Senior citizens Savings Scheme for Your Retirement years

Retirees looking for investment products with minimal risk are advised to consider opting for Senior Citizens Savings Scheme. This article highlights the many benefits offered to senior citizens for deposits made in SCSS.

Senior Citizens Savings Scheme (SCSS) is a popular investment tool in India that provides financial security to individuals above the age of 60 years. The scheme offers a regular flow of income as well as tax benefits under Section 80C of the Income Tax Act, 1961. SCSS is backed by the government, and is therefore among the most-safest investment options. Its interest rate is fixed by the Ministry of Finance from time to time. One can open an SCSS account through any of the certified banks or post offices across the country. This article is intended to give readers a thorough understanding of what an SCSS account is and the many benefits associated with this investment avenue.

The below entities are eligible to open an SCSS account:

• Individuals who are 60 years of age or above (on the date of opening the account).
• Retirees who have opted for Superannuation or VRS from the ages of 55 years or more, but less than 60 years. The investment must be made within a month of receiving the retirement benefits.
• Retired personnel of Defence Services (excluding Civilian Defence Employees) who are 50 years of age and above.

An applicant can open an SCSS account at any of the authorized banks or post office branches across India. The documents that will be required to open an SCSS account are as follows:

• Filled-up Form A (Application For Opening Of An Account Under Senior Citizens Savings Scheme, 2004)
• Identity proof
• Address proof
• Age proof
• Passport size photographs

One can invest up to Rs. 15 lakhs (singly or jointly) in an SCSS account (in multiples of Rs. 1,000). The amount put into the account cannot be greater than the sum that the depositor has received on retirement. Thus, it can be said that the individual can invest either the amount received as a retirement benefit or Rs. 15 lakhs, whichever is lower.

According to the India Post website, an SCSS account can be opened by cash for amounts less than Rs. 1 lakh and by cheque for Rs. 1 lakh and above. For payment made via cheque, the date of investment in the scheme shall be the date when the cheque is realized in the government's account.

The rate of interest on SCSS accounts is determined by the Ministry of Finance from time to time. According to the Income Tax Department website, a deposit made under Senior Citizens Savings Scheme Rules, 2004, on or after the 1st day of July, 2019, shall fetch interest at the rate of 8.6% p.a. from the date of deposit. It additionally stated that interest shall be payable from the deposit date to 31st March, 30th June, 30th September, or 31st December on the first working day of April, July, October or January, as the case may be, in the first instance. Thereafter, interest shall be paid on the first working day of April, July, October or January.

The advantages of choosing this investment route are as follows:

• Reliable and safe: Given that SCSS is backed by the government of India, the depositor can be assured of the highest level of safety with regards to the investment made.
• Tax benefits: Individuals can claim tax benefits under Section 80C of the Income Tax Act, 1961. The maximum tax deduction that can be claimed in the financial year when the deposit is made is Rs. 1.5 lakhs.
• Flexibility: The tenure of SCSS account is five years. This can be extended for another three years. Senior citizens can therefore treat SCSS as a medium to long term investment tool.
• Premature withdrawal: One can make premature withdrawals a year after opening the account. However, there are charges associated with such withdrawals. No charges will be levied if the account is prematurely closed as a result of the depositor's demise.

As seen from all the points mentioned above, one can enjoy many benefits by making investments in a Senior Citizens Savings Scheme. Along with providing financial security to the senior citizen, an Senior Citizen Savings Scheme account helps the depositor enjoy tax benefits under Section 80C of the Income Tax Act. While opening an SCSS account, the depositor must ensure to furnish all the required information. In the event it is found that the information submitted is not accurate, the account will be closed right away.