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Know the latest interest rates, investment limit, taxability, who can invest, how to open SCSS, maturity.
Senior Citizen Savings Scheme is a post office savings scheme for the senior citizens in India. It allows you to invest a lump-sum amount of upto Rs.15 lakhs with a lock-in-period of 5 years. The interest payouts are done quarterly to ensure regular income in the hands of the senior citizens. It's government backed thus, making it a risk-free scheme. Also,the investment in this scheme qualifies for deduction under 80C of income tax. So, if you are looking forward to investing your lump sum retirement funds and get good returns, then this scheme is meant for you. So, without much ado, let’s read about the scheme and plan your and your loved one’s retirement responsibly.
5 Year Senior Citizen Saving Scheme is a safest tax saving investment option for senior citizens aged 60 years old or above. It’s a government-backed scheme, to provide security in the old age.Hence, the risk of losing your investments is almost negligible. As the name suggests the original maturity period is five years which can further be extended for 3 years.
The 5 Year Senior Citizen Saving Scheme account can be opened with any post office, private banks or public sector banks. It aims to provide
Investing under this scheme also provides tax deduction under section 80 C of the income tax.To know the documents required, tax benefits, opening procedure etc read further.
The minimum investment age for individuals has been set at 60 by the Government.
Early retiree’s can also invest between 55 to 60 years of age if they have opted for voluntary retirement or company retirement. Under this provision, investment must be done within one month of receiving retirement benefits.
Please note that NRIs and HUF (Hindu Undivided Family) are barred from investing in this scheme.50 years or above Defence personnel can also invest in this scheme
The interest rates are determined by the Ministry of Finance, under the Government of India. The interest rates are reviewed and revised every quarter of the financial year by the finance department. For the quarter ending 31st March 2020, the interest rate has been fixed at 8.6% p.a. The interest rate is fixed on the investment according to the rate fixed for that quarter. If you are extending your account post-maturity, then the interest prevailing at that time will be applicable.
The interest rate is calculated and paid on different dates. Check the table below to know when your returns will be credited in your account:
|Interest Period FY 2019-20||When the interest is calculated||When the interest is paid/credited||Interest Rate compounded and paid quarterly|
|April-June 2019||30th June 2019||1st July 2019||8.7% p.a.|
|July-Sep 2019||30th September 2019||1st October 2019||8.6% p.a.|
|Oct-Dec 2019||31st December 2019||1st January 2020||8.6% p.a.|
|Jan-March 2020||31st March 2020||1st April 2020||8.6% p.a.|
Let us consider an example to understand the interest calculations better :Amount Invested in senior citizen saving scheme - Rs 5,00,000
|Particulars||Amount Invested||Rate of Interest||Amount of interest|
|July - Sep||500,000||8.60%||10,750|
|Oct - Dec||500,000||8.60%||10,750|
|Jan - March||500,000||8.60%||10,750|
Note: It's better to reinvest interest amount to earn more interest.
Let us understand the various investment limits under Senior Citizen Saving Scheme one by one
Please note that before making an investment either at a post office or bank, you need to have a functional savings account to receive returns after every quarter.
Opening an account under this scheme is very simple. Gather the required documents and follow the Step-by-step process to open an account under the 5 year Senior Citizen Saving Scheme:
There is a list of documents that you need to be eligible to open an account under the senior citizen saving scheme. Documents required are:
The various tax deductions and benefits are available under the 5 year Senior Citizen Savings Scheme
|Tax Deduction||Tax Benefit||Particulars|
|Section 80C||Upto Rs 1.5 lakh||Tax benefit for investments made under the Senior Citizen Savings Scheme.*|
|Section 80TTB||Upto Rs 50,000||According to section 80TTB of the Income Tax Act, you can save up to Rs. 50,000 on interest earned in one FY. TDS (Tax Deducted at Source) is deducted when annual interest amount exceeds Rs.10,000.|
In case of premature withdrawals, the principal amount along with the interest accumulated will be added in the 'gross total income' of the individual and becomes taxable. In case the premature withdrawals are made due to the death of the depositor, the principal amount withdrawn by the nominee/legal heir is exempted from the taxes. However, taxes will be levied on the interest earned on the deposits after the death of the depositor.
