Senior Citizen Savings Scheme: A Government Initiative To Help The Senior Citizens Of India
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. You can apply for the scheme at any bank or post office. It has a maturity period of 5 years which can be extended to 8 years. The current interest rate for this scheme is 7.4% p.a.
It’s been proposed to exempt senior citizens from filing ITR returns provided the pension and its subsequent interest income are the only income source. However, Section 194P, that has been implemented recently, has enforced banks to deduct tax on senior citizens aged 75 years and above provided they have a pension and interest income from the bank.
What is SCSS?
SCSS or Senior Citizen Savings Scheme is a Government-backed initiative that aims to monetarily benefit the senior citizens of India. Individuals ages 60 years and above can invest in this scheme to get 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.
What is an SCSS Account and How to Open it?
If you are a senior citizen, you would need to open an SCSS account to avail of scheme benefits. You can open this account either with a bank or post office. Senior citizens can invest individually or jointly in a lump sum in the scheme to enjoy regular income after retirement. You can claim tax benefits too on your investment in the Senior Citizen Savings Scheme.
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How to Download Senior Citizen Saving Scheme Form
You could get an SCSS form by visiting your nearest bank or post office. Thanks to modern banking, you could do the same offline too. Just go to your bank’s official website, search for “Senior Citizen Savings Scheme” and download the SCSS form online.
Senior Citizen Savings Scheme Features
The following are the prominent features of SCSS:
- The maturity period for this scheme 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 Rs. 1,000 and a maximum of Rs. 15 lakh. Note that you can pay a deposit of Rs. 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.
- You have the option to vary or cancel your nomination.
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 | Usually ranges from 7 days to 10 years |
| Interest rate | 7.4% | Usually ranges from 6%- 7.5% |
| Premature withdrawal | Available any time after opening an account, but a penalty is applicable | Not available |
| Tax benefits (on investment) | Available | Available |
| Tax benefits (on return ) | Taxable | Taxable |
However, FD interest rates have fallen over the years. So, keep other external factors in mind before choosing between the two, like premature withdrawal facility, interest rates, etc.,. The best piece of advice would be to have both the accounts if possible. Both SCSS and FDs offer guaranteed returns with minimal risk.
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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.
- Risk-free returns: As the government backs this scheme, it is already a safe scheme with guaranteed returns.
- Tax deduction: This scheme also comes under Section 80C of the Income Tax Act, making the maximum investment amount of up to Rs. 1.5 lakh tax-deductible in a financial year.
- Interest rate: SCSS offers an interest rate of 7.4%, which is higher compared to other savings schemes like fixed deposits or savings accounts.
- Quarterly interest pay-out: For the SCSS account holders, the interest is paid quarterly in the months of April, July, October and January.
SCSS Interest Rates
To have a better understanding of the SCSS interest rate, here is a brief rundown of the interest rates over the past few years.
| Time Period (financial year) | Rate of Interest |
| Jan- Mar (FY 2021-22) | 7.4 |
| Oct-Dec (FY 2021-22) | 7.4 |
| Jul-Sep (FY 2021-22) | 7.4 |
| April-June (FY 2021-22) | 7.4 |
| Jan-March (FY 2020-21) | 7.4 |
| Oct-Dec (FY 2020-21) | 7.4 |
| July-Sep (FY 2020-21) | 7.4 |
| April-June (FY 2020-21) | 7.4 |
| Jan-March (FY 2019-20) | 8.6 |
| Oct-Dec (FY 2019-20) | 8.6 |
| July-Sep (FY 2019-20) | 8.6 |
| Apr-Jun (FY 2019-20) | 8.7 |
| Jan-March (FY 2018-19) | 8.7 |
| Oct-Dec (FY 2018-19) | 8.7 |
| July-Sep (FY 2018-19) | 8.3 |
| Apr-June (FY 2018-19) | 8.3 |
| Jan-March (FY 2017-18) | 8.3 |
| Oct-Dec (FY 2017-18) | 8.3 |
| July-Sep (FY 2017-18) | 8.3 |
| Apr-Jun (FY 2017-18) | 8.4 |
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.
- A retired defence person above the age of 50 years and less than 60 years of age can avail the benefits of this scheme.
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Documents Required for SCSS
You will need the following documents while applying for the Senior Citizen Savings Scheme.
- Form A or application form
- Two passport size photos
- Identity proof
- Address proof
- Age proof
How to Open SCSS Account
You can open an SCSS account in any post office or bank. The process to open an account is given below:
Step 1: Go to the closest post office or bank branch.
Step 2: Submit ‘Form A’ and the KYC documents.
Step 3: If the deposit amount is under Rs. 1 lakh, then you can pay in cash. Otherwise, the deposit amount should be paid by cheque.
List of Banks That Offer SCSS
The following banks 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
Also Read: Health Insurance Plans For Senior Citizens: How To Claim, Best Plans And Benefits
Final Word
Senior Citizens Savings Scheme offers guaranteed returns and a steady income for the elderly after retirement. Therefore, to have financial stability in future, one can consider investing in this scheme.
FAQs
Ans: 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.
Ans: 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.
Ans: 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.
Ans: 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.
Ans: Individuals can only open a joint account with their spouse under SCSS. However, there is no age limit for the second account holder.
Ans: 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.
Ans: 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.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
