# Senior Citizen Saving Scheme

The Senior Citizen Saving Scheme (SCSS) is a government-backed scheme designed to provide financial assistance for retired senior citizens aged 60 and above. The scheme provides a regular income and high interest rates on investments, making it a great investment option for substantial returns.

You can open a Senior Citizen Saving Scheme account with the Post Office or any Private or Public Sector Bank. Invest any amount ranging from 1000 to 30 lakhs at a fixed interest rate for a tenure of 5 years, extendable to 3 years. The scheme also offers tax benefits under Section 80C of the Income Tax Act.

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## SCSS Interest Rate

The SCSS interest rate offered by the government is considered to be one of the highest rates offered to any fixed-income investment option. It is compounded quarterly and is disbursed on the 1st of April, July, October, and January. Currently, the interest rate is:

Dates Interest Rate
October to December 2023 8.2% p.a.

The SCSS interest rate will be fixed for the whole tenure and is calculated based on the principal amount, interest rate, and tenure compounded quarterly. It can be calculated using an online Sr Citizen Saving Scheme interest calculator or by manually calculating using the formula:

Compound Interest Calculation

CI=P x(1+ r/n)n x t - P

For example:

Let’s say P = 20,00,000
r = 8.2%
n = 5 years

Therefore, using the formula:
CI=2000000 x(1+ 0.084/4)4 x 5 - 20,00,000
CI=2000000 x (1.0205)20 - 20,00,000
CI=2000000 x (1.483648)20 - 20,00,000
CI=2000000 x 2.616534 - 20,00,000
CI=52,33,068 - 20,00,000
CI= 32,33,068

Maturity Amount Calculation:

To calculate the maturity amount, the formula used is:

M.A = P x (1+r/n)n x t

Taking P to be 20 lakhs, r = 8.2% and t is 5 years with n being 4 (compounded quarterly)
The calculation will be as follows:

M.A = 20,00,000 x (1+0.082/4)4 x 5
M.A = 20,00,000 x (1.0205)20
M.A = 20,00,000 x (1.483648)20
M.A = 20,00,000 x 2.616534
M.A = 52, 33, 068

## Senior Citizen Saving Scheme Eligibility

The senior citizen deposit scheme has specific criteria that are required to be fulfilled. Which are:

• The individuals should be 60 years of age.
• Individuals who are 55 - 60 years of age who have retired under superannuation, VRS, or special VRS.
• Retired personnel of Defence Services can open an account at 50 years of age if they fulfill other given conditions.
• Non-residential Indians(NRIs) and Hindu Undivided Families(HUFs) are not eligible to open an SCSS account.

## Documents Required For SCSS

Certain documents are required to apply for an SCSS account. These documents serve as verification for your identity and age to ensure compliance with eligibility requirements and establish the legitimacy of the funds deposited.

The documents required are:

 Proof of identity PAN card, Voter ID, Aadhaar card or Passport. Proof of address Aadhaar card or Utility Bills. Proof of age PAN card, Voter ID, Birth Certificate, or Senior Citizen Card. Others Two passport-size photographs.

## Features & Benefits For SCSS

The Senior Citizen Saving Scheme offers many benefits and features that make the scheme an attractive investment option. From great interest rates to tax advantages, the scheme provides financial security and stability helping senior citizens enjoy their retirement.

These features and benefits are:

Age relaxation for retirees: Senior citizens who took a voluntary retirement scheme (VRS) or those who are superannuated and who are 55 to 60 years of age can open an SCSS account.

Age relaxation for defence services: Individuals who are Defence retirees can open a Senior Citizen Saving Scheme account at 50 years of age, if they open the account one month before they receive retirement benefits.

Risk-free investment: Your deposits will be safe as the scheme is backed by the government with a guarantee for valuable returns.

Quarterly interest payout: The interest rate is fixed by the government for every quarter of the Financial Year. So, if you open an account when the interest rate is at 8%, the interest on your deposit will remain at 8% till the maturity date. You will get an interest payout quarterly on the 1st of April, July, October, and January.

Flexible deposit amount: You can deposit a minimum amount of ₹1000 or multiples of 1000 with a maximum deposit of ₹30 Lakhs. The deposit amount should also not exceed the retirement benefit amount. Moreover, if you have more than one account, then the total deposited amount shall not exceed ₹30 Lakhs.

