Senior Citizens Savings Scheme

The Senior Citizens Savings Scheme (SCSS) offers regular income, highest safety and tax saving, making it a popular product for those over 60 years of age.

Post retirement, people are looking for investment avenues to park their retirement corpus in. They are hesitant to put their hard-earned money in equities, which carry capital loss risk, or products which come with a long lock-in period and don’t offer any income till maturity.

Retirees are looking for products that are less risky and can also minimise their tax outgo. This is where SCSS comes in. The scheme offers capital protection, along with quarterly interest payment as a source of income. SCSS is backed by the government and, therefore, offers a sovereign guarantee. Interest income from SCSS can also help retirees bridge the gap between their pension and the last salary drawn.

What is the eligibility criteria for Investment in SCSS

Following persons are eligible to invest in SCSS:-

• Any individual aged 60 and above can invest in it.
• Early retirees between 55 and 60 years, who either opted for the voluntary retirement scheme (VRS) or superannuation, can also invest in the scheme, provided the investment is done within a month of receiving retirement benefits.
• The scheme is also available for the retired defense personnel irrespective of above mentioned age limits subject to fulfillment of other terms & conditions.

However, non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not allowed to invest SCSS.

What are the prerequisites of investment in SCSS

• A senior citizen can invest in this scheme by opening either an individual or a joint (along with the spouse) account with a post office or a scheduled commercial bank.
• The account can be opened by cash for an amount below ₹1 lakh and by cheque for an amount exceeding ₹1 lakh.

What are the detailed procedures to be followed to open an SCSS account

An SCSS account can be opened in any of the authorized banks or post office branch across India with following self-attested documents:-

• Form A has to be filled for opening an SCSS Account.
• Document evidencing proof of identity like PAN card, Passport to be presented.
• Document evidencing proof of address such as Telephone bill, Aadhar card is mandated.
• Document evidencing proof of age is required. This could be in the form of a Passport, Senior Citizen Card, a Birth certificate issued by the Corporation or registrar of births and death, Voter ID card, PAN card etc.
• 2 Passport size photographs.

 What is the minimum and maximum amount which can be invested

• An individual can invest an amount of ₹ 15 lakhs, or the amount received as retirement benefits, whichever is lower.
• The amount can be invested either individually or jointly in an SCSS account (in multiples of ₹ 1,000).

 What is the tenure of the fund

• The tenure of this scheme is 5 years.
• The tenure of 5 years can be extended for a further period of 3 years.
• In order to extend the scheme for another 3 years after the completion of the 5-year tenure, the investor is required to submit the duly filled Form B which is regarding the extension of the scheme.
• Only one extension is allowed, and such extended accounts can be closed after one year of extension without any penalty

Whether premature withdrawal from the account is allowed from the account

Premature withdrawals are allowed but only after 1 year of account opening.

What are the charges that are levied on withdrawal from the account

• If the closure of the account takes place after one year but before the end of 2 years, 1.5% of the deposit is deducted in the form of pre-mature withdrawal charges.
• On the closure of the account after 2 years an amount equal to 1% of the deposit shall be deducted as charges.
• In the event of the death of the depositor, no charges or penalty is levied for the premature closure of the account.

 What are the interest rates of an SCSS account

 List of banks where an SCSS account can be opened:-

• 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
• Punjab National Bank
• State Bank of India
• Syndicate Bank
• UCO Bank
• Union Bank of India
• Vijaya Bank
• ICICI Bank

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Tags : Senior Citizens Savings Scheme, Income Tax, Income Tax Deduction, Deduction from Gross Total Income