Senior Citizen Savings Scheme (SCSS) is a government backed policy designed specifically for senior citizens.
Senior Citizens are individuals who are 60 years of age or above. Since India has a significant population of senior citizens, the Government of India has created a senior citizen specific policy. The SCSS interest rate from July 2019 has been set at 8.6% p.a. This is the highest interest rate among the various small savings schemes.
The Senior Citizen Savings Scheme account can be opened in any bank or post office across India. Some banks also offer this facility online. In addition, a person can hold more than one SCSS account, provided that the combined maximum amount does not exceed Rs. 15 lakhs.
Salient Features of Post Office Senior Citizen Savings Account
Here are a few features of the Post Office Senior Citizen Saving Account
An individual of the age of 60 years or more may open the account.
An individual of the age of 55 years or more, but less than 60 years, who has retired on superannuation or under voluntary retirement scheme can open this account.
One can open a Senior Citizen Savings Scheme in individual capacity or jointly with spouse.
The maturity period is 5 years.
For amount more than Rs. 1 lakh, the payment is accepted only via cheque.
Nomination facility is available at the time of opening and also after opening of account.
You have the option to transferring your account from one post office to another.
The interest earned can be easily auto credited to the savings bank account.
Post maturity, the account can be extended for further three years within one year of maturity.
Investment under this scheme qualify for the Tax-Saving benefit of Section 80C of the Income Tax Act, 1961. If the interest amount earned is more than Rs. 50,000 for a financial year, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.
TDS is deducted at source on interest if the interest amount is more than Rs. 10,000 p.a.
Non-Resident Indians (NRIs), Person of Indian Origin (PIOs), Hindu Undivided Family (HUFs) are not entitled to open a Senior Citizens Savings Scheme account.
The account can be closed after the expiry of one year on deduction of an amount equal to 1.5% of the deposit & after 2 years 1% of the deposit.
How to open an SCSS Account?
You can open an SCSS Account in any post office across India. You simply need to visit any of the post offices and submit the account opening application form along with the requested KYC. The interest earned can be easily credited to the investor’s linked savings account at the same post office.
The same process is applicable to open a SCSS account in private/public sector banks.
Advantages of Investing in a Senior Citizen Savings Scheme
Flexibility: SCSS offers flexibility in tenure. This scheme comes with a tenure of 5 years which can be extended up to 3 additional years.
Safe: SCSS is a government backed scheme. It is a safe and reliable investment plan which offers guaranteed returns.
Easy Process: The process to open a SCSS is simple and can be opened in any post office or bank.
High Returns: SCSS offers higher returns in comparison to a savings bank account or fixed deposit.
Nomination Facility: The facility to nominate a family member can be done at the time of opening the account.
What are the documents required to open an SCSS account?
Age Proof (mandatory for SCSS Account): Self attested copies of the following documents can be given as Age Proof - Birth Certificate issued by Municipal Authority/Gram Panchayat/District Office of Registrar of Births & Deaths, Voter ID Card, PAN Card, Passport, Ration Card, Date of birth certificate issued by School last attended by the applicant or any other recognized educational institution or Driving License.
If PAN is Not Allotted: Copy of receipt for application form for allotment of PAN. An individual who is not assessed to income tax, may furnish a self-declaration that his/her income from all sources (including interest income from the account to be opened)does not cross the exemption limit and the applicant is not required to obtain PAN under Income Tax Act, 1961, as amended from time to time.
Certificate from Employer: Indicating the fact of retirement benefits, employment held and period of employment, if age on the date of opening of SCSS account is less than 60 years and above 55 years.
What is the Penalty for Premature Withdrawal?
The penalties on premature exit from SCSS are:
1.5% of deposit amount if the exit from the scheme occurs before completion of 2 years.
1% of SCSS deposit if exit from the scheme occurs between 2 years to less than 5 years.
In case of death of the primary account holder before actual maturity of the account, the account will be closed and all the maturity proceeds will be transferred to the legal heirs/nominee. If you are on the verge of retirement, a senior citizen savings scheme is a good investment option. It offers excellent returns in comparison to other small savings scheme.
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