Senior Citizens Savings Scheme (SCSS): Eligibility, Interest Rate & Benefits

Senior Citizens Savings Scheme Overview

Senior Citizens Savings Scheme is an Indian Government Scheme launched to help the senior citizens of India aged over 60 years. During the post-retirement phase of senior citizens, they will get a steady income with the help of this scheme. The Indian Government launched this scheme in 2004. It is a highly profitable scheme in India, as it offers good returns to its investors. One can apply for this scheme through post offices or banks.

Features of the Senior Citizen Savings Scheme

Interest Rates Revision

Under SCSS, the interest rate changes every three months, and this interest rate depends on the inflation level, market rate, etc. Sometimes, the scss rate of interest remains the same after a revision due to economical condition.

Fixed Income

At the time of investment, you will get one interest rate. This rate will not change throughout your period of the scheme, even when the post office interest rates for senior citizens change in a later quarter.

Deposit Amount

Individuals can make a minimum deposit of amount 1000 rupees. This is to open an account in this SCSS scheme. One can invest a maximum amount of Rs. 15 lakhs.

Maturity Tenure

The normal maturity tenure is 5 years, which one can extend up to another 3 years, so a total of 8 years. To make an extension, one has to fill the application Form B and submit it to the respective bank.

Premature Withdrawals

One can withdraw the purchase price prematurely under SCSS one year soon after opening your account.

Quarterly Disbursal

Senior citizens, who open the account under SCSS, can receive the amount every 3 months once. Interest payment reaches the senior citizens’ accounts on every 1^ST of January, April, July, and October.

Mode of Deposit

If the investment amount is less than Rs. 1 Lakh, then you can pay them in cash. But, if it exceeds Rs. 1 Lakh, then you need to pay in a cheque.

Nomination Facility

Individuals have the right to choose the nominee at the time of opening the account under SCSS. The nominee will get the due amount in the event of an investor’s death before the maturity period.

Eligibility for Senior Citizen Savings Scheme (SCSS)

Individuals, who are eligible to apply for this sr citizen saving scheme, are given below.

• Senior citizens of India who are above the age of 60 years can apply for this scheme.
• Individuals under the age of 55 years can apply for this scheme only after early retirement.
• With the above age limits, retired defense personnel can also apply for this scheme. Personnel should also meet other terms and conditions.
• Person of Indian Origin (PIO) and Non-Resident Indians (NRIs) are not eligible to apply for this scheme.
• Hindu Undivided Family Members are also not eligible to open this scheme.

Benefits of Investing in Senior Citizen Savings Scheme

• SCSS comes with a good interest rate, which us 7.4% p.a. This is far higher when compared to other government schemes in Sector 80C.
• There is no need to worry about investing in this scheme, as SCSS comes with all necessary protection.
• The investment that you made in this scheme is taxable under Section 80C.
• The scheme comes with an initial lock-in period of 5 years, which one can extend to 3 more years. This extension is applicable based on certain terms and conditions that one has to meet under this scheme.
• An individual can invest any amount in the multiples of Rs. 1,000 and the maximum limit is Rs. 15 lakhs.
• Premature withdrawal of investment options is available in case of any emergencies.
• One can get the service of this scheme from certain banks and Indian post offices.

Limitations of SCSS

With SCSS, there are a few limitations as well. They are

• Though the scheme offers guaranteed returns, the interest rate depends on the inflation in India. A high inflation rate may affect the interest rate and your returns may also become zero value.
• The scheme offers a limited tenure of five years. One can extend up to three years and more than that is not applicable.
• Based on your senior citizen saving scheme interest rate 2020, income tax may apply to deductions. This tax may decrease your returns.
• One can invest a maximum amount of Rs. 15 lakhs.
• A Penalty will be there for a premature exit from this scheme.

Interest Rate in SCSS Scheme

Historically, the Senior Citizen Savings Scheme is well-known for providing high-interest rates to investors. SCSS interest rate may change every three months. Now, the current interest rate is 7.4% p.a. for the quarter (April to June) in this year 2020. The ministry of finance takes care of the senior citizen saving scheme interest rate every three months. We will discuss the historic interest rates to see the wide change of interest.

