Senior Citizens Savings Scheme (SCSS)
This saving scheme option is exclusive to senior citizens in India. Ideally, the applicant must be 60 years or more but those between the ages of 55-60 years, are retired or have opted for VRS, can also apply, provided that the account is opened within one month of the receipt of their retirement benefits.
Reason to invest in SCSS
Investing in SCSS is a very good opportunity for senior citizens above 60 years to make money. This is an effective & long term saving option which offers security and features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available through certified banks and post offices across India.
Following is the list of the documents required for investing in the scheme:
(a) Duly filled application form, available at the post office or bank
(b) Know Your Customer (KYC) form
(c) Photographs of the applicant/s
(d) Permanent Account Number (PAN)
(f) Address proof
(g) Age proof
(h) In the case of retirees, a certificate from the employer, stating the retirement was on superannuation or otherwise, retirement benefits, employment held (designation) and the period of employment.
(i) Proof of date of disbursal of the retirement benefits
The tenure of the scheme is five years, which can be further extended for three more years. Premature withdrawals are allowed, but only after one year and with premature withdrawal charges.
If one prematurely withdraws after a year, but before two years from the start date, the charges are 1.5 per cent of the deposit, and after 2 years it is 1 per cent.
No charges are levied in case of premature closure of account due to the depositor’s death.
If the depositor wishes to close the account after the completion of five years and receive the maturity amount then he needs to submit the duly filled ‘Closure Form’, along with the passbook.
To apply for the extension of the scheme for another three years after it has completed its mandated five-year tenure; the investor must submit the duly filled form of the extension of the scheme.
Features of SCSS
- Interest rate of 9.3% p.a, payable on any of the following dates in year- 31st March, 30th June, 30th Sept and 31st December.
- The tenure of a SCSS portfolio is 5 years.
- The applicant can make only one deposit into the account. This amount should be in multiples of Rs.1,000 and must not exceed a maximum of Rs.15 lakhs.
- The account can be transferred from one post office/bank to another.
- The SCSS account can be closed prematurely provided the applicant shells out 1.5% of the deposit amount in the first year and 1.0% of the deposit amount in the second year.
- Post the maturity of the account, the tenure can be extended for a further 3 years. After completing 1 year of this extension period, the account can be prematurely closed without any deductions.
- TDS is deducted at source on the accumulated interest if the latter exceeds Rs.10,000 p.a.
- SCSS accounts save tax as per the Section 80C of the Income Tax Act, 1961.
Eligibility for SCSS
The following people/groups are eligible to opt for SCSS:
- Senior citizen of India aged 60 years or above.
- Retirees who have opted for the Voluntary Retirement Scheme (VRS) or Superannuation with the age between 55-60. Here the investment has to be done within a month of receiving the retirement benefits.
- Retired defense personnel with a minimum age of 50 years.
- HUFs and NRIs are not allowed to invest in this scheme.
Benefits of SCSS
As a savings and investment product for the 60+ year olds, the Senior Citizens Savings Scheme Account is a heaven-sent. Boasting of one of the best interest rates for any government sponsored investment product in India, the senior citizens savings scheme is customized to suit the specific requirements of an investment minded senior citizen. The salient features and benefits of this option are as follows-
- Easily Available- Fill up a simple application form at your local bank or post office and you are set.
- Reliability- This is a Government of India sponsored investment product and comes with all the security and assurance associated with that tag.
- Multiple Accounts- A single applicant can open multiple SCSS accounts, either individually or with a joint investor (must be the spouse of the primary investor).
- High Returns- At 8.6% per annum, the returns on your SCSS accounts are very impressive.
- Flexible Tenure- The account has a tenure of 5 years but can be stretched to add another 3 years. Thus, your senior citizens savings scheme serves as either a medium range investment or a long term plan.
- Save Tax- As per the dictates of Section 80C, Income Tax Act, 1961, the TDS can be saved.
- Choose Your Investment- Only one investment is allowed per SCSS account. This amount must be a multiple of Rs.1000 and not exceed Rs.15 lakhs. Thus, the SCSS investment is immensely affordable and scalable.
- Premature Termination- In extreme financial duress, your SCSS account can be closed and the money accessed. While this option only applies after the account has existed for a minimum of one year, it still is a ready source of funds that can be called to help at a moment’s notice. However, after 1 year, a penalty of 1.5% of the funds in the SCSS account will be deducted while the same is 1% after the completion of 2 years.
- Minimum Documentation- KYC documents that prove your age. The documents that can be submitted to substantiate this are- Passport/ Birth Certificate/ Voter’s ID/ Senior Citizen Card/ PAN, etc.
How to open a SCSS account?
The SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:
- Form A has to be filled for opening SCSS Account.
- Identity proof like PAN card, Passport.
- Address proof such as Telephone bill, Aadhar card.
- Age Proof Document is required like as Passport, Senior Citizen Card, a Birth certificate issued Corporation or registrar of births and death, Voter ID card, PAN card etc.
- 2 Passport size photographs.
All the above documents should have to be self-attested.
Senior Citizens Savings Scheme Rules
A structured approach is crucial for success and peace of mind. When looking to enrol with the senior citizens savings scheme, ensure that you are well aware of the following conditions-
- You must be 60 years or above to enroll In certain conditions, individuals in the age group of 55 years and above can also apply successfully.
- Only one deposit is permitted per SCSS account. The deposit must be in multiples of Rs.1,000 with a maximum permissible investment of Rs.15 lakhs.
- Interest on the money accumulated in the SCSS account is payable on 31st March/30th September/31st December in the first instance and thereafter interest is payable as of 31st March, 30th June, 30th September and 31st December of each year.
- Maximum tenure of this saving scheme is 5 years. However, after maturity, the tenure can be extended for a further 3 years, pending the application for the same in the designated format.
- An applicant can operate multiple accounts simultaneously, individually or with a joint account holder who is the spouse. However, the account holder must ensure that all requirements pertaining to the validity and operation of these accounts must be met, including maintaining the minimum balance.
- It must be noted that cash is an acceptable medium of investment if the initial amount is less that Rs.1 lakh. If this amount is larger than Rs.1 lakh then a cheque must be used.
- Account can be easily and quickly transferred from one bank/post office onto another.
- SCSS provides nomination facility that can be availed at the time of opening the account or after said account has been in operation for a set duration of time.
- If the depositor chooses to terminate the account prematurely then the following penalty applies- 1.5% of deposit amount after one year and 1% of the deposit amount after two years. Kindly note that premature closure of the senior citizens savings scheme account is only possible after the account has been in operation for a minimum of one year.
- In case of joint accounts, the primary account holder is deemed the investor while the second stakeholder must be the primary account holder’s spouse.
- Tax is deducted at source if the accumulated interest on the invested amount exceeds Rs.10,000 per annum.
- Accumulated interest is deposited onto a designated savings account, maintained at the bank/post office, wherein the senior citizens savings scheme is maintained. These deposits are actioned through the auto credit facility via money orders or PDCs.
- Investments in the SCSS account saves tax as per the provisions laid out in Section 80C of the Income Tax Act, 1961.