Tenure: The SCSS scheme maturity period is 5 years which can be extended up to 3 years. The extension is only allowed once. However, the interest rate of the extension will be the rate of interest for that quarter.

Premature withdrawal and early closure: Premature withdrawal is possible for a Senior Citizen Deposit Scheme a year after the account has been opened. With early closure, if the account is closed before completing 2 years then 1.5% of the deposit will be deducted as a penalty. But, if the account is closed after completing 2 years, then 1% will be deducted as a penalty from the deposit amount.

However, if the account has been extended, the account closure can be done without penalty after the 1st year of the extension.

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## Senior Citizen Saving Scheme (SCSS) Deposit Limits

The Sr. Citizen Saving Scheme SCSS offers substantial returns and financial security to retirees. However, there is a limit on how much you can deposit into the account. The minimum deposit amount is 1000 while the maximum deposit amount is 30 Lakhs. Moreover, the maximum deposit amount will also depend on your retirement benefit amount.

For example, if you are getting a retirement benefit of ₹25 Lakhs then the maximum amount you can deposit in the account will be 25 Lakhs. This limit will apply even if the account held is a joint account.

The maximum limit will apply even if you have multiple SCSS scheme accounts.

## SCSS Maturity Period

The Senior Citizen Deposit Scheme has a maturity period of 5 years which can be extended for another 3 years. The extension can only take place one time. Having an SCSS account is a great investment option with the maturity period ensuring financial discipline, stability, and liquidity planning by the investors. If an extension is approved, the investors will get the interest rates that are applicable in that quarter.

For example, you opened an account in 2015 at an interest rate of 8%, however, with the extension, if the interest rate for that quarter is 7% then the new interest rate you are eligible for will be 7%.

## Nomination Facilities Under SCSS

Appointing a nominee for the Sr. Citizen Saving Scheme is possible at the time of opening an account or at a later date. The nominee will be eligible to receive the amount in the event of the account holder’s demise before the maturity period.

## How To Open Senior Citizen Saving Scheme Account

An SCSS account can be opened at an authorized bank or the post office. An account can be opened in the bank through offline or online mode. If the bank has an online option, you can visit the website or open an account through the bank’s mobile application.

Here is how you can open an account in the bank:

Step 1: Visit the nearest bank branch or visit their website.

Step 2: Duly fill out the application Form A.

Step 3: Submit the required documents such as age proof, address proof, and identity proof.

Step 4: Deposit the desired investment amount in one installment.

Step 5: The bank will then proceed with the account opening process.

You can also open an account in the Post Office, however, an online option is unavailable.

To open an SCSS account with the post office, this is what you need to do:

Step 1: Visit your nearest post office or visit the website.

Step 3: Fill in your account number, if you already have a post office savings account.

Step 4: Paste passport-sized pictures of the account holder.

Step 5: Fill in the account holder’s name and tick the SCSS option in the bracket.

Step 6: Select the account holder type and account type.

Step 7: Fill in the deposit amount and the particular details.

Step 8: Mark the cells for the documents you have submitted as proof.

Step 9: Add the signature of the account holder.

Step 10: Add the nomination and nominee information, along with proper signatures of the account holder.

Step 11: Step 11: Visit your nearest Post Office to submit the form along with the documents.

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## Top Banks in India Offering SCSS Account Opening Facility

The SCSS scheme can be opened in many top banks of India, making the scheme accessible to the majority of the senior citizen population. The availability of the scheme account in top banks makes it convenient for them to get proper financial support. Here are the top banks in India that are offering SCSS account openings:

 State Bank of India ICICI Bank Bank of Baroda Punjab National Bank Canara Bank Union Bank of India Indian Bank Bank of India Central Bank of India Bank of Maharashtra Indian Overseas Bank Allahabad Bank Corporation Bank Andhra Bank UCO Bank IDBI Bank Syndicate Bank Vijaya Bank

## Post Office Senior Citizen Saving Scheme

The post office senior citizen saving scheme is no different from the SCSS scheme. Both offer regular interest payout and a maturity period of 5 years extendable to another 3 years. Differences may exist in specific features although minimal. However, you can compare the two before choosing where to invest. The post office savings scheme offers competitive interest rates which makes it a desirable option if you prefer postal savings.

