The Senior Citizens Saving Scheme (SCSS) was created to meet the post-retirement needs of those who have reached the age of 60 or older, as well as those who have retired via a voluntary retirement program or through superannuation who are at least 55 years old but under 60.

The nation’s federal government program for senior people who are Indian citizens by birth or naturalization aids them in providing the security of a sovereign guarantee to their investment, revenues of which they get after the scheme’s maturity.

Principal Components of the Senior Citizens Saving Scheme

The SCSS delivers better returns than even the well-known fixed deposits, which are accounts offered by Indian banks and non-banking financial institutions that give investors returns that are higher than those of a typical savings account.

For FY20–21, a government-owned bank in India earned interest on normal savings accounts at a rate ranging from 3% to 3.5%. In the same year, fixed deposits provide interest rates between 5% and 5.5%, but the SCSS offers investors an annual return of 7.4%.

Key elements that investors should be aware of before joining the program include:

Eligibility

An Indian national who resides in the nation and is 60 years of age or older may apply for SCSS.

Age eligibility is 55 years of age or older but less than 60 years for those who have retired on superannuation or under the VRS, provided that the account is started within one month of receiving retirement benefits and that the investment amount does not exceed that amount.

Under the age of 50, retired members of the armed forces, except civilian defense employees, may open an SCSS.

NRIs (non-resident Indians) are not permitted to choose the SCSS.

Account Holder

If the investment cap imposed by the Indian government’s 15 lakh rupee ceiling is not exceeded, a depositor may maintain several accounts.

Any number of accounts may be formed in only a personal capacity or jointly with a spouse, with a maximum of four nominations per account. The total investment across all accounts must not go beyond the SCSS maximum investment cap.

Investment

A minimum investment of INR 1000 and a maximum investment of INR 15 lakh are required to start an account.

The depositor is required to make a cash payment for investments under INR 1 lakh. Cheque payments are required for any investment over INR 1 lakh. When a government account receives a payment by check, the date of realization is fixed to coincide with the account’s opening date.

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Interest Rates

The government decides the interest rate on an SCSS investment at the start of the fiscal year.

For instance, the interest rate in FY19-20 was set at 8.60% but the interest rate in FY20-21 is currently at 7.40%.

Early Account Closing

Before the five-year maturity term, the SCSS account may be prematurely closed.

The account holder receives his main deposit and no interest if the account is closed before one year has passed since it was opened.

A penalty equivalent to 1.5% of the deposit is made if the account is closed early after one year of investing but before two years have passed.

A 1% penalty on the deposit is applied to accounts closed on or after the two-year mark.

Closing of Account

An SCSS account matures five years after the account’s establishment.

Within one year of the account’s maturity, it may be extended for another three years. In these situations, the account may be canceled at any time after the one-year extension has expired without incurring any fees.

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An individual is qualified to receive interest at the rate applicable to a basic savings account of the bank that started the account if they do not extend their account through maturity but retain their investment amount in their SCSS account.

The account is closed and the deposit is returned to the nominee with interest accrued up until the date of the account holder’s death in the event of death before maturity or delayed maturity.

Taxation

The Income Tax Act’s Section 80C provides tax benefits to SCSS depositors by allowing them to classify their investment in the scheme within the annual personal tax exemption cap of INR 1.5 lakh. A person is qualified to pay taxes in line with the direct tax bracket they come under if their cumulative Section 80 C investments for the year exceed INR 1.5 lakh.

In addition to tax on investments, tax is deducted at source from interest payments that exceed INR 50,000 annually.

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How to Create a SCSS Account

An SCSS account may be created in three easy steps.

Go to your location for Account opening

An approved bank or post office branch are the two places where an SCSS account may be created.

The majority of government banks provide SCSS, and customers must physically visit the bank office to provide the necessary information for the account.

The interest accrued on the plan is immediately deposited to the savings account the bank establishes for the plan, which can, upon request, be connected to another savings account.

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Depositors who create SCSS accounts through the Indian Post Office may obtain the account opening form online, but they must still physically visit the location to deposit it.

The savings account that the post office establishes for the depositor serves as the conduit for interest and deposit activities.

Documents Required

The documentation procedure is straightforward because the program is geared toward seniors. Depositors must possess:

• PAN cards are required as age verification when opening an SCSS.
• Aadhaar Card is an acceptable form of address verification.
• Images of the depositors serve as identification.
• Proof of Retirement: If you are a retired employee, you must present your certificate of employment, a letter saying whether you have been released to superannuation or the Veterans Retirement System, and a document indicating the company has paid out your retirement benefits.

Send in Your Application

You may physically pick up your application form from the post office or a bank branch, or you can download it online and drop it off at the branch of your choosing.

Before completing your form, make sure you are familiar with the SCSS’s terms and conditions.

Send in your application and the necessary paperwork.

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Collect Your Passbook

Once the account has been established, you must get your passbook, which will contain details like:

• Opening date of the account
• Accounts Opened: Number
• The amount placed in the account Information about the quarterly interest you will earn
• The account’s maturity date
• Information about your nominees or legal heirs, as appropriate

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Senior Citizens Saving Scheme FAQs