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SCSS stands for the Senior Citizens Saving Scheme. Retirement is a dreaded time in everybody’s life as your financial stability may be at risk. This particular product targets that group and is mainly curated for people who are above 60 years old. Equities, stocks, mutual funds are somewhat a risky business and retired people are not in a condition to put their money in investments which come with even the slightest of risks.
SCSS is a product which is much less in levels of risk and also significantly cuts down on payment of taxes. Not only does it offer capital protection, but also has a facility of a quarterly interest payment which may act as an additional source of income for most retirees. However, not many people know about the intricacies of this scheme. Through this article, we would try to cover all the important details about SCSS through this article.
Benefits of SCSS
Long Term
It is a good scheme for long-term benefits as it comes with a lock-in period of five years, and then can further be extended for three years at a time.
Security
These schemes are similar to government-sponsored savings schemes; hence they are much safer. Another reason to rely on SCSS is the fact that they are facilitated by banks which are certified and are also provided by post offices across India.
Tax - Benefits
This scheme is eligible under Section 80 C and provides tax exemption so that you would not need to pay additional taxes on the corpus invested.
Fixed Rate of Interest
Currently, the interest rate applicable on SCSS Deposit is 8.7% for Q3 F.Y. 2018-19. As compared to a fixed deposit or other investments, the returns are much higher for this scheme.
Lock-in Period
The lock-in period for the same is of five years, but the money can be withdrawn after a period of one year.
Transferable
An account holder has the options to make a transfer of this SCSS scheme to a different bank account or a post office of their preference. A transfer form needs to be submitted for the same. The fee for this feature is negligible.
Eligibility for Senior Citizens Savings Schemes in India
For people who want to invest in Senior Citizen Saving Scheme, the following criterions need to be met with:
Firstly, the citizen needs to be above the age of 60. This scheme is only for senior citizens who are above the age of sixty.
On the other hand, people who are above the age of 55 and have opted for VRS which is also known as Voluntary Retirement Scheme, or have chosen to undertake superannuation, can also invest in this particular scheme. However, this investment needs to be done within the first month of receiving the benefits of retirement.
Additionally, retired defense personnel who are minimum 50 years of age can also invest in this scheme.
NRIs or HUFs are not eligible for this scheme.
Senior Citizens Savings Scheme Rules
An individual can invest a maximum of fifteen lakhs (15,00,000/-), either singly or in a joint account in this particular scheme. Otherwise, one needs to invest in multiples of Rs. 1000 as a valid amount for SCSS. There is another condition. The money that one has received on retirement is the only amount that can be invested in this scheme. So, either an amount of Rs. 15 Lakhs or a lower amount of what has been received while retiring.
Another thing to remember is that an account which is opened in SCSS can be opened in two ways. One, it can be opened by putting in cash wherein an amount of lower than Rs. 1 Lakh can be put in, while on the other hand, if an amount of more than Rs. 1 Lakh needs to be invested, then a cheque needs to be submitted for the same.
SCSS Interest Rates
Investment in Senior Citizens Saving Schemes is eligible for a deduction under the Section 80C of the Income Tax Act, 1961. However, this tax benefit has a ceiling up to Rs. 1.5 lakh per annum fixed for all the investments that are tax exempt.
Tax benefits of Senior Citizens Savings Schemes
Investment in Senior Citizens Saving Schemes is eligible for a deduction under the Section 80C of the Income Tax Act, 1961. However, this tax benefit has a ceiling up to Rs. 1.5 lakh per annum fixed for all the investments that are tax exempt.
SCSS Calculator
The SCSS maturity amount and interest rate can be calculated through the medium of different online calculators available.
Senior Citizens Savings Schemes offered by different banks
There are nineteen banks which are authorized for people to open an SCSS account. You can open an account in the following banks:
ICICI Bank
Bank of Maharashtra
Central Bank of India
IDBI Bank
Indian Bank
Punjab National Bank
Canara Bank
State Bank of India
Indian Overseas Bank
Corporation Bank
Allahabad Bank
Union Bank of India
Bank of India
Andhra bank
Dena Bank
Syndicate Bank
Bank of Baroda
Vijaya Bank
UCO Bank
Senior Citizens Savings Schemes in Post Office
The local post office offers the SCSS. The generated interest amount in the SCSS scheme can be garnered through SCSS or money order.
FAQs on Senior Citizen Saving Schems
Can SCSS be extended?
Yes, the typical Senior Citizens Savings Scheme (SCSS) account tenure is 5 years and upon maturity, this can be subsequently extended for an additional 3 years.
Can senior citizen open PPF account?
Yes, there is no upper age limit for the same. Hence, any senior citizen can open a PPF account.
Can senior citizen saving scheme be extended?
Yes, the senior saving can be extended for an additional period of 3 years.
How can I invest in senior citizen savings scheme?
The SCSS account can be opened in any of the post office branches across the nation and also in any branch of the authorized banks.