## Senior Citizen Saving Scheme Tax Benefit

The scheme not only offers attractive returns and financial security, it also offers tax benefits. Under Section 80C of the Income Tax Act, 1961, the amount deposited in the SCSS account is eligible for tax deduction up to the limit of ₹1.5 Lakhs. However, if the interest earned by the depositor exceeds ₹50,000 then it is subject to Tax Deduction at Source or TDS.

## Premature Withdrawal

Premature withdrawal is possible at any time, all you have to do is fill up application Form-2.

• If the account is withdrawn and closed before 1 year of opening the account, then no interest will be payable. If interest has been paid then it will be recovered.
• If the account is closed after 1 year but before completing 2 years, then 1.5% will be deducted from the principal amount.
• If the account is closed after 2 years before completing 5 years, then 1% will be deducted from the principal amount.
• In case of an extension of the maturity period, then there will be no deduction if the account is closed a year after the extension date.

## What Happens in Case of the Accountholder’s Demise?

In the event that the account holder passes away before the maturity of the account, the post office SCSS account will earn interest at the rate of the PO savings account. If the sole nominee or the spouse is there then the account will continue until maturity with the spouse or nominee receiving the amount.

## Senior Citizen Saving Scheme vs Fixed Deposit

The Sr. Citizen Saving Scheme and a fixed deposit are both financial investments that offer good returns, however, they differ greatly from one another. Choosing which investment option you can take will depend on various factors such as the age of the investor, financial goals, and more. Senior citizens who are seeking fixed returns and payouts with government backing may choose SCSS. while others who opt for FDs may do so because of other objectives such as tenure flexibility and varied interest rates.

Here are the major differences between the two:

Returns: The SCSS scheme currently offers an interest rate of 8.2% compounded quarterly. The highest interest rate on FDs for senior citizens is 9.50% at a tenure of 1001 days, which is offered by Unity Small Finance Bank.

Maturity Period: The maturity period for SCSS is 5 years which can be extended up to 3 years. However, the maturity for FDs is flexible and can be chosen by the depositor according to their financial goals. The term for FDs can also be renewed by the financial requirement.

Deposit Limit: The deposit limit for an SCSS account is 30Lakhs or the maximum retirement benefit amount received, whichever is lower. While the deposit limit for FDs can go up to 10 Cr depending on the limits of different banks.

Tax Benefits: Both SCSS and FDs offer tax benefits under Section 80C of the Income Tax Act of 1961. However, interest earned on both accounts can be taxed.

Payouts: SCSS offers regular payouts on the 1st of April, July, October and January. Most FDs do not have a regular income option, only some FD options offer Non-cumulative FD with regular payout.

The SCSS is a government-backed savings scheme for senior citizens that offers attractive interest rates and regular interest payout at a fixed maturity period.

Senior citizens can invest an amount between 1000 to 30 lakhs in the SCSS scheme, at an interest rate that is compounded quarterly for a maturity period of 5 years, extendable to 3 years.

The maximum investment limit in SCSS is 30 Lakhs or the maximum retirement benefit amount received, whichever is lower.

The current interest rate on Sr. citizen saving schemes is 8.2%.

No, non-residential Indians cannot invest in the SCSS scheme.

Senior Citizens investing in SCSS can enjoy tax deductions of up to 1.5Lakhs under Section 80C of the Income Tax Act, 1961.

Yes, the interest from SCSS is taxable.

Yes, Section 80C of the Income Tax Act,1961 applies to Senior citizen deposit schemes.

You can withdraw your investment prematurely but with a penalty.

Yes, there is a penalty for withdrawals before the completion of the maturity period. Check above for more details.

You can open an SCSS account at the bank or Post office. All you need to do is visit the nearest bank or post office, fill in the form, provide the necessary documents, pay the amount and the account will be opened after the payment is received.

Yes, joint accounts with the spouse are allowed.

The tenure of the SCSS scheme is 5 years which can be extended for 3 years.

Yes, you can extend your SCSS account to 3 years after the maturity of 5 years.

The interest on SCSS is paid quarterly on the 1st of April, July, October, and January directly to the account.

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