All About Senior Citizens Savings Scheme

Senior Citizens Savings Scheme (SCSS) is a government-backed savings for Indian residents aged over 60 years. 

Deposit Limits

A lump sum deposit with a minimum of Rs.1000 and maximum limit Rs.15 lakh can be made. Deposits greater than Rs.1000 have to be made in multiples of Rs.1000. Deposits through cash are allowed for amounts less than Rs. 1 lakh.Use of a cheque/demand draft  is mandatory for more than this limit.

Maturity period is after 5 years calculated from the date of account opening, extendable once for an additional 3 years on maturity. Extension requests should be made within 1 year of maturity.  

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Eligibility    

  • Available to any resident individual aged 60 years and above.
  • Individuals attaining 55 years but are less than sixty years, if they have retired under applicable superannuation or VRS. The account should be opened within 1 month of the receipt of retirement benefits.
  • Available to the retired defense personnel irrespective of above mentioned age limits subject to other terms & conditions.
  • NRIs, HUF members and Persons of Indian Origin are not eligible. 

Taxability

  • Investments qualify for deduction benefit up to Rs. 1.5 Lakh.Interest is fully taxable. Interest earned more than Rs. 50,000 for a fiscal year, TDS is applicable. ( AY 2020-21 onwards) Deposits made into this account are compounded and paid out annually and credited to the respective savings account held with the post office or banks.The interest rate is currently 7.4% (Q1 FY 20-21)Interest is subject to quarterly changes made by the govt. 
  • The interest earned is credited to the account holder’s linked savings account at the same post office or anywhere across the country when it is opened at a post office.
  • In case of Public/ Private sector banks:
  • The accrued interest directly credited into the depositor’s savings bank account held with the bank branch.
  • Standard account statements are forwarded to depositors through post or email.
  • 24×7 customer service through phone banking.

Application Form to open an account is available via the offline route at India PO and via the online route from the official India Post website. Application form can be downloaded from the official websites of banks. Paper form is also available.

The account cannot be opened via the online route, thus after downloading the application form, we have to print, fill it out and submit the completed form (at the post office/bank) along with:

  • Applicant name and PAN
  • Name of the primary applicant’s father/mother/husband/wife
  • In the case of joint account with spouse, mention the name, age, and address of your spouse.
  • Cheque/demand draft amount and number.
  • Nominee name, age, and address (If more than one nominee, detail of individual share of each nominee)

Premature withdrawal is allowed subject to penalties based on following:

  • 1.5% of deposit as a penalty if an exit occurs before completion of 2 years after date of opening.
  • 1% of deposit as a penalty if an exit occurs between 2 years to less than 5 years from the date of account opening

Benefits 

  • It is a government backed plan.
  • The scheme has a higher interest rate of 7.4% annually..
  • Maturity term is of 5 years extendable to another 3 years. 
  • Tax-deductible up to Rs. 1.5 lakh per annum.
  • One can invest any amount once in multiples of Rs. 1,000 up to the maximum of Rs. 15 lakhs.
  • Premature withdrawal in case of emergencies.
  • Availed through India Post Offices or designated bank branches.

It should be noted that in case the primary account holder dies before the actual maturity, the account will be closed and the proceeds will be transferred to the legal heir/nominee. He/She will have to fill out a written application in prescribed format with a Death Certificate to close the account.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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