Senior Citizen Savings Scheme (SCSS) – Interest Rate 2023
The Senior Citizen Savings Scheme is a government savings scheme launched for the senior citizens of India aged 60 or above. This scheme is one of the most preferable options for earning a steady income post-retirement. Currently, the SCSS interest rate stands at 8.2%.
What is SCSS (Senior Citizen Savings Scheme)?
SCSS or Senior Citizen Savings Scheme is a government-backed investment instrument that aims to monetarily benefit the senior citizens of India. Individuals aged 60 years and above can invest in this scheme to get assured regular monthly income and tax benefits post retirement. You can invest in a lump sum in this scheme and enjoy the interest on the invested amount post-maturity.
Here are some of the most important features of SCSS:
| Investor Eligibility | 1. Indian residents above the age of 60 2. Retired individuals above 55 (voluntary and special voluntary retirement scheme) 3. Retired individuals above 50 (defence personnel) |
| Investment Range | ₹1,000 to ₹30 lakh |
| Account Opened In | Post offices and branches of authorised banks |
| Current SCSS Interest Rate | 8.2% p.a. (April-June, 2023) |
| Tenure | 5 years, once extendable to 3 years |
| Major Benefits | 1. Assured Returns 2. Returns typically above prevailing FD rates 3. Tax deduction benefits up to ₹1.5 lakh under Section 80C |
| Premature Withdrawal | Allowed, with the following penalties: 1. No interest if SCSS account closed within 1 yr 2. 1.5% penalty if account closed between 1 year and 2 years 3. 1% penalty if account closed between 2 years and 5 years |
Features of Senior Citizen Savings Scheme (SCSS)
The following are the prominent features of SCSS:
- The maturity period for SCSS is 5 years. However, if you want, you can extend the duration by another 3 years by submitting an application form within one year of maturity.
- You can open and operate more than one account by yourself or open a joint account with your spouse only. In the case of a joint account, the prime depositor will be the investor of the joint account.
- You can make a single deposit with a minimum limit of ₹1,000 and a maximum of ₹30 lakh. Note that you can pay a deposit of ₹1 lakh by cash, but for more than that, you have to deposit by cheque.
- Nomination and transfer of an account are allowed for SCSS.
- You are allowed to make a premature withdrawal after 1 year of opening the account. However, a charge of 1% and 1.5% is levied on the available amount after 1 and 2 years, respectively.
- You can nominate more than one person for your SCSS account.
- You have the option to vary or cancel your nomination.
- The government revises SCSS interest rates on quarterly basis and deposits the interest on the first day of every April, July, October and January.
- SCSS interest rates are typically higher than prevailing FD rates for senior citizens.
- SCSS investments qualify for tax deduction benefits up to ₹1,5 lakh under Section 80C of the Income Tax Act.
- SCSS returns are taxable as per the investor’s tax slab. TDS is also applicable if the interest earned exceeds ₹50,000 in a financial year.
Also Read
SCSS Interest Rates
The current interest rate for Senior Citizen Savings Scheme is 8.2% p.a. This rate is applicable for the quarter April to June, 2023.
Benefits of Investing in SCSS
If you are thinking about investing in SCSS, the following list of benefits will help you know why this scheme could be a suitable option for you.
1. Risk-free Returns
As the government backs this scheme, it is already a safe scheme with guaranteed returns making it a great option for senior citizens.
2. Tax Deduction
This scheme also comes under Section 80C of the Income Tax Act, making the maximum investment amount of up to ₹1.5 lakh tax-deductible in a financial year.
3. Interest Rate
The current Senior Citizen Savings Scheme interest rate is 8.2%, which could be higher than many other bank fixed deposit rates.
4. Quarterly Interest Pay-out
For the SCSS account holders, the interest is paid quarterly in the months of April, July, October and January.
5. High Liquidity
Although Senior Citizen Savings Scheme comes with a maturity period of 5 years, the investments could be withdrawn after paying applicable penalties.
