What’s the SCSS?
The senior citizen savings scheme (SCSS) is a popular small saving scheme, offering retirees a risk free and tax saving investment. It is one of the best investment options for retirees, who need income in retirement. The interest paid on deposits is pre- specified and not affected by market fluctuations. The scheme is backed by the government and enjoys sovereign guarantee.
Investing in SCSS is a great way of reducing the gap between pension and salary. The SCSS scheme can be availed for a minimum of 5 years, with a further extension of 3 years. The money invested must be in multiples of Rs 1,000 and the SCSS scheme can be availed easily at post offices or public sector banks and requires minimal documentation. Currently, the rate of interest offered for senior citizen savings scheme is 8.7% a year, which makes it an ideal investment option for retirees.
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SEE ALSO: What’s Senior Citizen Savings Scheme?
Everything You Need To Know About SCSS
Rate of Interest on SCSS
Currently, the interest rate offered on senior citizens saving scheme is 8.7% a year. As retirees want steady income, saving in SCSS makes sense. SCSS helps you receive regular income and covers monthly expenses.
Pros of Senior Citizen Savings Scheme
Senior citizen savings scheme is one of the best investment options for conservative investors. It is an effective and long term saving option, which offers capital protection along with quarterly interest payments as a source of income. There are other advantages of this scheme.
- Availability: SCSS is specifically designed to support you after retirement. SCSS can be easily availed at the nearest post office or bank. You must collect and fill the application form and submit along with supporting documents.
- Reliable: SCSS is backed by the government and is one of the safest and risk free investment avenues. The interest income is pre-specified and does not depend on market fluctuations.
- Multiple accounts: A single investor can opt for multiple senior citizen savings scheme accounts. The account holder can appoint a nominee or even open a joint SCSS account. However, the second applicant must be the spouse.
- Good returns: SCSS offers interest rate of 8.7% for the quarter, January to March 2019. This is very high return, among conservative investments.
- Flexible duration: SCSS has maturity period of 5 years and can be further extended for another 3 years.
- Tax saving instrument: SCSS enjoys tax deductions under Section 80C of the income tax act, up to Rs 1.5 Lakhs a year.
- Select your investment: You can make a one-time investment in SCSS account. The amount deposited must be in multiples of Rs 1,000. The maximum amount that can be invested is Rs 15 Lakh.
- Premature termination: During times of financial stress, you can close Senior Citizen Savings Scheme account and use the money. This option is applicable after SCSS account has been active for a time period of at least 365 days. After SCSS completes a year, 1.5% is charged as a penalty for premature termination. After time duration of 2 years, 1% is charged as a penalty.
- Least documentation: It’s easy to invest in SCSS as the scheme requires minimum documentation.
SEE ALSO: What are the Advantages of Senior Citizen Savings Schemes?
Eligibility Criteria for SCSS:
There are some important eligibility criteria that the applicant must fulfill for availing Senior citizen savings schemes in India. You must keep the following points in mind before applying for this scheme:
- For availing this scheme you must be 60 years or older.
- An individual who opted for voluntary retirement scheme (VRS) or superannuation can also invest in this scheme.
- Retired defense personnel who are 55 years or above can also apply.
- HUF and NRIs are not allowed to invest in the scheme.
- For Joint accounts the eligibility is determined based on the age criteria of the main depositor. No age restrictions are applied on the nominee or the secondary applicant.
Rules of Senior Citizen Saving Scheme:
Senior citizen savings schemes are specifically designed to meet the requirements of senior citizens. There are certain rules that the applicant must abide while enrolling in senior citizen savings scheme:
- The applicant must be 60 years of age or above. In certain situations he/she can be 55 years or more.
- Only a single deposit is permitted in senior citizen savings scheme account.
- The amount paid as deposit must be in multiples of Rs 1,000. The maximum amount that can be invested is Rs 15 Lakhs.
- The interest incurred on the senior citizen savings scheme account is paid on 31st March / 30th September/ 31st December for the first time. Post that, interest is paid on quarterly basis each year.
- SCSS is a 5 year investment scheme. On maturity the amount can be reinvested for a period of 3 years.
- You can hold more than one SCSS account in single or joint name at one time. The account holder must maintain the minimum balance in all the accounts.
- In case the amount invested in this scheme is less than Rs 1 Lakh, the preferred mode of payment is cash. If the amount invested is greater than Rs 1 Lakh then the preferred mode of payment is by cheque.
- Transfer of accounts from one post office to another is allowed. The process is simple and convenient and is helpful for people who have transferable jobs.
- SCSS offers the facility of nomination which can be easily availed when you open an account or after your account has been active for a particular period of time.
- If the account holder wants to terminate his/her account before maturity, then the applicable penalty is:
After 1 year: 1.5% of the invested amount.
After 2 years: 1% of the invested amount.
- For joint accounts the main account holder is considered to be the investor. The second account holder can only be the spouse of the primary account holder.
- In case the accumulated interest on the deposited amount is above Rs 50,000 a year, then TDS is deducted at source.
- The accumulated interest is deposited in a savings account which is maintained at the post office or bank where the account holder has his SCSS account.
- The investments made in the SCSS account offers tax benefits according to the provisions of Section 80C of the Income Tax Act, 1961.
Banks offering SCSS
The senior citizen savings scheme is offered by Indian post offices along with 24 public sector banks and 1 private sector bank. Listed below are the names of the private and public sector banks that offers senior citizen saving scheme:
Private Sector Bank Offering SCSS
Public Sector Bank Offering SCSS
- Allahabad Bank
- Andhra Bank
- State Bank of Bikaner and Jaipur
- State Bank of India
- State Bank of Patiala
- State Bank of Mysore
- State Bank of Travancore
- State Bank of Hyderabad
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Corporation Bank
- Central Bank of India
- Syndicate Bank
- Dena Bank
- Union Bank of India
- UCO bank
- Vijaya Bank
- IDBI Bank
- Indian overseas Bank
- Indian Bank
- Punjab National Bank
- United Bank of India
SCSS is a promising investment scheme for the senior citizens or retirees introduced by the government. It is a secure and risk free investment. It is better to invest in a senior citizen saving scheme than FDs as the returns are much higher than fixed deposits. Investing in SCSS is a good option as interest is paid in quarterly cycles. The depositor can have a monthly income and the sum of money invested will be returned at the end of the tenure. An FD accumulates interest which can be encashed only after maturity.
While opening an SCSS account, the documents submitted must be legitimate. In case the information is found to be false or incorrect, then the account will be closed immediately. The interest earned will be deducted and only the principal amount will be returned.
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