Post Office Senior Citizens Savings Scheme (SCSS) is a government-backed savings scheme which is available only to Indian residents aged above 60 years. SCSS is exclusively tailored to meet the financial requirements of senior citizens and offering them an attractive and dedicated savings platform for their hard-earned money.
It has been launched with the following objectives,
Resident Indian senior citizens can make a lump sum investment in this scheme. They are free to invest either individually or jointly in this scheme. Through such investment in SCSS, they can not only get access to regular income but also can enjoy tax benefits. Government backing of SCSS takes care of the safety and security of the investment made by senior citizens.
| Features | Benefits |
|---|---|
| Individuals aged 60 and above can invest in SCSS. In some cases, individuals aged above 55, who have taken voluntary retirement, can also invest | Significant investment limit allows senior citizens to deploy a sizable amount and get potentially higher returns on such big investment |
| SCSS is exclusively designed for senior citizens | SCSS offers competitive interest rates which generates a regular income stream for senior citizens through quarterly interest payouts |
| Tenure of SCSS is 5 years and is extendable for an additional 3 years after maturity | Flexibility to extend the tenure offers continued financial security for seniors even even after the initial 5-year period |
| Interest rate is set by the government and is subject to periodic review and usually quarterly revisions | SCSS offers tax benefits to optimize investor's tax liabilities and retain more of their earnings |
| Interest in SCSS is paid out quarterly | Premature withdrawal is allowed after 1 year of investment with certain penalties |
| SCSS provides a nomination facility so that a smooth transfer of the investment can be made to the nominee in case of the investor's demise | Government backing instills confidence in investor of the safety of their hard-earned money |
| Investor can deposit the funds in cash if the investment amount is below Rs.1 lakh but if the investment amount is above Rs.1 lakh, an investor has to make the deposit through cheque | SCSS account can be transferred from a post office to a bank and vice versa |
| Individuals can open more than one SCSS account | SCSS account opening is fairly easy as it opened by following very simple steps at any authorized bank or any post office in India |
SCSS account can be opened as in single mode i.e. as individual capacity or it can be opened jointly but only with spouse. The applicant should meet any of the following age specific eligibility criteria,
Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open a SCSS.
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.
In case a customer who has attained the age of 55 years or more but less than 60 years, and who has retired, can open the account within a month of the date of receipt of the retirement benefits and on submitting proof of date of disbursal of such retirement benefit(s) along with a certificate from the employer.
SCSS provides tax benefits to the investors under section 80C of the Income Tax Act, wherein the amount invested in the scheme is eligible for deduction up to a limit of Rs.1.50 lakhs in a year.
However, interest earned on SCSS is taxable in the hands of investor as per his tax slab.
Further, TDS will be deducted if the amount exceeds Rs.50,000 in a financial year.
The tenure of SCSS is 5 years which is extendable for an additional 3 years on maturity.
Current interest rate of SCSS is 8.20% p.a. for the period from 1st July 2024 until 30th September 2024. The interest will be paid on a quarterly basis and is paid once every quarter. It can be drawn through auto credit into their savings account held at the same PO or through ECS facility.
The interest rate is set by the government and is subject to periodic revisions. As of now, it provides quarterly interest payouts. The quarterly interest payouts work as a consistent income source and are helpful in the financial planning of senior citizens.
The interest in the SCSS scheme is payable from the date of deposit to 31st March/30th June/30th September/31st December in the first instance. Thereafter, interest will be payable on 1st April, 1st July, 1st October and 1st January.
SCSS Scheme does not have the option of 'Cumulative Interest'.
TDS at the prescribed rate shall be deducted from the total interest paid, if total interest in all SCSS accounts exceeds Rs.50,000 in a financial year. However, TDS will not be deducted, if investor submits form 15 G/15H or accrued interest is not above prescribed limit of Rs.50,000.