Calculation of Interest Under the Senior Citizen Savings Scheme
Let’s assume:
- One-time lump sum SCSS investment: ₹15,00,000
- Rate of interest: 8.2%
- Tenure: 5 years
Assuming the same interest rate throughout the tenure of 5 years, here are the following calculations:
- Total investment: ₹15,00,000
- Quarterly interest: ₹30,000
- Total interest earned: ₹30,000x4x5 = ₹6,00,000
- Total returns: ₹15,00,000+₹6,00,000 = ₹21,00,000
Eligibility for SCSS
As this is a scheme only for senior citizens, SCSS has the following eligibility criteria:
- One has to be a resident of India and at least 60 years of age.
- A retired person within the age group of 55-60 years who has taken voluntary retirement can invest in SCSS.
- Retired defence personnel above the age of 50 years and less than 60 years of age can avail the benefits of this scheme.
Documents Required for SCSS
- SCSS form (available online or at any post office or at the branch of an authorised bank)
- Two passport-size photos
- Identity proof like Aadhaar, PAN, Voter’s ID, Passport, etc.
- Address proof: Aadhaar, PAN, Voter’s ID, Passport, etc.
- Age proof
Where to Open an SCSS Account?
An SCSS account can be opened at a post office or at the branches of an authorised public or private bank.
How to Open an SCSS Account Online?
A Senior Citizen Savings Scheme account cannot be opened online. Interested investors should visit a post office or a branch of an authorised bank to do the same. They should fill out and submit the SCSS form along with KYC documents and two passport-size photographs. They can deposit up to ₹1 lakh in their SCSS account in cash; however, they need to give a cheque for a higher deposit amount.
How to Open SCSS Account in a Bank Offline?
- Step 1
Visit the nearest branch of any of the authorised public or private banks
- Step 2
Fill the SCSS form, along with the required KYC documents and two passport size photographs.
- Step 3
Deposit the principal amount at the bank branch (in cash if amount is less than ₹1 lakh, otherwise through a cheque)
How to Download Senior Citizen Saving Scheme Form?
The authorised banks including State Bank of India, Union Bank of India, Punjab National Bank, ICICI Bank, Bank of Baroda, etc.
You can also download the SCSS form online by clicking on the link:
How to Fill the Post Office SCSS Application Form?
- Step 1: Enter the branch name of the post office on the top left corner.
- Step 2: Enter the post office savings account number.
- Step 3: Enter the post office branch address under the ‘To’ section.
- Step 4: Paste the SCSS account holder’s photograph.
- Step 5: Write account holder’s name in the first blank space and tick on ‘SCSS’ option.
- Step 6: If you also want to open a savings account with the post office, select appropriate option under the ‘Additional Facilities Available’ section.
- Step 7: Select the applicable option under self, minor through guardian, or person of unsound mind through guardian.
- Step 8: Select appropriate SCSS account type – single, either or survivor, or all or survivor.
- Step 9: Under field number 2, enter the deposit amount in figures and words. Write the cheque number and date if deposit is made through a cheque.
- Step 10: Enter the personal details of account holder(s).
- Step 11: Tick the appropriate options where you have provided the requested document proofs at the end of the table.
- Step 12: Tick the SCSS declaration and enter the details.
- Step 13: Put signatures of all the account holders at the end of the Page 1 and in Page 2.
- Step 14: Mention the nominee for the account and his/her relevant details.
List of Banks That Offer SCSS
- Union Bank of India
- UCO Bank
- ICICI Bank
- Indian Bank
- Vijaya Bank
- Syndicate Bank
- IDBI Bank
- Bank of India
- Bank of Baroda
- Punjab National Bank
- Indian Overseas Bank
- Central Bank of India
- Dena Bank
- State Bank of India
- Bank of Maharashtra
- Corporation Bank
- Canara Bank
- Allahabad Bank
- Andhra Bank
Tax Implications of Senior Citizen Savings Scheme
SCSS investments qualify for a tax deduction benefit of up to ₹1.5 lakh in a financial year under Section 80C of the Income Tax Act, 1961. However, since it’s a one-time lump sum investment, this tax exemption can be enjoyed only once during the year of SCSS account opening.
