Senior Citizen Savings Scheme (SCSS)

Learn about benefits and features of Senior Citizen Savings Scheme (SCSS).
OPEN FD
SCSS
OPEN FD
4 mins
21-August-2024

The Senior Citizen Savings Scheme, commonly known as SCSS, is a special savings plan crafted to cater to the financial needs of individuals aged 60 and above. In this article, we will understand the key aspects of SCSS, including its features, interest rates in 2024, eligibility criteria, rules, and the process of opening an SCSS account.

What is the Senior Citizen Savings Scheme (SCSS)?

The Senior Citizen Savings Scheme (SCSS) is a government-backed financial instrument designed for individuals aged 60 and above. It offers a secure and beneficial way for seniors to invest a lump sum amount for a fixed duration, currently set at 5 years. The scheme provides a fixed interest rate of 8.2% p.a. (as of 01/01/2024) and the interest is paid out quarterly.

The SCSS provides a valuable option for senior citizens seeking guaranteed returns. However, it's wise to consider diversifying your investments for greater flexibility. Fixed deposits (FD) can be a smart complement to the SCSS. FD offer flexible tenures, allowing you to tailor investments to your specific needs.

Pro tip

Enjoy higher interest rate with Bajaj Finance Digital FD. Unlock returns of up to 8.65% p.a. by investing for 42 months via website and app.

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Features of SCSS

Feature

Details

Tenure

5 years

Interest rate

8.2% p.a. (as of 01/01/2024)

Minimum investment

Rs. 1,000

Maximum investment

Rs. 30,00,000

Tax benefits

Up to Rs. 1.5 lakh under Section 80C

 

  1. Guaranteed returns: As a government-backed instrument, the SCSS provides assured returns, offering a secure investment option compared to market-linked investments.
  2. Maturity period: The SCSS has a fixed maturity period of 5 years, but individuals have the option to extend it for an additional 3 years by submitting Form B at concerned post office.
  3. Deposit limits: To open an account, a minimum deposit of Rs. 1,000 is necessary, and there is a maximum deposit limit is Rs. 30 lakh.
  4. Prematurely withdrawal: If you prematurely withdraw your amount before completion of 1 year, you won't get any interest, if you withdraw it after 1 year but before 2 years, a 1.5% penalty is charged from the principal amount and if you withdraw after 2 years but before 5 years, a 1% penalty is charged.
  5. Nomination option: Account holders can nominate a beneficiary for the Senior Citizens Saving Scheme, so if the account holder passes away before the account matures, the nominee will receive the due amount.

How does the Senior Citizen Savings Scheme work?

  • Open an SCSS account with a single installment by contributing Rs. 1,000 up to Rs. 30 lakh.
  • The amount must 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 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
  • If the deposit exceeds the ceiling amount, the excess will be refunded immediately to the account holder.
  • Interest is credited to the account every quarter.
  • Interest can be withdrawn through ECS (Electronic Clearing Service) or auto credit mode via the post office.
  • The account can be closed prematurely anytime after the date of account opening.
  • The account can be extended for another three years from the date of maturity.
  • The extension must be done within one year from the date of maturity.

Benefits of Senior Citizen Savings Scheme

The Senior Citizen Savings Scheme (SCSS) offers several benefits:

  1. Ease of access: Open an SCSS account at any authorized bank or post office.
  2. Competitive returns: Enjoy an attractive annual interest rate of 8.2% as of 01/01/2024.
  3. Tax benefits: SCSS interest is exempt from income tax up to a certain limit.
  4. Early withdrawal: Premature withdrawal is allowed in case of medical emergencies with a penalty.

For a higher interest rate on your investment, you can consider Bajaj Finance Fixed Deposit. They offer interest rates up to 8.65% p.a. on their fixed deposits.

Eligibility for SCSS

  • Individuals above 60 years of age are eligible to open an SCSS account.
  • Retired civilian employees above 55 and below 60 years and retired defense employees above 50 and below 60 years can also open accounts within one month of receiving retirement benefits.
  • Joint accounts can be opened with a spouse.

Documents required to open SCSS account

  1. 2 passport-size photo
  2. Identity proof (PAN card, Voter ID, Aadhaar card, or passport)
  3. Address proof (Aadhaar card or recent telephone bills)
  4. Proof of age (PAN card, Voter ID, birth certificate, or senior citizen card)

How to fill the Post Office SCSS application form?

  1. Enter the branch name of the post office.
  2. If you already have a savings account with the post office, enter the account number.
  3. In the 'To' section, specify the branch address of the Post Office.
  4. Attach a photograph of the accountholder.
  5. Write the account holder's name and select the SCSS option.
  6. Choose the account holder type: minor through guardian, person of unsound mind through guardian, or self.
  7. Select the account type: single, survivor, or all.
  8. Enter the deposit amount in both figures and words.
  9. If depositing by cheque, write the cheque number and date.
  10. Enter the accountholder's personal details.
  11. Tick the boxes at the end of the table for the provided documents.
  12. Fill in the SCSS details and tick the declaration box.
  13. The account holder must sign on both page one and two.
  14. Provide details of the nominee and add the account holder's signature to validate the nominee's information.

Procedure to open SCSS account in a bank

  1. Visit the nearest authorised bank branch and obtain the SCSS application form.
  2. Complete the application form by providing the required information.
  3. Attach the necessary documents.
  4. Submit the filled application form, along with the required documents and the deposit amount.
  5. The bank personnel will process the application and proceed to open the SCSS account.

Tax benefits under the SCSS

The principal amount invested in this scheme is eligible for a deduction of up to Rs. 1.5 lakh per year under Section 80C of the Income Tax Act. Additionally, the interest on SCSS is taxable based on the individual's tax slab. If the interest amount exceeds Rs. 50,000 in a fiscal year, TDS will be deducted.

Conclusion

Senior Citizen Savings Scheme (SCSS) offers a secure financial option for senior citizen. With a guaranteed returns the scheme ensures competitive interest rates, easy registration, and tax advantages. SCSS caters to the financial needs of senior citizen, promoting financial security.

For additional flexibility and potential for slightly higher returns, you can consider investing fixed deposit, which can provide flexible tenure and competitive interest rates.

Frequently asked questions

What happens to SCSS after 8 years?

After 8 years, the SCSS account can be closed or extended for another three years. If not extended, the account will earn post-maturity interest at the rate applicable to savings accounts until it is closed.

Can a person have two SCSS accounts?

Yes, a person can have multiple SCSS accounts, but the total investment across all accounts should not exceed Rs. 30 lakh. Each account must be opened with a retirement benefit received or with fresh contributions within the specified limits.

What is the current interest rate for SCSS?

The current interest rate for SCSS is 8.2% per annum (as of 2024), payable quarterly. This rate is subject to change and is periodically reviewed by the government.

Who is eligible for SCSS scheme?

Individuals aged 60 years or above are eligible for the SCSS scheme. Those aged 55 years or more but less than 60 years, who have retired on superannuation or under a voluntary retirement scheme, can also open an account within one month of receiving retirement benefits.

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