How many times PPF account can be extended after normal maturity period?
A PPF account can be extended by a block of five years at a time as many times as you want.
How should I invest my retirement money?
You can put the same in a Senior Citizen Saving Scheme to ensure safety or put it in fixed deposits for yearly returns.
Is Post Office Senior Citizen Scheme interest taxable?
Yes, the taxation remains uniform for this scheme.
Is SCSS eligible for 80c?
Yes, you enjoy tax benefits available under Section 80C of the Income Tax Act, 1961.
Is senior citizen saving scheme tax-free?
Yes, the amount invested is eligible for tax deduction with a ceiling of 1.5 Lakh rupees.
What are the best savings options for senior citizens?
Senior citizens can opt for PPF and Senior Citizens Saving Scheme.
What are the benefits of senior citizens in India?
Senior citizens can avail benefits from banking, travel any many more.
What is the monthly income scheme?
The Monthly Income Scheme (MIS) is offered by the Department of Posts. It offers an interest rate of 7.3 percent per annum, payable monthly.
What is NSC bond?
NSC is National Savings Certificates which is an Indian Government Savings Bond, is used for small savings and income tax saving investments in India.
What is Section 80c?
It is mentioned in detail under the Income Tax Act 1961. In simpler terms, this section lists down all investment schemes and instruments which reduces the investor’s taxable income by the prescribed limit of Rs. 1.5 lakh.
What is senior citizen pension scheme?
It is a scheme initiated by the government for giving monthly returns to senior investors.
What is senior citizen saving scheme?
Senior Citizen Saving scheme is an investment scheme for senior citizens.
What is the deposit period of senior citizen saving scheme?
The minimum deposit period of senior citizen saving scheme is 5 years which can be extended to 3 years.
What is the income tax rate in India?
Depending on the different slabs, the income tax rate in India varies from 5% to 30%.
What is the interest rate for senior citizen in post office?
SCSS account in post office will give you an interest rate of 8.7% per annum from 1st October 2018.
When can a customer avail loan facility in PPF account?
A PPF subscriber can avail loan between the third and sixth financial year of opening the account
Can both the spouses open separate accounts?
Yes, both spouses can open separate accounts or they may open a joint account too
Any income tax exemption is admissible?
Yes, tax exemption for a ceiling of up to Rs. 1.5 Lakh is admissible for SCSS.
Is TDS applicable to this scheme?
Yes, but the tax is deducted at source only if the total interest exceeds Rs. 10,000 annually.
Has any minimum limit been prescribed for deduction of tax at source?
For net taxable income which is less than the maximum amount, then no TDS is applied. (Rs. 2,50,000 for an individual, Rs. 3,00,000 for Senior Citizens and Rs. 5,00,000 for Super Senior Citizens).
Can a person hold a Power of Attorney sign for the nominee in the nomination form?
No, a person holding a Power of Attorney cannot sign for the nominee in the nomination form.
In case of a joint account, if the first holder/depositor expires before maturity, can the account be continued?
Yes, in case of a joint account, if the first holder/depositor expires before maturity, the account will continue with the surviving holder.
Is there any fee prescribed for nomination and / or change / cancellation of nomination?
No fee is applicable for nomination and / or change / cancellation of nomination.
Can an account holder obtain loan by pledging the deposit / account under the SCSS, 2004?
No, this is not permitted since the account holder is not allowed to make withdrawals for the interest amount periodically.
Is premature withdrawal of the deposits from the accounts under the SCSS, 2004 permitted?
It can be withdrawn after a year of holding the scheme.
Are Non-resident Indians, Persons of Indian Origin and Hindu Undivided Family eligible to invest in the SCSS, 2004?
No, they are not allowed. However, if they become a NRI after opening the account, then they may continue to hold it for a year.
Can an account be transferred from one deposit office to another?
Yes, an account be transferred from one deposit office to another.
Can an SCSS account be extended?
Yes, the SCSS account can be extended for three years after the completion of five years.
What happens if an account is opened in contravention of the SCSS Rules?
In such a case, the account will be closed immediately and the money will be refunded.
Whether commission is payable to the agents under the Scheme?
The payment of commission under this scheme is not allowed anymore since 1st of December, 2011.
Why must I choose to open my SCSS account in a bank rather than a post office? Which is better?
Both platforms are just mediums of carrying out this facility, but the banking sector is better in terms of features and accessibility.
What documents must be submitted when opening up a senior citizens savings scheme account?
One also needs to submit a PAN Card or a Passport for identity proof. Even an Aadhaar card along with an address proof and 2 passport size photos will suffice.
What will happen to my account if I were to pass away?
In such a case, the SCSS account will be closed. The nominee would need to submit an application for the same.
I keep hearing the term ‘retirement benefits’, what does this mean exactly?
For rules governing the SCSS accounts, these benefits are basically payments which are credited to the depositor once s/he retires. It may include a range of monetary components.
Can I cancel or change my nomination?
Yes this facility is available.
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