Senior Citizen Saving Scheme Rules

Learn about Senior Citizen Saving Scheme Rules for secure retirement planning.
OPEN FD
4 min
3-May-2024

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.

If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. Nominations
    Individuals can appoint nominees either when opening an SCSS account or after opening the account, provided it complies with the SCSS rules.
  6. 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.
  7. 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.
  8. Transfer of an account
    An SCSS account is transferable from a bank to a post office and vice versa.
  9. 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.
  10. Interest rate
    The scheme offers a competitive interest rate on the deposit amount. As of May 2024, the rate is set at 8.2%
  11. 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.

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.85% p.a.

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.

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Frequently asked questions

What is the rule 4 of SCSS scheme?

If a deceased depositor has no nomination, the outstanding amount is credited to the legal heirs upon submission of the FORM-F application, the depositor’s death certificate, and either a succession certificate or a Letter of Administration with an attested copy of the deceased depositor’s probated will, issued under provisions of the Indian Succession Act, 1925.

What is the SCSS closure rule?

After completing the initial five-year tenure, SCSS rules allow you to extend the account for an additional three years. During this extended period, you can close your account prematurely after one year without incurring any penalties.

Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.