Senior Citizen Savings Scheme" is one of the two major small savings schemes of the Government of India, which gives the highest interest to all other savings schemes. Government has started this scheme with the aim of providing Senior Citizens i.e. Risk Free Investment and Regular Income for Senior Citizens.
This scheme is very popular among retired and pensioners employees due to the best interest rate, tax benefit under Section 80C and Government Gaurantee. In this post, we have come up with the key rules related to the Senior Citizen Saving Scheme, along with all the important things to know. Let's read.
Features of Senior Citizen Savings Scheme (SCSS) :
Senior Citizen Saving Scheme has many such features, which make it special from other plans. It not only gives you the highest fixed interest return, but also offers maximum tax savings. It also provides regular income to the account holder. This is the best savings plan for those who have retired from their job. The other features of this scheme are as follows :
Tenure of SCSS :
The Senior Citizen Saving Scheme is opened for 5 years, but you can extend it further, according to your convenience. You can extend the account to 3-3 year periods. If you withdraw money during the extension period, then you will not have to pay any kind of penalty.
Rate of Interest of SCSS Deposit Account :
The biggest benefit of the Senior Citizen Saving Scheme is high interest rate. It is often 0.5% more than PPF's interest rate. At present, the interest rate for the Senior Citizen Savings Scheme is 8.3%, which is higher than the interest rate offered by the PPF (7.6%) or FD of any government bank.
Period
Interest Rate
Up to 2012
9.00%
2012-13
9.3%
2013-14
9.2%
2014-15
9.2%
2015-16
9.3%
2016-17
8.5%
2017-18 (Q1)
8.4%
2017-18 (Q2)
8.3%
2017-18 (Q3)
8.3%
2017-18 (Q4)
8.3%
Tax on Senior Citizen Saving Scheme :
Like the PPF and Suknaya Samriddhi Yojana, the amount deposited in the Senior Citizen Saving Scheme Account also benefits the tax exemption under section 80C. However, like the PPF and Sukanya Samriddhi account, this is not a complete tax exemption (exempt, exempt, exempt-EEE) scheme. Because, the interest paid on deposited in it has to be taxed like tax saving fixed deposit. That is, whatever income you have in the form of interest on the Senior Citizen Saving Scheme Account, it is included in the taxable income.
Payment of Interest in SCSS Account :
Senior Citizen Saving Scheme gives you regular income. At the beginning of every quarter you get the interest. The interest receipt date is also fixed. This is the first working day of every quarter i.e., the first working day of April, July, October and January. If there is a holiday that day, then this amount of interest is paid on the next working day. Interest on the Senior Citizen Saving Scheme is calculated on the quarterly basis. It is worth mentioning that interest on Bank FD also gets on every quarter.
TDS on Senior Citizen Saving Scheme :
TDS is applicable on the Senior Citizen Saving Scheme. If you get more than Rs. 10,000 on deposited amount during a financial year, then TDS will be discontinued on this. TDS will be deducted at the time of payment of interest wherever the bank or post office is located. However, if you earn all your income after earning, then if the total income is not within the limits of tax, then you can avoid TDS. For this you need to submit Form 15H.
SCSS and Investment Limits :
You can deposit at least Rs. 1000 in the Senior Citizen Saving Scheme. More than that, you can raise money even by increasing it in multiples of 1000. However, a person's name cannot be deposited in excess of Rs. 15 lakhs. You can also open more than one SCSS account on your own name. However, the deposit amount in all SCSS accounts should not be more than Rs. 15 lakhs.
Who Can Open SCSS Account :
Senior Citizen Saving Scheme is for those who come in the category of Senior Citizen, i.e. 60 years old. However, for those who are earlier retired, there is a discount for Minimum Age limit. If you are retired by due to government rule or voluntary retirement (VRS), even after completing 55 years of age, you can open an account in Senior Citizen Savings Scheme. Similarly, there is no restriction of minimum age limit for those who are retired from defense services, they can open a SCSS account at any time after retirement.
Joint Account Facility in SCSS :
In the Senior Citizen Saving Scheme, you can also open a joint account with your spouse. If there is a joint account, the restriction of the minimum age limit for the other account holder does not apply. But the facility of withdrawal of account operative or withdrawal is available only if the main applicant dies. By the way, if your spouse wants, you can also open your own separate SCSS account.
Nomination facility :
You can also make Nominee of your Senior Citizen Saving Scheme Account. Any time you open an account or later you can decide on your Nominee. Nominee already registered, if required, can also be renamed. Nominee can be made even when having a joint account. But in the event of the death of the first applicant in such a situation, the first right on the money deposited in the account will be of the other Joint Account Holder.
Not Available for NRIs :
In the Senior Citizen Saving Scheme, such people cannot open accounts, who have assumed the citizenship of any other country i.e. they are non-resident Indians. It is only available to the people of Indian origin and those who come under the Hindu Undivided Family (HUF).
Account Transfer :
You can transfer your SCSS account whenever you need it or at your nearest post office or bank branch as per your convenience. If your account is in post office then you can transfer your account to another post office or any bank branch. Similarly, if your account is in a bank, then you can get an account transfer from there to another bank or post office. For this, you have to submit it by entering Form G. Application for account transfer with the passbook of SCSS account is required.
SCSS and the Rules for Premature Withdrawal :
After one year from the date of opening of Senior Citizen Saving Account, you can withdraw money if necessary. But, in such a situation, you will be able to get the remaining amount after the penalty is deducted. The rules regarding penalty are as follows:
If one year after the completion of the SCSS account, before the completion of two years, if you close the account, 1.5% of the deposit will be deducted as Penalty.If you close the account after completion of two years of the SCSS account, then 1% of the deposit will be deducted in the form of Penalty and the remaining amount can be found.
Note: If you have completed the maturity period of 5 years after completing the maturity period, then the rule is different. In such a situation, after completion of one year of the extended period, there is no penalty for any kind of withdrawal of money in the middle.
Where To Open Senior Citizen Savings Account ?
Apart from post offices, SBI has the facility of opening an SCSS account in all government and major private banks. But, this facility is only in designated bank branches of those banks. Generally, there are facilities for opening of Senior Citizen Saving Account in the branches of PPF account and Sukanya Samridhi account opening.
In this post, we have learned about the major rules and features related to the Senior Citizen Saving Account. The Central Government has many small savings schemes, which offer good interest rates and tax deductions. Among them are the PPF account and Sukanya Samrudhi Yojana.
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