A Senior Citizens Saving Scheme (SCSS) is a government-sponsored retirement savings program. Senior citizens in India can invest a lump sum in the scheme, either individually or jointly, and receive regular income as well as tax benefits. It has been proposed to exempt senior citizens from filing income tax returns if their only annual income source is pension and interest income. Section 194P has been added to force banks to deduct tax on senior citizens over the age of 75 who receive a pension and interest income from the bank.
Important Terms/Definitions:
NRI: A non-resident Indian is a person who is an Indian citizen or of Indian origin but is not a resident of India.
HUF: It is meant for Hindu Undivided families. By forming a family unit and pooling assets to form a HUF, you can save taxes. HUF is taxed independently of its members. A Hindu HUF can be formed by a Hindu family. Hindu Undivided families can also be formed by Buddhists, Jains, and Sikhs. The HUF has its own PAN and files tax returns separately from its members.
Premature withdrawal: It is the withdrawal of funds from a fixed deposit account before the maturity date.
Eligibility of Senior Citizens Saving Scheme (SCSS):
- Indian citizens who are older than 60 years.
- Retirees in the age bracket of 55-60 years who have opted for Voluntary Retirement Scheme/ Superannuation
- Retired defense personnel (RDP) above 50 years and below 60 years of age
- Hindu Undivided families and non-resident Indians are not eligible to invest in Senior Citizen Savings Scheme
How Do I Open a Post Office Senior Citizen Savings Scheme Account?
An SCSS account can also be opened at the post office. Senior citizens can open an account by going to the nearest post office and filling out the proper documents. The completed form must be submitted along with supporting documentation such as age proof, address proof, a cheque for the deposit amount, identity proof, and so on. The Post Office Senior Citizen Saving Scheme is well-known for its high-interest rate.
How to Open a Senior Citizen Savings Scheme Account at a Bank:
SCSS accounts are available at various public/private sector banks across India, in addition to post offices. Having an SCSS account with an authorized bank comes with its own set of benefits:
- The accumulated interest can be credited directly to the Senior Citizen Saving Scheme account holder’s savings account.
- Account statements are emailed or mailed at regular intervals.
- Phone banking provides round-the-clock customer service.
- Senior citizen aspirants can open an account by following the applicable Senior Citizen Saving Scheme account opening process, either online or offline.
Documents:
The below documents are required to open an SCSS account in India:
- Two passport-size photographs
- Form A must be fully completed and sent.
- A Permanent Account Number (PAN) Card or another kind of identity documentation must be presented.
- People must provide address proof, such as an Aadhaar card or phone bill.
- An official document proving the person’s age must be provided. The age-proof document can be the PAN Card, Voter ID, Birth Certificate, Senior Citizen Card, or Passport.
- All supporting documents must be self-attested in order to open an account.
Banks that provide a Senior Citizen Savings Scheme:
Besides post offices, selected banks in the country offer the Senior Citizen Savings Scheme. Since 2004, 24 public sector banks and 1 private sector bank have been authorized to provide Senior Citizen Saving Schemes. Here is a list of these financial institutions.
| Banks in the Public Sector |
Allahabad Bank Andhra bank State Bank of Bikaner and Jaipur State Bank of India State Bank of Patiala State Bank of Mysore State Bank of Travancore State Bank of Hyderabad Bank of Baroda Bank of Maharashtra Bank of India Canara Bank Corporation Bank Central Bank of India Syndicate Bank Dena Bank Union Bank of India UCO Bank Vijaya Bank IDBI Bank Indian Overseas Bank Indian Bank Punjab National Bank United Bank of India |
| Banks in the private sector | ICICI Bank Ltd. |
Interest Rates of Senior Citizens Saving Scheme (SCSS):
| Time Period | Interest Rate (% annually |
| April to June(Q1 FY 2022-23) | 7.4 |
| Jan to Mar (Q4 FY 2021-22) | 7.4 |
| Oct to Dec (Q3 FY 2021-22) | 7.4 |
| Jul to Sep (Q2 FY 2021-22) | 7.4 |
| April to June (Q1 FY 2021-22) | 7.4 |
| Jan to March 2021 (Q4 FY 2020-21) | 7.4 |
| Oct to Dec 2020 (Q3 FY 2020-21 | 7.4 |
| Jul to Sep 2020 (Q2 FY 2020-21) | 7.4 |
| Apr to Jun 2020 (Q1 FY 2020-21 | 7.4 |
| Jan to March (Q4 FY 2019-20) | 8.6 |
| Oct to Dec 2019 (Q3 FY 2019-20 | 8.6 |
| Jul to Sep 2019 (Q2 FY 2019-20 | 8.6 |
| Apr to Jun 2019 (Q1 FY 2019-20) | 8.7 |
| Jan to March 2019 (Q4 FY 2018-19) | 8.7 |
| Oct to Dec 2018 (Q3 FY 2018-19) | 8.7 |
| Jul to Sep 2018 (Q2 FY 2018-19 | 8.3 |
| Apr to Jun 2018 (Q1 FY 2018-19 | 8.3 |
| Jan to March 2018 (Q4 FY 2017-18 | 8.3 |
Senior Citizen Saving Scheme Benefits:
The Senior Citizen Saving Scheme (SCSS) is an excellent option for senior citizens because it is both a savings and an investment vehicle. It is proud to offer one of the highest interest rates and to be a government-backed investment instrument in our country. The SCSS is designed to meet the specific insurance needs of an investment-minded senior citizen.
