Senior Citizen Saving Scheme (SCSS) is one of the best and safest investment option for senior citizens. The scheme is launched by government of India in 2004, so some times it is called Senior Citizen Saving Scheme 2004. Money invested under Senior Citizen Saving Scheme (SCSS) is providing tax benefit under Income Tax section of 80-C up to 1,50,000 rupees. This scheme has maturity tenure of five years.
In this article, we'll review different aspects of this scheme such as eligibility, where to open Senior Citizen Saving Scheme (SCSS) account, rate of interest, etc.
What is rate of interest Senior Citizen Saving Scheme (SCSS) Provides
Senior Citizen Saving Scheme (SCSS) provides rate of interest of 8.6% per anumm. Senior Citizen Saving Scheme (SCSS) internally invest in equity market, so that depositors can earn high interest rates. Each financial year interest rates of Senior Citizen Saving Scheme (SCSS) is changed, but once account is opened, same interest rate is fixed for 5 years.
Interest earned can be withdrawn on quarterly basic which is on first business day of months April, July, October, January. Quarterly interest is only paid on these days irrespective of when account is opened.
One thing to note is that, if one chooses to quarterly payment of interest, one will loose compounding of interest for that money.
TDS is applicable on interest earned above 10000 rupees per annum. TDS deducted is 10% of interest earned, and if no pan no is provided then this amount will be 20% of interest earned. Let's take an example for more understanding. Mr.X has invested in Senior Citizen Saving Scheme (SCSS), and based on his investment he is earning 5000 rupees quarterly interest. If we calculate annually interest earned then this amount will be 5000 multiplied by 4 which is 20000 rupees, which is clearly more than 10000 rupees. So total TDS deducted is 10% of 20000 rupees which is 2000 rupees. If Mr.X haven't provided pan card, then this deduction will be 20% of 20000 which will be 4000 rupees.
Who can invest in Senior Citizen Saving Scheme (SCSS) account?
Any individual senior citizen (Age more than or greater than 60 years) can open Senior Citizen Saving Scheme (SCSS) account. One can open individual account or he can jointly open account with spouse.
However, individual having age between 55 years and 60 years, who has retired under a VRS (Voluntary Retirement Scheme) or Special Voluntary Retirement Scheme (SVRS) can open Senior Citizen Saving Scheme (SCSS) account within three months of having retirement benefits. In this case amount can not exceed the amount of retirement benefits.
There is no age limit for retired personnel of defence services. In this case it is mandatory that they fulfil other specified conditions.
Now, let's see who can not open Senior Citizen Saving Scheme (SCSS) account? Non-resident indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open this account.
How much money one can invest in Senior Citizen Saving Scheme (SCSS)?
One can invest minimum amount of 1000 rupees, and maximum up to 15 lac rupees. One can only invest in multiples of 1000 rupees.
You can invest money by cash and cheque too. However if you are depositing more than 1 lac rupees, you have to pay by cheque only.
Where one can open Senior Citizen Saving Scheme (SCSS)?
One can open Senior Citizen Saving Scheme (SCSS) account in post office and bank too. Currently 25 Banks provide opening of Senior Citizen Saving Scheme (SCSS) account, which are as following.
- Allahabad Bank
- Andhra bank
- State Bank of India
- State Bank of Mysore
- State Bank of Bikaner and Jaipur
- State Bank of Patiala
- State Bank of Travancore
- State Bank of Hyderabad
- Bank of Maharashtra
- Bank of Baroda
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Vijaya Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- United Bank of India
- ICICI Bank Ltd
At the time of opening Senior Citizen Saving Scheme (SCSS) below documents are needed.
- Documents which can confirm individual's identity and his age, such as Passport, Birth Certificate, Voter's ID, Pan Card, Senior Citizen Card etc.
Useful information regarding Senior Citizen Saving Scheme (SCSS)
- Individual can open more than one Senior Citizen Saving Scheme (SCSS) account opened for his own or joint account with spouse. However all money invested in all these accounts must below maximum investment limit of 15 lacs.
- Nomination facility is available at the time of opening Senior Citizen Saving Scheme (SCSS) account. One can also add nominee after opening of account.
- One can withdraw money prematurely, but for this he has to wait for at-least one year. For initial one year one can not withdraw all money and close account. After one year of deposit, if one closes account prematurely he will loose amount equal to 1.5% of deposit, and one closes account prematurely after 2 year one will loose 1% of deposit. It we take example, Mr X has invested 1lac in Senior Citizen Saving Scheme (SCSS) account on 1 April 2016. Now his account will be matured after five year which is 1 April 2021. For the first year of opening account Mr.X can not close account and withdraw all money, i.e. till 1 April 2017 Mr.X can not close this account. Between 1st April 2017 to 1st April 2018 if Mr.X want to close account and withdraw money, he'll loose 1.5% of his deposit which will be around 1500 rupees and thus he'll get 98500 rupees. If between 1st April 2018 to 1st April 2021 Mr.X want to close account and prematurely withdraw money he'll loose 1% of deposit which is 1000 rupees and thus he'll get rupees 99000 back.
- On maturity account can be extended for further three years. However this can be done only within one year of maturity and one has to give application in prescribed format. In these cases account can be closed at any time after one year of extension and one does not have any deduction.
I hope this article is helpful to you. Thank you.