Time	Rate of Interest
April to June (2020-21)	7.4
Jan to March (2019-2020)	8.6
Oct to Dec 2019	8.6
Jul to Sep 2019	8.6
Apr to Jun 2019	8.7
Jan to March 2019	8.7
Oct to Dec 2018	8.7
Jul to Sep 2018	8.3
Apr to Jun 2018	8.3
Jan to March 2018	8.3
Oct to Dec 2017	8.3
Jul to Sep 2017	8.3
Apr to Jun 2017	8.4

Senior Citizens Savings Scheme Calculation Method

Individuals who made deposits under this SCSS scheme will get the interest amount annually to their account. You will get these payouts regularly to your account in a post office or bank. The current interest rate is 7.4%. To make a calculation, you require some primary components such as

• The Deposit amount or Principal amount
• Rate of Interest
• Maturity or Lock-in period

For instance, your deposit amount is Rs. 15 lakhs in SCSS, now you will get the maturity amount as calculated as follows.

Deposit amount for 5 years = Rs. 15, 00,000

Interest rate for 1 year = Rs. 1, 11,000

So the Maturity amount you will get is Rs. 20, 55,000

Tenure of the fund and withdrawal

The maturity period of this senior citizen scheme is 5 years. One can extend this period to three more years. One can extend this scheme for 3 years, after the completion of five years. To extend this scheme, one has to fill and submit the Form B under duly filled condition. For an individual, one extension under this scheme is possible. One can close this extended account after one year without requiring you to any penalty.

Premature Withdrawal

One can make the premature withdrawal of this account after the completion of one year from the date of opening an account. If you withdraw the amount after one year, 1.5% of the amount is the penalty amount, and the government withdraws such amount. When you withdraw the amount after 2 years, 1% of the amount will be charged as a penalty. In the case of the death of the investor, there is no penalty imposed on the premature withdrawal of the amount.

How to open an SCSS Account?

One can open the SCSS account at post offices or some authorized banks in India. Here the procedure to follow for opening an SCSS account.

1. Visit your nearest post office or authorized bank branch
2. Get Form A and fill the details
3. Now, submit the original and Xerox copies of the required documents to the respective officer.
4. You need to provide identity proof, address proof, and age proof to avail this scheme

Documents Required to Apply under SCSS?

Some of the mandatory documents that you need to submit for opening an SCSS account are given as follows.

• Voter ID card
• Aadhar card
• Passport
• PAN card
• Telephone and electricity bill
• Birth certificate
• Senior citizen card if there is no birth certificate
• 2 passport size photos of the applicant

How to Apply SCSS Online?

You can visit the nearest post office or authorized bank to apply offline. You can also open an account online. To open your post office senior citizen scheme online, download the SCSS application form. To download this, visit the official website of an Indian post office. Even the authorized banks provide the option to download the application form from their websites.

How to Fill the SCSS Application Form?

After downloading the application form, you need to provide the following details such as

• Your name and PAN card number
• Enter your father/mother/husband/wife name
• If you want to create a joint account with your spouse, you need to provide your spouse’s name and age
• Provide the details of cheque or DD and its number
• Enter the nominee name, address, and age, etc.

Banks Offering Senior Citizen Savings Scheme

You can’t get the service of this scheme in all banks, as the Indian Government allows certain banks to provide this post office senior citizen saving scheme. The following lists are the bank branches where you can open a senior citizen saving scheme in banks.

1. Andhra bank
2. Allahabad Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. Indian Bank
11. Indian Overseas Bank
12. IDBI Bank
13. Punjab National Bank
14. Syndicate Bank
15. State Bank of India
16. Union Bank of India
17. UCO Bank
18. ICICI Bank
19. Vijaya Bank

Tax Implications of Senior Citizen Savings Scheme

With its attractive tax benefits, SCSS becomes one of the most beneficial schemes in India. According to the Income Tax Act, 1961, under Section 80C, the deposit amount that you invest under this scheme is taxable, up to the limit of 1.5 lakhs rupees. So, the interest you receive from this scheme applies to taxes.

For example, if you earn Rs. 72,000 as an interest amount annually and your annual income is Rs. 4 lakhs, then you will get tax amount at a 5% rate. So, the tax amount is (72000*4%) = Rs. 2880. If your interest income reaches more than Rs. 50,000, then it applies to TDS.

Comparison between SCSS and Fixed Deposit

Factors	SCSS	Fixed Deposit
Rate of Interest	7.4% (April-June) 2020	For senior citizens 6.5 to 8.45%
Lock-in Period	5 Years	Varies as per the bank
Investment Tax Benefits	Available	Available
Tax Benefits (For returns)	Taxable	Taxable
Premature Period	Penalty fee 1.5% and allowed after one year for premature withdrawal	Not Applicable

The Bottom Line

SCSS 2020 is the best investment option for senior citizens or retirees, who don’t require any regular income. This is an entirely risk-free scheme and one can invest in it for higher returns. So, one can invest in this scheme, as there are no many rules when you want to withdraw the deposit prematurely.