Senior Citizens Savings Scheme was especially planned keeping in mind the unique needs of senior citizens in India, that is, individuals of at least 60 years of age. However, individuals between 55 years and 60 years who have retired or have opted for Voluntary Retirement Scheme (VRS) are also eligible to apply for Senior Citizens Savings Scheme, but only when the savings scheme account has been issued within one month of the receipt of their retirement benefits.
Investing in SCSS is a good opportunity for senior citizens above 60 years to make money. This is an effective and long-term saving option which offers security and added features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available through certified banks and post offices across India.
In order to avail this saving scheme for senior citizens, resident Indians have to meet the following key conditions:
a. The scheme is available to any resident individual aged 60 years and above.
b. Also individuals who have attained 55 years but are less than sixty years old are also eligible to apply for the senior citizens savings scheme provided they have retired under applicable superannuation or VRS rules. In such cases, the account should be open within 1 month of the receipt of retirement benefits.
c. The scheme is also available for the retired defense personnel irrespective of above mentioned age limits subject to fulfillment of other terms & conditions.
d. Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs) are not entitled to open a Senior Citizens Savings Scheme account.
e. Also hindu Undivided Family members are not entitled to open the account under these rules.
As a savings and investment product for the 60+ year olds, the Senior Citizens Savings Scheme Account is a heaven-sent. Boasting of one of the best interest rates for any government sponsored investment product in India, the senior citizens savings scheme is customized to suit the specific requirements of an investment minded senior citizen. The salient features and benefits of this option are as follows-
1. Easily Available- Fill up a simple application form at your local bank or post office and you are set.
2. Reliability- This is a Government of India sponsored investment product and comes with all the security and assurance associated with that tag.
3. Multiple Accounts- A single applicant can open multiple Senior Citizens Savings Scheme (SCSS) accounts, either individually or with a joint investor (must be the spouse of the primary investor).
4. High Returns- At 8.6% per annum, the returns on your Senior Citizens Savings Scheme (SCSS) accounts are very impressive.
5. Flexible Tenure- The account has a tenure of 5 years but can be stretched to add another 3 years. Thus, your senior citizens savings scheme serves as either a medium range investment or a long term plan.
6. Save Tax- As per the dictates of Section 80C, Income Tax Act, 1961, the TDS can be saved.
7. Choose Your Investment- Only one investment is allowed per Senior Citizens Savings Scheme (SCSS) account. This amount must be a multiple of Rs.1000 and not exceed Rs.15 lakhs. Thus, the SCSS investment is immensely affordable and scalable.
8. Premature Termination- In extreme financial duress, your Senior Citizens Savings Scheme (SCSS) account can be closed and the money accessed. While this option only applies after the account has existed for a minimum of one year, it still is a ready source of funds that can be called to help at a moment’s notice. However, after 1 year, a penalty of 1.5% of the funds in the SCSS account will be deducted while the same is 1% after the completion of 2 years.
9. Minimum Documentation- KYC documents that prove your age. The documents that can be submitted to substantiate this are- Passport/ Birth Certificate/ Voter’s ID/ Senior Citizen Card/ PAN, etc.
Following is the list of the documents required for investing in the scheme:
(a) Duly filled application form, available at the post office or bank
(b) Know Your Customer (KYC) form
(c) Photographs of the applicant/s
(d) Permanent Account Number (PAN)
(f) Address proof
(g) Age proof
(h) 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.
(i) Proof of date of disbursal of the retirement benefits
The SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:
1. Form A has to be filled for opening an Senior Citizens Savings Scheme (SCSS) Account.
2. Identity proof like PAN card, Passport to be presented.
3. Address proof such as Telephone bill, Aadhar card is mandatory.
4. Document for proof of age is required. This could be in the form of a Passport, Senior Citizen Card, a Birth certificate issued by the Corporation or Registrar of Births and Deaths, Voter ID card, PAN card etc.
5. 2 Passport size photographs.
All the above documents must be self-attested.
The tenure of this scheme is 5 years with the option to extend it for 3 more years. In order to extend the scheme for another 3 years after the completion of the 5-year tenure, the investor is required to submit the duly filled Form B for the extension of the scheme. Only one extension is allowed, and such extended accounts can be closed after one year of extension without any penalty.