| Available Easily | Simply fill out an application form at your nearest bank/post office. |
|---|---|
| Reliable | It is an investment product backed by the Indian government, which provides security assurance. |
| Multiple Accounts | Individuals can open multiple Senior Citizen Savings Scheme accounts, either individually or as joint investors. The other investor must be the primary investor’s spouse. |
| Amazing Return | The SCSS returns are very satisfying at 8.7 percent per year. |
| Flexible Duration | The SCSS account has a five-year term, but it can be extended for an additional three years. As a result, the Senior Citizen Saving Scheme serves as both a short-term and long-term investment vehicle. |
| Tax Saving for Senior Citizens | Senior citizens can save TDS on these schemes under Section 80C of the Income Tax Act of 1961. |
| Choose Your Investment | Each Senior Citizen Saving Scheme account can only have one investment. The sum must be a multiple of Rupees 1000 and cannot exceed Rupees 15 Lakh. As a result, the SCSS investment option is both scalable and affordable. |
| Premature Termination | If your financial affairs are small, you can close your Senior Citizen Savings Scheme account and withdraw your money. This option becomes available after your account has been active for 365 days. It is a source of funds that can be accessed at any time. However, after one year, a 1.5 percent penalty is charged, and the funds in your SCSS account are deducted accordingly. After two years, a penalty of one percent is charged in the event of early termination. |
| Minimal Paperwork | The Senior Citizen Saving Scheme application process requires minimal paperwork. Birth certificates, passports, voter identification cards, PAN cards, senior citizen cards, and so on are common Know Your Customer documents. |
Maturity Period of Senior Citizens Saving Scheme (SCSS):
A Senior Citizen Savings Scheme matures after 5 years from the date the account is opened. The account holder, however, has the option of extending the account for another three years after it has matured. This extension option is currently available only once, and the request must be made within one year of the SCSS account’s maturity.
The Tax Implications of the Senior Citizens Savings Program:
- SCSS investments are also eligible for tax deductions in the following ways:
- Under Section 80C of the Income Tax Act of 1961, the principal amount deposited in SCSS is eligible for a tax deduction of up to Rs. 1.5 Lakh per year.
- Interest on SCSS is taxable in accordance with the individual’s tax bracket.
- If the interest earned exceeds Rs. 50,000 in a financial year, Tax Deducted at Source (TDS) applies to the interest earned.
- This TDS deduction limit on SCSS investments is effective beginning with the financial year 2020-21.
Deposit Limits for the Senior Citizen Savings Scheme:
Eligible investors can invest in the Post Office Senior Citizen Savings Scheme with a lump sum.
| Minimum deposit | Rs. 1,000 |
| Maximum deposit | Rs. 15 lakh |
While cash deposits into SCSS accounts are permitted, they are limited to amounts less than Rs. 1 lakh. A cheque/demand draft is required for deposits exceeding Rs. 1 lakh.
Withdrawal of Senior Citizens Saving Scheme (SCSS):
- The Person may withdraw your Senior Citizen Savings Scheme Deposit at any time after the date of account opening, subject to the applicable penalties. The penalty is determined by when you withdraw the funds.
- No interest will be paid, and any interest paid in the account will be deducted from the principal if the account is closed one year from the date of account opening.
- A penalty of 1.5% of the deposit amount is deducted if the scheme is exited before the completion of two years from the date of account opening.
- If you leave the scheme between 2 years and less than 2 years, you will be penalized with 1% of your SCSS deposit.
FAQ on Senior Citizen Savings Scheme:
Q1: What are the deposit Limits for the Senior Citizen Savings Scheme?
Answer:
Eligible investors can invest in the Post Office Senior Citizen Savings Scheme with a lump sum.
Minimum deposit Rs. 1,000 Maximum deposit Rs. 15 lakh While cash deposits into SCSS accounts are permitted, they are limited to amounts less than Rs. 1 lakh. A cheque/demand draft is required for deposits exceeding Rs. 1 lakh.
Q2: Mention some of the benefits of Senior Citizens Saving Scheme (SCSS).
Answer:
- Reliable: It is an investment product backed by the Indian government, which provides security assurance.
- Multiple Accounts: Individuals can open multiple Senior Citizen Savings Scheme accounts, either individually or as joint investors. The other investor must be the primary investor’s spouse.
- Amazing Return: The SCSS returns are very satisfying at 8.7 percent per year
Q3: What are the documents required for Senior Citizens Saving Scheme (SCSS)?
Answer:
The below documents are required to open an SCSS account in India:
- A completed application form must be obtained from a post office or a bank.
- Form of KYC
- Permanent Account Number(PAN)
- Photographs of the Applicant
- Address verification
- Employer’s certificate in the case of retirees
- Proof of retirement benefit disbursement date