The SCSS interest income, however, is taxable as per the investor’s tax slab rate. Also, TDS would apply if the interest income exceeds ₹50,000 in a year.
Premature Withdrawal of SCSS
Investors could liquidate their SCSS account at any time before the maturity period of 5 years. However, a penalty would be imposed depending on the timing of the premature withdrawal, as follows:
- No interest if the SCSS account closed within 1 year from account opening
- 1.5% penalty if the SCSS account is closed between 1 and 2 years of account opening
- 1% penalty if the SCSS account closed between 2 and 5 years
SCSS vs Fixed Deposits: Which One is Better for You?
The following table will help you understand the basic differences between SCSS and fixed deposits. This will help you choose the option that is best suited for you.
| Attributes | Senior Citizen Savings Scheme | Fixed Deposit |
| Maturity period | 5 years | Ranges from 7 days to 10 years |
| SCSS Interest rate | 8.2% (April-June, 2023) | 3.5%-8% p.a. For senior citizens depending on bank, tenure and amount |
| Premature withdrawal | Allowed, with applicable penalties | Allowed, with applicable penalties. Not allowed for tax-saver FDs |
| Tax deduction benefits (on investment) | Up to ₹1.5L u/s 80C | Up to ₹1.5L u/s 80C only for tax-saver FDs |
| Tax Benefits (on return ) | Taxable | Taxable |
Senior Citizen Savings Scheme usually offers higher rates than prevailing FD rates for senior citizen depositors, despite many banks offering comparable FD rates in recent months. Both are liquid investments as both allow premature withdrawal after paying the applicable penalty. However, tax deduction benefits are only available on SCSS and tax-saver FDs but not on normal FDs. Also, SCSS does not allow deposits higher than ₹30 lakh; if you want to invest a higher amount, FDs could be a better low-risk investment option.
You can, however, consider investing in both for assured returns at minimal risk.
Disadvantages of Senior Citizen Savings Scheme
- Although SCSS returns could be higher than prevailing FD rates, the returns could still be lower than market-linked investments like equities and even NPS, although at much higher levels of risks
- SCSS returns are fully taxable as per the investor’s tax slab rate
- Although premature withdrawals are allowed in SCSS accounts, investors would not earn any interest if the account is closed within 1 year. Besides, a penalty of up to 1.5% would apply if the account is preclosed after the end of 1 year.
Final Word
Senior Citizen Savings Scheme offers guaranteed returns and a steady income for the elderly after retirement usually at rates higher than prevailing FD rates. Therefore, to have financial stability in the future, one can consider investing in this scheme. However, investors should keep in mind that despite 80C tax deduction benefits on the year of account opening, SCSS returns are fully taxable as per the investor’s tax slab.
That said, if you’re looking to diversify your investments, you may consider investing in a range of mutual funds from Navi Mutual Fund across market caps, asset classes and geographies. Investments starting at just ₹10!
FAQs
You have to link your SCSS account with your post office savings or bank account before March 31 2022, as announced by the government. This has to be done because the interest on your SCSS account will be credited directly to your bank or PO savings account.
There is no fixed date for the interest rate to change on SCSS. However, this decision is taken by the Monetary Policy Committee via a meeting which is held 4 times a year at an interval of 3 months. The first meeting is generally held in the first quarter of every financial year.
You can open an SCSS account with SBI in a few simple steps. However, the very condition for having more than one SCSS account is the total deposit amount of all the accounts taken together should not exceed Rs.15 lakh.
In the event of the sudden demise of the account holder, the available amount at the time of the unfortunate event is transferred to the legal heir or nominee. Therefore, the nominee or the legal heir can apply for transfer along with the account holder’s death certificate.
Individuals can only open a joint account with their spouse under SCSS. However, there is no age limit for the second account holder.
The maturity period of SCSS is five years. Post maturity, individuals can apply for an extension of another three years but only within the year of maturity.
As of now, there are no such options. You have to visit a bank or post office, submit the form and issue the cheque to open an SCSS account. However, you could choose to download the form online.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
