Looking for a safe investment option for your retirement? Consider the Senior Citizen Savings Scheme, which offers attractive interest rates and tax benefits.
As a Senior Citizen, you may be looking for a safe and reliable investment option to secure your retirement. The Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme that offers attractive interest rates and tax benefits.
Learn more about this investment option and how it can benefit you.
What is the Senior Citizen Savings Scheme?
The Senior Citizen Savings Scheme (SCSS) is a savings scheme specifically designed for senior citizens aged 60 years and above.
It is backed by the Government of India and offers a safe and reliable investment option for those looking to secure their retirement.
The scheme offers attractive interest rates and tax benefits, making it a popular choice among senior citizens.
Who is eligible to invest in the scheme?
To open an account in the Senior Citizen Savings Scheme, you need to visit a Post Office or a bank that offers the scheme.
You will need to fill out an application form and provide documents such as your age proof, identity proof, and address proof.
The customer is required to fulfill the following conditions.
(i) An individual above 60 years of age.
(ii) Retired civilian employees above 55 years of age and below 60 years of age, subject to the condition that investment be made within 1 month of receipt of retirement benefits.
(iii) Retired Defense Employees above 50 years of age and below 60 years of age, subject to the condition that investment be made within 1 month of receipt of retirement benefits.
(iv) Account can be opened in an individual capacity or jointly with a spouse only.
(v) The whole amount of deposit in a joint account shall be attributable to the first account holder only.
It’s important to note that deposits made in the scheme are non-transferable and non-extendable.
Interest Rates and Tax Benefits
The Senior Citizen Savings Scheme offers an attractive interest rate of 8.2% per annum wef 01 Apr 2023, which is higher than most other fixed-income investment options. However, Interest Rates are updated by the Government from time to time.
Additionally, investments made in the scheme are eligible for tax benefits under Section 80C of the Income Tax Act, up to a maximum of Rs. 1.5 lakhs per year.
The interest earned on the investment is also taxable, but senior citizens can claim a deduction of up to Rs. 50,000 under Section 80TTB of the Income Tax Act.
How to open an account and make deposits?
As the name suggests, the Senior Citizen Savings Scheme is exclusively for senior citizens who are 60 years or older. However, individuals who are 55 years or older but have retired from a government job can also invest in the scheme.
Once your account is opened, you can make deposits in multiples of Rs. 1,000 up to a maximum of Rs. 30 lakhs.
You can make deposits in cash or through a cheque or demand draft.
What are the rules for the premature closure Senior Citizen Savings Scheme?
The Senior Citizen Savings Scheme account can be prematurely closed any time after the date of opening. If the account is closed before 1 year, no interest will be payable.
However, if the account closed after 1 year but before 2 years from the date of opening, an amount equal to 1.5 % will be deducted from the principal amount.
On the other hand, if the account is closed after 2 years but before 5 years from the date of opening, an amount equal to 1 % will be deducted from the principal amount and if any interest is paid in the account shall be recovered from the principal.
How to Close Senior Citizen Savings Scheme Account
SCSS Account may be closed after 5 years from the date of opening by submitting the prescribed application form with passbook at the concerned Post Office.
In case of the death of the account holder, from the date of death, the account shall earn interest at the rate of the Post Office Savings Account.
In case the spouse is a joint holder or a sole nominee, the account can be continued till maturity if the spouse is eligible to open an SCSS account and not have another SCSS Account.
What is the Extension facility of the SCSS Account?
The account holder may extend the account for a further period of 3 years from the date of maturity by submitting the prescribed form with a passbook at the concerned post office.
The account can be extended within 1 year of maturity.
Extended SCSS account shall earn interest at the rate applicable on the date of maturity.
An extended account can be closed after the expiry of one year from the date of extension of the account without any deduction.
