All about Senior Citizen Savings Scheme (SCSS)

Snapshot of Senior Citizen Savings Scheme (SCSS)

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Benefits of Investing in Senior Citizen Savings Scheme (SCSS)

1. It is one of the safest investment instruments for senior citizens in India
2. It is a Government of India product
3. It offers Fixed Interest
4. It can be opened very easily at any authorised bank or post office in India
5. It is a source of regular income after retirement
6. It offers very attractive returns, currently 8.30% p.a.
7. It provides tax benefit i.e. a tax deduction up to Rs 1.50 lakhs can be claimed under Section 80C of Income Tax Act 1961.
8. It can be withdrawn before its maturity also.
9. It can also be renewed for a further period of 3 years.
10. It provides nomination facility to the depositor.

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Eligibility Criteria for Senior Citizen Savings Scheme (SCSS)

• An individual who has attained the age of 60 years and above on the date of opening of an account.
• An individual who has attained the age of 55 years or more but less than 60 years and who has retired on superannuation or otherwise on the date of opening an account.
• An individual who has retired at any time before the commencement of these rules and attained the age of 55 years or more on the date of opening of an account
• The retired personnel of Defence Services (excluding civilian Defence employees) irrespective of the above age limits subject to fulfilment of other specified conditions.

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Premature Closure of Account under Senior Citizen Savings Scheme (SCSS)

It is possible to withdraw from the account under Senior Citizen Savings Scheme after one year by paying some charges/ penalty as detailed below:

1. Upto 1 year: Premature Closure of Account is not allowed
2. From 1 year upto 2 years: Charges @1.5% of the deposit shall be deducted and the balance paid to the depositor.
3. On or after expiry of 2 years: Charges @1% of the deposit shall be deducted and the balance paid to the depositor.

If the depositor withdraws from the scheme prematurely, he/ she will lose the income tax benefit of section 80C of income tax act. In such case, the principal amount and the interest paid in the year of withdrawal would be added to the depositor's gross total income in the year of the premature withdrawal.

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Maturity of Senior Citizen Savings Scheme (SCSS)

If the depositor wants to close the account on maturity i.e. after the completion of 5 years from the date of deposit and receive the maturity amount then he is required to submit the duly filled 'SCSS Account Closure Form' along with the passbook.

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Extension of Account (Renewal) of Senior Citizen Savings Scheme (SCSS)

A depositor can extend the account for a further period of 3 years. For extending the term, the depositor needs to submit its request within one year from the date of maturity.

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Death of the Depositor under Senior Citizen Savings Scheme (SCSS)

If the depositor expires before the maturity, the account will be closed and deposit along with the interest will be refunded to the nominee or legal heirs in case the nominee has also expired or nomination was not made as per rules. Such application should be made through "Form F" by the claimant.

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Important Points to be noted under Senior Citizen Savings Scheme (SCSS)

1. NRI and HUF are not eligible to open an account under this scheme.
2. There shall be only one deposit in the account minimum of Rs. 1,000 and in multiples of Rs. 1,000 thereafter but not exceeding Rs. 15 lakhs.
3. The account under SCSS Scheme may be opened individually or jointly with spouse.
4. The amount deposited in the SCSS Scheme cannot exceed the money that has been received on retirement with a maximum cap of Rs. 15 lakhs.
5. The interest received under the SCSS Scheme is taxable in the hands of the depositors.
6. If the depositor has not closed the account after maturity or extended the scheme on maturity then after the maturity, the depositor will earn the savings account interest prevailing at the time of maturity until he/ she withdraws the amount.

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Share This : Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
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