Invest in Senior Citizen Savings Scheme, Beat FD Interest Rates

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Senior Citizen Saving Scheme (SCSS)

As the name implies, Senior Citizen Savings Scheme is primarily for senior citizens of India. If your father has retired or about to retire, SCSS is the simplest investment option available. Here are all the details you need to know before you invest your money in this scheme.

Eligibility
An SCSS account can be opened by citizen of India who is above the age of 60 years. For those who have opted for voluntary retirement or retired in the age of 55 to 60 years; they can opt for SCSS within one month of retirement. The age restriction has been reduced to 50 years for defence personnel.

Operation
One can operate the account individually or jointly subject to the Rs. 15 lakh deposit limit in all accounts. Joint account is allowed only with spouse. Thus, one cannot open account with children or relative.

Amount
The minimum amount of deposit is Rs. 1000 while the maximum remains at Rs. 15lakhs. Interest rate is applicable from time to time. Currently, SCSS earns a whopping interest rate of 8.7% quarterly. The assured pay-out at the end of each quarter is the biggest benefit of the scheme. The rate of interest is subject to revision each quarter.

senior citizen saving scheme


Tenure
The Tenure of SCSS is five years and is further extendable by three more years.

Premature Payment
Yes, premature payment is allowed at applicable rate. It is permissible after one year of opening of account but with penalty. If the account is closed after the first year and before the end of second year, an amount equal to 1.5% of the deposit will be deducted as penalty.
In case the account is closed on or after the second year, an amount equal to 1% of the deposit will be deducted as penalty.

Tax Benefits
Investments of up to Rs. 1.5 lakh are eligible for deduction under Section 80C of Income Tax Act.

TDS
The interest income is taxable. Section 80TTB allows for deduction up to Rs. 50000 in respect of interest income from deposits held by senior citizens. For those senior citizens whose total income is within the prescribed limit, one may choose to provide a 15H declaration to avoid Tax Deductible at Source (TDS).

Any queries related to SCSS? Feel free to ask us in the comments section.

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