Senior citizen savings scheme (SCSS), as name suggests it is a saving scheme especially designed by the Government of India for senior citizens. It offers a safe investment alternative with high interest rate to senior citizens. Lets have a look on the features of SCSS scheme and analyze whether you should invest in it or not.
- Only an Indian resident individual is eligible to open a SCSS account. Non-Resident Indians (NRIs), Persons Of Indian Origin (PIO) and Hindu Undivided Families (HUF) are not allowed to open SCSS account.
- An Indian resident citizen who is of 60 years of age or above is eligible to invest under SCSS scheme.
- An Indian resident citizen who have retired on superannuation or under voluntary retirement scheme (VRS) is eligible for SCSS scheme at the age of 55 years or above.
- Defense Personnel (excluding Civilian Defense Employees), retired on superannuation, shall be eligible to subscribe irrespective of the age limit.
- An individual is allowed to open a joint account but only with his/her spouse. There is no age limit applicable for the joint account holder(spouse). In case of the death of the primary account holder, the spouse can continue the account.
Where To Invest
The senior citizen saving scheme (SCSS) account can be opened at any post office across the country. Other than post office doing saving bank work, some designated branches of nationalized banks also offers the facility to SCSS scheme.
*ICICI Bank is the only private bank where an SCSS account can be opened.
Source Of Investment Money
For senior citizens (over 60 years) can invest money obtained from any source without any restriction but for people between the age of 55 to 60, the source of income invested in the SCSS has to come from retirement benefits only.
Maturity Period / Investment Tenure
Money invested under SCSS scheme gets locked for the period of 1 years from the date of opening of the account. Which means no withdrawal is allowed before the expiry of 1 years. Maturity period is 5 years which is extendable for 3 more years on the choice of account holder.
Premature / Early Withdrawal possibility is available but to the account holders having at least one year old account. Premature withdrawal also attracts penalty, which is 1.5% of deposit amount for 1 to 2 years old account and 1% of deposit amount for more than 2 years old account.
Rate Of Interest
The rate of interest on SCSS investment is @9% per annum compounded quarterly. Which means is computed and paid out every three months.
On premature encashment, the interest amount is calculated at POSB rate.
Minimum And Maximum Limit Of Investment
The minimum amount of investment required to open a SCSS account is Rs 1000 which can go upto Rs 15 Lakhs i.e the maximum amount of investment allowed to an individual. Any amount between Rs. 1,000 and Rs. 15 Lakhs can be invested in multiples of Rs. 1,000.
The investment amount invested under SCSS scheme qualifies for deduction under section 80C of the income tax act.
The interest earned on investment under SCSS scheme is fully taxable.
Tax Deducted At Source (TDS) is applicable to the scheme as interest payment is not exempt from tax. You can provide form 15G or 15H if you are sure that you will not be required to pay tax in that particular year i.e your total income is going to be less than the permissible limits for the financial year. So that no tax is deducted at source.
Compare Senior Citizen Savings Scheme (SCSS) With Other Options For Senior Citizens?
Here we have jot down few points to help you analyzing whether you should invest in SCSS scheme or not::-
Other options like Fixed deposit can be considered as an option for investment by senior citizens in the current scenario.
|Point Of Difference||Fixed Deposit
(For Senior Citizens)
|Senior Citizen Saving Scheme (SCSS)|
|Qualifying Age||60 Years||60 Years ( 55 for VRS or Retired)|
|Maturity Period||As per Choice||5Years (Extendable by 3 years)|
|Returns||10 to 11%||9%|
|Premature Withdrawal||1%||1.5% For 1 to 2 Years
1% after 2 Years