In an endeavor to make the life of retiree/senior citizens more independent and self-governing, the Department of Post offers Senior Citizen Savings Scheme (SCSS). As the name depicts, this scheme is solely for senior citizens who are over and above 60 years of age and for retirees on superannuation or on VRS. Launched way back, the Senior Citizen Savings Scheme offers every possible benefit that an investor looks for: Fixed returns on investment, immunity of capital, regular payoffs and security of your money.
Features of Senior Citizens Savings Scheme
- Eligibility: The minimum age to invest in SCSS is 60 years. However, individuals who are 55 years of age can also invest in this scheme if they have chosen retirement through Voluntarily Retirement Scheme (VRS). But it should also be noted that such retirees must open an SCSS account within a month of receiving their retirement benefits. The amount invested in the SCSS should not go beyond the amount an individual has received as a retirement corpus. Depositors who fall under the pre-requisites of this scheme can open a Senior Citizens Savings Account at any post office or at any nominated branch of 12 public sector banks and ICICI bank.
- Investment limit: Under the Senior Citizen Savings Scheme, an investor can deposit not more than ₹ 15 lakh and the investment here can be made in multiples of ₹ 1,000/-. Also, the government allows retirees to open more than one account under the SCSS scheme both single or jointly with their spouse. However, one should note that the maximum investment limit is of ₹ 15 lakh.
- Interest rate: – The interest rate applicable on SCSS is 8.3% (w.e.f 1.07.2017) payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December. The biggest advantage of investing in SCSS is that the scheme yields assured returns that serves as a regular income for the retirees and senior citizens.
- Interest amount and the frequency of compounding: The interest rate on the SCSS is compounded and paid off on a quarterly basis on scheduled dates that are mostly the first working day of January, April, July, and October every year. This has nothing to do with your investment date. With this scheme, you are sure to get an interest every single quarter. The quarterly interest is very beneficial for retirees as it eill provide them a steady income for their day to day expenditure.
- Investment term and foreclosure: The investment tenure of SCSS is 5 years which can be extended to another 3 years after the successful completion of the investment term. In case of any sudden financial need, an investor can foreclose the account after one year. However, this may attract a deduction, which will be 1.5% of the total amount. As per the rules set by the government, if an individual forecloses the SCSS account in less than 2 years, the penalty is 1.5%, and after two years, the fine is 1% of the total amount. There are no charges applicable on the foreclosure of the account after the successful completion of mandatory 5 years.
- Tax Exemption: Investing in Senior Citizens Savings Scheme would also earn you several tax benefits u/s 80c of Income Tax Act, 1961. In a fiscal year, investors can claim a maximum deduction of ₹5 lakh u/s 80c of Income Tax Act. To claim more deductions from the SCSS account, investors cannot make further investments here.
Benefits of Senior Citizen Savings Scheme
The Senior Citizens Saving Scheme, designated for persons above 60 years of age offers good many benefits to the investors. Some prominent ones are listed below:-
- You can easily apply for this scheme by simply filling out its application form at your local bank or post office nearby.
- As the Department of Post is managed by the Indian government, this scheme is highly reliable and trustable.
- SCSS give depositors the privilege to open more than one account either as a single applicant or jointly with their spouse (husband/wife).
- The profit on your SCSS account is cosmological as it can help you earn annual revenue of whopping 8.6%.
- The investment term of the SCSS is 5 years which can be extended to another 3 years which can easily help you serve your long-term and mid-term goals.
- Under session 80c of the I-T act, you can save a good amount of tax and TDS.
- SCSS requires just your proof of age as KYC documentation. For this you can submit either of the following – Passport/Senior Citizen Card/PAN Card/Voter ID Card/Birth Certificate, etc.
- The applicable interest rate on SCSS is 8.3%per annum.
- Investment in SCSS can be made through cash (if the amount is less than 1 lakh) and through cheque or DD (if the amount is more than 1 lakh).
- You can make multiple nominees for your SCSS account if needed.
Conclusion: Senior Citizens Savings Scheme comes as a boon for every senior citizen who wants to secure their retirement phase. This savings scheme empowers the senior citizens of our society and gives them wings to live their lives in the best manner possible. Since the interest in the Senior Citizen Savings Scheme is paid off every single quarter, it serves as a quarterly income for the investors and helps them in their day-to-day living.