As the name suggests, the Senior Citizen Saving Scheme(SCSS) is a scheme launched by the government for senior citizens only. A few amazing features of this scheme are government-backed returns, tax benefits under 80C, better returns than many debt instruments, affordability, and no lock-in period.
In April & November 2023, there were new Amendments to this scheme due to which this scheme has become more attractive. We are going to discuss all features and Amendments of the Senior Citizen Saving Scheme in this Article, Let’s get started 🚀.
| Feature | Particulars |
|---|---|
|
Maturity Tenure |
5 Years |
|
Interest Rate |
8.2% |
|
Minimum Investment |
₹ 1,000 |
|
Maximum Investment |
₹ 30,00000 (30 Lakhs) |
|
Tax Benefits |
Upto 1.5 Lacks under Section 80C |
|
Nomination Facility |
Yes |
|
Premature Closure |
Yes |
Who can Apply in Senior Citizen Savings Scheme?
- Anyone who has attained the age of sixty years or above on the date of opening of the account.
- Any Civilian whose age is between 55 and 60 years, has to apply within 3 months (Before amendment this was 1 month) of receiving their retirement benefits.
- Any Defence personnel whose age is more than 50 years but less than 60 years, have to apply within 3 months(Before amendment this was 1 month) of receiving their retirement benefits.
- After the amendment, an additional category was included in this scheme. Now, the wife of a government employee (either state or central) who was over 50 years old and passed away while in service can also apply, even if the wife is under 50 years of age.
- You can open an Individual Account or Joint Account with this Scheme. A Joint Account can only be opened with the Spouse. If you are opening a joint account then the age of the first person will be considered as eligibility to open an account. If the age of the first person is more than 60 and the second person’s age is less than 60 then also they can open a joint account.
What is Minimum and Maximum Deposit in Senior Citizen Savings Scheme?
The minimum Deposit amount SCSS is ₹1000 and the Maximum deposit amount in this scheme is ₹30,00000(30 Lakhs). Before the amendment, the maximum allowed deposit amount was 15 Lakhs only. In this Scheme, you are allowed to do one-time Investment only, but you can open multiple accounts in this scheme. Even if you can open multiple accounts in SCSS, as an individual investor you can’t Invest more than 30 Lakhs.
But if you opt to open a joint account along with your spouse then the investment of each individual can be up to 30 Lakhs. Hence, the total investment of both individuals put together can’t be more than 60 lakhs. If you Invest in this scheme you are eligible for Tax benefits up to 1.5 Lakhs under 80C if your investment is more than or equal to 1.5 Lakhs for that particular year.
Senior Citizen Savings Scheme Interest Rate
Interest Rates for this Scheme change every quarter, but the interest rate of the quarter in which you applied for this scheme will be applicable until the maturity of your investment. Interest payments will be credited every quarter. So, for the first year, you will get the interest payment on 31st March, 30th June, 30th September & 31st December. In subsequent years you will get Interest payments on 1st day of April, July, October, and January.
Interest Payment You will have to claim on the due date or if you want you can opt-in for Auto Credit in your Scheduled Bank. If you are not claiming it on the due date, then you can claim it later also, but you won’t get any interest on that amount. You can get an overview of historical interest rates and what could be the future rates from the below table.
| Year | Rate of Interest(%) |
|---|---|
|
02-08-2004 to 31-03-2012 |
9.0 |
|
01-04-2012 to 31-03-2013 |
9.30 |
|
01-04-2013 to 31-03-2015 |
9.20 |
|
01-04-2015 to 31-03-2016 |
9.30 |
|
01-04-2016 to 30-09-2016 |
8.60 |
|
01-10-2016 to 31-03-2017 |
8.50 |
|
01-04-2017 to 30-06-2017 |
8.40 |
|
01-07-2017 to 30-09-2018 |
8.30 |
|
01-10-2018 to 30-06-2019 |
8.70 |
|
01-07-2019 to 31-03-2020 |
8.60 |
|
01-04-2020 to 30-09-2022 |
7.40 |
|
01-10-2022 to 31-12-2022 |
7.60 |
|
01-01-2023 to 31-03-2023 |
8.00 |
|
01-04-2023 to 30-09-2024 |
8.20 |
Tax on Interest Income from Senior Citizen Savings Scheme
- Interest is taxable and added to your income as per your slab rate.
