Senior Citizen Savings Scheme (SCSS): Features, eligibility and tax saving benefits

• Visit the nearest authorised bank branch and request the SCSS application form.
• Complete the application form by providing all the required information.
• Gather the necessary documents as specified.
• Attach the required documents to the application form and deposit the required funds with the bank staff.
• Submit the completed application form, the attached documents, and deposit to the bank staff.
• The bank employees will then process your application and open your SCSS account.

Also Read: National Pension Scheme (NPS): How to invest, tax benefits and eligibility

How does SCSS work?

Here's how an SCSS account operates:

• Open an SCSS account by depositing an amount from Rs 1,000 up to Rs 30 lakh in a single instalment.
• Deposit retirement benefits received into the SCSS account within one month from the date of receiving them from the employer.
• Retirement benefits include various payments due to the account holder upon retirement, such as provident fund dues, gratuity, pension commutation value, leave encashment, and more.
• Excess deposits beyond the ceiling amount will be promptly refunded to the account holder.

Features of the Senior Citizen Savings Scheme

Here are the key features of the SCSS:

1. Tenure: 5 years
2. Interest rate: 8.2% per annum
3. Minimum investment: Rs 1,000
4. Maximum investment: Rs 30,00,000
5. Tax benefits: Available under Section 80C, up to Rs 1.5 lakh
6. Nomination facility: Available
7. Interest on the deposit is paid quarterly.
8. Interest can be withdrawn through auto-credit into a savings account held at the same branch or via ECS (Electronic Clearing Service).
9. The account can be closed prematurely at any time after opening.
10. The account may be extended for an additional three years from the maturity date.
11. Extension requests can be made within one year from the maturity date.

Eligibility of SCSS

Here are the eligibility criteria for opening an SCSS account:

• Individuals aged 60 years and above.
• Retired civilian employees aged between 55 to 60 years. However, the investment must be made within one month of receiving retirement benefits.
• Retired defence employees aged between 50 to 60 years. The investment should also be made within one month of receiving retirement benefits.
• Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are ineligible to open an SCSS account.

Benefits of SCSS

Here are some reasons to consider investing in SCSS:

1. SCSS is backed by the Indian government, making it a safe and trustworthy investment option.
2. Opening an SCSS account is straightforward and can be done at any authorised bank or post office in India.
3. The account is transferable within India, providing flexibility for account holders.
4. SCSS offers an attractive interest rate on deposits, providing the potential for significant returns.
5. It allows you to enjoy an income tax deduction of up to Rs 1.5 lakh under the Indian Income Tax Act, 1961, Section 80C.
6. Account holders receive quarterly interest on the principal amount at a rate set by the government, credited on the first of April, July, October, and January.
7. Cash deposits are accepted for amounts below Rs 1 lakh, while payments exceeding Rs 1 lakh should be made via cheque.
8. The account's 5-year tenure can be extended for an additional three years, allowing for continued investment growth and flexibility.
9. The SCSS matures in 5 years, but individuals can extend it by three years by applying during the fourth year.
10. Nominees can be appointed during or after opening the SCSS account.
11. Individuals can open multiple SCSS accounts singly or jointly with their spouse.
12. Deposits can range from a minimum of Rs 1,000 to a maximum of Rs 30 lakh, in multiples of Rs 1,000.
13. SCSS accounts can be transferred between post offices and banks (public, private).
14. Withdrawals are permitted one year after opening the account. If closed within one year, no charge applies. After one year but within two years, a 1.5% charge is deducted, and a 1% charge applies if closed within two to five years.

Frequently Asked Questions (FAQs)

Can NRIs (Non-Resident Indians) invest in the Senior Citizen Savings Scheme?

No, NRIs are not eligible to invest in the Senior Citizen Savings Scheme. This scheme is exclusively available to resident individuals aged 60 years and above and individuals aged 55 to 60 who have opted for voluntary retirement.

Is the interest earned from the SCSS taxable?

Yes, the interest earned from the Senior Citizen Savings Scheme is taxable per the investor's income tax slab. However, investments made in the SCSS are eligible for tax benefits under Section 80C of the Income Tax Act. Investors can claim deductions of up to Rs. 1.5 lakh in a financial year on their taxable income by investing in the SCSS.