retired civilian employees over 55 years and below 60 years of age, provided the investment is made within one (1) month from when the retirement benefits are received
- Retired defence employees above 50 years and below 60 years of age, provided the investment is made within one (1) month from when the retirement benefits are received
- Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open an SCSS account
Features and benefits
SCSS offers the following features:
- Secure investment
Since SCSS is a scheme backed by the government, the invested amount is secure and there is a guarantee of returns upon its maturity. - Interest payment
As per SCSS rules, individuals who opt for an SCSS account receive interest on the principal deposited amount at a rate set by the government. They receive a quarterly interest on their deposited amount, which is typically credited to an individual’s account on the first date of April, July, October, and January. - Mode of deposit
An individual is allowed to deposit the money in cash when the amount is below Rs. 1 lakh and by cheque when the amount exceeds Rs. 1 lakh. - Maturity of the scheme
A senior citizen saving scheme has a maturity period of 5 years. However, this can be extended by an additional 3 years through an application submission, which should be done in the last year. - Nominations
Individuals can appoint nominees either when opening an SCSS account or after opening the account, provided it complies with the SCSS rules. - Number of accounts
As per SCSS rules, individuals are allowed to open multiple SCSS accounts. They may open another account either by themselves or jointly with their spouse. However, the joint account can only be opened with the spouse; the first depositor in the joint account is the initial depositor. - Minimum and maximum deposit amounts
The minimum deposit amount is Rs. 1,000, while the maximum amount is Rs. 30 lakh. The deposits can be made in multiples of Rs. 1,000. - Transfer of an account
An SCSS account is transferable from a bank to a post office and vice versa. - Premature closure
Individuals can withdraw the amount and close the account at any given time on an application in Form-2, provided the following conditions are met:- If the account is closed before 1 year, the interest paid on the deposit in the account will be recovered from the deposit.
- If the account is closed before 2 years, 1.5% of the deposit will be levied as a penalty.
- If the account is closed after 2 years, 1% of the deposit will be levied as a penalty.
- Interest rate
The scheme offers a competitive interest rate on the deposit amount. As of May 2024, the rate is set at 8.2% - Tax deduction
You can get an income tax deduction of up to Rs. 1.5 lakh under Section 80C of the Indian Tax Act, 1961.
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Conclusion
The senior citizens’ savings scheme is meant for senior citizens in India. The scheme offers a regular income stream with tax-saving benefits while being completely safe. It is an apt investment choice for those over 60 and provides guaranteed returns, thus helping you financially during your golden years.