- For those who are more than 60 years old, and if Interest exceeds ₹50,000(50k) then only tax will be deducted.
- For those who are between 55-60 years age group tax will be deducted only if your interest exceeds ₹10,000(10k).
SCSS Application Process
You can open an SCSS account either at an authorized bank branch or at a post office branch. If the bank allows, you can open the SCSS account online on the bank’s internet banking portal or mobile banking app. There is no option to open the SCSS account online with the post office.
Use FORM-1 to apply for SCSS.
List of Banks Offering SCSS Account
- Allahabad Bank
- Andhra bank
- Bank of Maharashtra
- Bank of Baroda
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Oriental bank of Commerce
- Punjab National Bank
- State bank of Bikaner & Jaipur
- State Bank of Hyderabad
- State Bank of India
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Travancore
- Syndicate Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
- ICICI Bank
Along with these banks, Post office also offers SCSS.
Documents Required for SCSS Account
- Two Passport Size Photographs.
- Identity Proof, Such as an Aadhar Card, PAN card, Voter ID, or Passport.
- Proof of Address such as Aadhar Card or Electricity bill.
- Age Proof, such as PAN Card, Voter ID, and birth certificate.
All Documents must be self attested.
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Extension of Senior Citizen Savings Scheme Account
After a maturity period of 5 years, you can extend your account for a block period of 3 years. Before amendment, you can do it only once but after amendment, you can do it multiple times but only in the block of 3 years. For Extension, you will have to apply within a year after maturity.
Before the amendment, the interest rate of the extension happened to be the same as what you were earning in a 5-year maturity period. Since now you can extend it multiple times, the rate that was applicable for the previous block of investment will be applicable for for current block.
For Example, suppose your Investment matured in December 2024 and the interest rate was 8.2%, hence if you extend for 3 years the rate would be 8.2% only which is the same as the last block interest rate. If the rate is updated to be 8% in January 2025 and you again extended for the second time in January 2028 then the interest rate applicable for you will be 8%.
Premature Closure of Senior Citizen Savings Scheme
There is no Lock-in period for Senior Citizen Savings Scheme however, if you close the scheme before maturity there will be a penalty.
- Before the amendment, if you close your account within a year then you only get your principal amount back, the interest amount will be deducted. But after the amendment 1% penalty is now applicable on the principal if you decide to close the account before 1 year.
- If you close your account after 1 year but before 2nd year, in that case, a penalty of 1.5% will apply to the principal and will be deducted from the principal.
- If you close your account after 2 years but before 5 years, a penalty of 1% will be applicable to the principal.
Please Note that wherever a Penalty is applicable, it will be first deducted from your principal amount then interest will be calculated on top of the remaining amount. And if you want to calculate the interest for a period whose quarter has not been completed yet you can use the below Formula
( Number of days in the period X Interest Rate ) / Total number of days in that quarter
For Premature Closure of Account, you can apply using FORM-2.
Lastly if you opt-in for Premature Closure Tax Benefits under 80C if you have already availed, will be reversed.
Is Senior Citizen Savings Scheme Interest Taxable?
Yes, interest on SCSS is taxable according to slab rates. For citizens whose age is more than 60 years if interest is more than 50,000(50k) then it will be taxable. For Citizens aged between 55-60 years if interest exceeds 10,000(10k) then it will be taxable.
What is Tax Benefits of SCSS?
If your Investment is more than or equal to 1.5 Lakhs under this scheme then you are eligible to get a 1.5 Lakhs debate under Section 80C for that particular financial year.
What is maturity period of Senior Citizen Savings Scheme?
The maturity period of the Senior Citizen Savings Scheme is 5 years and it can be extended in the block of 3 years.
Is Premature Closure Allowed in SCSS?
Yes, Premature Closure is allowed in the Senior Citizen Savings Scheme with a penalty of 1% and 1.5% on the principal amount according to the amendment in November 2023. Penalty will be deducted first from the principal then interest will be calculated
How can I open SCSS Acount?
To open the Senior Citizen Savings Scheme you can fill out Form-1 and open your account from Post Office or any Bank offering this Facility. Almost All banks in India offer SCSS Accounts.
Is Senior Citizen Savings Scheme a Good Investment?
Senior Citizen Savings Scheme is a Good Investment for senior citizens as compared to other Debt Instruments. It is backed by the Government, provides a handsome return and you also get tax benefits up to 1.5 Lakhs under Section 80C.