Premature withdrawals are allowed but only after a year of opening an account. If the closure of the account takes place after one year but before the end of 2 years, 1.5% of the deposit is deducted in the form of pre-mature withdrawal charges. Upon closure of the account after 2 years an amount equal to 1% of the deposit shall be deducted as charges.
In the event of the death of the depositor, no charges or penalty is levied for the premature closure of the account.
If the depositor wishes to close the account after the completion of five years and receive the maturity amount then he needs to submit the duly filled ‘Closure Form’, along with the passbook.
To apply for the extension of the scheme for another three years after it has completed its mandated five-year tenure; the investor must submit the duly filled form of the extension of the scheme.
Investments made in a Senior Citizen Savings Scheme account qualify for income tax deduction benefit under Section 80C of the Income Tax Act, 1961.
Interest on SCSS is fully taxable. In case the interest amount earned is more than Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.
1. Interest rate of 9.3% p.a, payable on any of the following dates in year- 31st March, 30th June, 30th Sept and 31st December.
2. The tenure of a SCSS portfolio is 5 years.
3. The applicant can make only one deposit into the account. This amount should be in multiples of Rs.1,000 and must not exceed a maximum of Rs.15 lakhs.
4. The account can be transferred from one post office/bank to another.
5. The SCSS account can be closed prematurely provided the applicant shells out 1.5% of the deposit amount in the first year and 1.0% of the deposit amount in the second year.
6. Post the maturity of the account, the tenure can be extended for a further 3 years. After completing 1 year of this extension period, the account can be prematurely closed without any deductions.
7. TDS is deducted at source on the accumulated interest if the latter exceeds Rs.10,000 p.a.
8. SCSS accounts save tax as per the Section 80C of the Income Tax Act, 1961.
A structured approach is crucial for success and peace of mind. When looking to enrol with the senior citizens savings scheme, ensure that you are well aware of the following conditions-
1. You must be 60 years or above to enroll In certain conditions, individuals in the age group of 55 years and above can also apply successfully.
2. Only one deposit is permitted per SCSS account. The deposit must be in multiples of Rs.1,000 with a maximum permissible investment of Rs.15 lakhs.
3. Interest on the money accumulated in the SCSS account is payable on 31st March/30th September/31st December in the first instance and thereafter interest is payable as of 31st March, 30th June, 30th September and 31st December of each year.
4. Maximum tenure of this saving scheme is 5 years. However, after maturity, the tenure can be extended for a further 3 years, pending the application for the same in the designated format.
5. An applicant can operate multiple accounts simultaneously, individually or with a joint account holder who is the spouse. However, the account holder must ensure that all requirements pertaining to the validity and operation of these accounts must be met, including maintaining the minimum balance.
6. It must be noted that cash is an acceptable medium of investment if the initial amount is less that Rs.1 lakh. If this amount is larger than Rs.1 lakh then a cheque must be used.
7. Account can be easily and quickly transferred from one bank/post office onto another.
8. SCSS provides nomination facility that can be availed at the time of opening the account or after said account has been in operation for a set duration of time.
9. If the depositor chooses to terminate the account prematurely then the following penalty applies- 1.5% of deposit amount after one year and 1% of the deposit amount after two years. Kindly note that premature closure of the senior citizens savings scheme account is only possible after the account has been in operation for a minimum of one year.
10. In case of joint accounts, the primary account holder is deemed the investor while the second stakeholder must be the primary account holder’s spouse.
11. Tax is deducted at source if the accumulated interest on the invested amount exceeds Rs.10,000 per annum.
12. Accumulated interest is deposited onto a designated savings account, maintained at the bank/post office, wherein the senior citizens savings scheme is maintained. These deposits are actioned through the auto credit facility via money orders or PDCs.
13. Investments in the SCSS account saves tax as per the provisions laid out in Section 80C of the Income Tax Act, 1961.
The following is a list of top public sector banks offering the facility of opening a Senior Citizen’s Savings Scheme account –
1. Allahabad Bank
2. Andhra bank
3. State Bank of India
4. Bank of Maharashtra
5. Bank of Baroda
6. Bank of India
7. Corporation Bank
8. Canara Bank
9. Central Bank of India
10. Dena Bank
11. Syndicate Bank
12. UCO Bank
13. Union Bank of India
14. Vijaya Bank
15. IDBI Bank
16. Indian Bank
17. Indian Overseas Bank
18. Punjab National Bank
19. United Bank of India