If the interest payable every quarter is not claimed by an account holder, it will not earn additional interest.
| Year | Interest Rate |
|---|---|
| 02.08.2004 to 31.03.2012 | 9% |
| 01.04.2012 to 31.03.2013 | 9.3% |
| 01.04.2013 to 31.03.2015 | 9.2% |
| 01.04.2015 to 31.03.2016 | 9.3% |
| 01.04.2016 to 30.09.2016 | 8.6% |
| 01.10.2016 to 31.03.2017 | 8.5% |
| 01.04.2017 to 30.06.2017 | 8.4% |
| 01.07.2017 to 30.09.2018 | 8.3% |
| 01.10.2018 to 30.06.2019 | 8.7% |
| 01.07.2019 to 31.03.2020 | 8.6% |
| 01.04.2020 to 30.09.2022 | 7.4% |
| 01.10.2022 to 31.12.2022 | 7.6% |
| 01.01.2023 to 31.03.2023 | 8% |
| 01.04.2023 to 31.03.2024 | 8.2% |
| 01.04.2024 to 31.12.2024 | 8.2% |
Only one deposit can be made in one SCSS account which should be minimum of Rs.1000 and in multiple of Rs.1000 thereafter, with a maximum cap of Rs.30 lakh.
If any excess amount is invested is made in SCSS account, such excess fund will be refunded immediately to the investor. PO Savings account interest rate will be applicable on such excess fund from the date of deposit to the date of refund, if the SCSS account is opened in Post Office.
If the amount is below Rs.1 lakh, you are allowed to deposit the money in cash while if the deposit amount is above Rs.1 lakh, you have to make the deposit by cheque or fund transfer.
You can open SCSS account with a post office or with the public/private banks in India by depositing a minimum amount of Rs.1,000 and maximum up to Rs.30 lakh in a single lump sum instalment. Outlined below is the stepwise procedure for opening SCSS account.
Following banks offer SCSS where you can open your SCSS account easily.
| Bank of Baroda | Corporation Bank | UCO Bank |
| Bank of India | Indian Bank | Union Bank of India |
| Bank of Maharashtra | Indian Overseas Bank | IDBI Bank Ltd. |
| Canara Bank | Punjab National Bank | ICICI Bank Ltd. |
| Central Bank of India | State Bank of India |
The benefit of opening SCSS Account with Bank is that the accrued interest can be credited into your savings account directly, if you have your account with that bank. In order to open a SCSS account with an bank offering SCSS, you need to perform following steps.
Remember, that all the attached documents should have to be self attested.
After opening of SCSS Account, you will be provided with a passbook showing account number, depositor's name, photograph, the date of opening of account, address, amount deposited, dates and amount of the quarterly interest payable, maturity date, maturity amount and nomination details.
A person is allowed to open any number of SCSS Accounts but he must make sure that the total amount deposited in all the accounts in his name must not exceed the maximum investment limit allowed to him i.e. either Rs.30 lakhs or the amount received as a retirement benefit, whichever is lower.
SCSS account can be closed prematurely at any time after the date of account opening. Mentioned below the penalty levied in case of closing of the SCSS account prematurely.
| Premature Closure | Penalty |
|---|---|
| If account closed before 1 year of opening it | No penalty for premature closure of the account but no interest will be payable and if any interest paid in account shall be recovered from principle |
| If account closed after 1 year but before 2 years of opening it | 1.50% penalty will be deducted from the principal amount |
| If account closed after 2 years but before 5 years of opening it | 1% penalty will be deducted from the principal amount |
Investor can extend SCSS account for a further period for 3 years from the date of maturity. However, such extension has to be done within 1 year from the date of maturity. Extended account will earn interest at the rate prevailing on the date of maturity.
This extension is allowed only once. Upon extension, however, interest rates applicable at that quarter will be applicable.
Let's understand this with the help of an example, you deposited Rs.15 lakh under SCSS in April 2017, when the interest rate offered was 8.7%. However, when you extended it further for 3 years in April 2024, the interest rate she was eligible to earn stood at 8.2%.
Extended account can be closed after the expiry of 1 year from the date of extension of the account without any deduction.
SCSS account can be closed at any time by making an application in a prescribed form. Given below is the stepwise process which has to be performed by you to close your Senior Citizens Savings Scheme Account.
In case of the death of the account holder, the SCSS account can be closed on the request of the nominee/ legal heir, The interest rate applicable till the death of the account holder will be paid as per SCSS interest. For the days after the death of the account holder, the claimant will receive only post office savings account interest.
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