5 years is the tenure or maturity period of Senior Citizen Saving Scheme. If you want, you can extend the maturity of the account for 3 more years but this needs to be done before the account reaches maturity. Under this scheme, premature withdrawals are allowed but they come with certain conditions like:
Upon maturity, you can either close your account and receive the maturity amount or you can extend the tenure of your account by 3 more years. If you wish to close your account, you will have to submit a ‘Closure form’ along with your account passbook. For the extension of the account after maturity, a duly filled ‘Extension form’ will be required.
If the depositor doesn’t take any action upon maturity, then the deposits will continue to earn interest at the rate determined for the post office savings scheme.
While opening the account, you can name a nominee in the account opening form. It is important that you are appointing a nominee as it comes handy in a dire situation like the sudden demise of the depositor. You can also appoint a ‘minor’ as your nominee. For appointing a minor as your nominee, you will need to submit the birth certificate and the details of the minor’s guardi Appointing and changing nominee can be done ‘n’ number of times since the process is free of charge.
If you fail to appoint a nominee while opening your savings account, then fret not. You also have the facility of appointing a nominee during the tenure of your account. All you need to do is, fill the ‘nomination form’ and submit it where you have your savings account. In case of nominating a nominee for a joint account, consent of all the depositors will be required in the form of signatures on the nomination form.
You have the facility of transferring your account from one post office/bank to another post office/bank. All you need to do is fill the ‘account transfer form’ and submit it where you have your savings account. You will be charged a nominal amount to fulfill this transfer facility.
It is important that you are furnishing correct information in the form while opening an account. If false information is discovered by the officials, your account will be rendered inoperative immediately. Your investment amount will be refunded to you but after deducting the accumulated interest already credited to your account.
You can open your account at any post office across India. Apart from the post office, the Government authorized 24 public sector banks and 1 private bank to offer the benefits of Senior Citizen Saving Scheme. ICICI bank is the only private limited bank which offers this facility. Under public sector banks, these banks have the authority to open accounts under SCSS:
SCSS interest rate is compounded which is payable quarterly.
No SCSS under post office or SBI cannot be considered as collateral for loan.
A senior citizen can invest in this scheme by opening either an individual or a joint (along with the spouse) account.You can invest in any number of SCSS accounts limiting to threshold adding all the accounts.
Yes. Just like PPF account senior citizen saving scheme account can be transferred from one branch to another branch of the same bank, one bank to another bank and bank to post office and vice versa is also possible.
An amount deposited under the Senior Citizens Savings Scheme Rules, 2004 is eligible for deduction of Rs.1.50 lakhs under section 80C of the Income Tax Act, 1961.
Initial maturity term of investment is 5 years however this can be further extended to another 3 years.
To open a SCSS account, senior citizens can visit the post office or bank branch and fill up the form. The form should be accompanied with KYC documents—age proof, address proof, identity proof and payment instrument i.e. cheque for the deposit amount. Also, the nomination can be made while opening the account or at a later date.
An individual can invest a maximum amount of Rs 15 lakhs, individually or jointly in an SCSS account (in multiples of Rs 1,000). The amount invested i cannot exceed the money received on retirement. Hence, the individual can invest lower of Rs 15 lakhs or the amount received as a retirement benefit,. The account for an amount below Rs 1 lakh in cash and for an amount exceeding Rs 1 lakh by cheque
All the resident and NRI senior citizens above the age of 60 years are eligible for fixed deposit schemes offered by the banks and post offices. NRI senior citizens can open a fixed deposit under the non-resident external (NRE) and non-resident Ordinary (NRO) category.
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