Senior Citizens Saving Scheme (SCSS)
The Senior Citizens Saving Scheme (SCSS) is a specific savings scheme offered by the Indian government to encourage senior citizens to save money and accumulate wealth. Launched in 2004, it has been a successful scheme in attracting senior citizens to save and grow their savings.
Key features of SCSS:
- Deposits: Minimum deposit of โน1 lakh, with subsequent deposits of any amount.
- Interest rate: Currently, 8% per annum, fixed for the entire tenure.
- Tenure: Minimum 5 years, extendable up to 10 years.
- Interest payout: Monthly, quarterly, half-yearly, or annually, as chosen by the investor.
- Tax benefits: Interest earned under SCSS is exempt from income tax for senior citizens.
- Loan facility: After 3 years, a loan of up to 25% of the deposit can be availed.
Benefits:
- Financial security: Provides a regular income stream for senior citizens during their retirement.
- Tax benefits: Enhances savings by eliminating income tax on interest earned.
- Easy to operate: Simple procedures and accessible branches.
- Flexibility: Allows for deposits and withdrawals throughout the tenure.
Eligibility:
- Any Indian citizen who is 60 years or above.
- Persons below 60 years can also invest, but the interest rate is lower (7%).
Additional features:
- Automatic renewal: Deposits mature automatically in the same scheme, unless the senior citizen chooses otherwise.
- Power of attorney: Allows designation of a representative to manage the scheme on behalf of the senior citizen.
- Modification of deposit: Deposits can be modified or withdrawn with permission from the bank.
Overall, the SCSS is a valuable savings scheme designed specifically for senior citizens in India. It offers a safe and convenient way to save money, earn interest, and access various benefits.
Additional resources:
- Senior Citizens Saving Scheme (SCSS) – SBI: sbicard.sbi.co.in/scss/
- Senior Citizens Saving Scheme (SCSS) – BankBazaar: bankbazaar.com/scss-senior-citizens-savings-scheme-interest-rate-calculator/ap/
- Senior Citizens Saving Scheme (SCSS) – Axis Bank: axisbankonline.com/personal-banking/
FAQs
Is the SCSS interest rate fixed for 5 years?
No, the interest rate for the Senior Citizen Savings Scheme (SCSS) is not fixed for 5 years. It is reviewed and subject to change every quarter by the Government of India. Once invested, the prevailing interest rate at the time of account opening remains applicable for the entire 5-year tenure of that particular deposit.
What happens to SCSS after 5 years?
fter the initial 5-year term of the SCSS account, it can be extended for an additional 3 years. The extension must be requested within one year of maturity. During the extended period, the interest rate applicable at the time of extension will continue to apply. Upon maturity after the extended period, the account can be closed or extended again, subject to prevailing rules.
Can I invest 30 lakhs in SCSS?
No, you cannot invest 30 lakhs in a single SCSS account. The maximum amount that can be invested in SCSS is โน15 lakhs per individual. However, a joint account can also be opened, but the total combined investment across all accounts should not exceed โน15 lakhs.
Is SCSS tax-free?
No, SCSS is not entirely tax-free. While the principal amount invested qualifies for a deduction under Section 80C of the Income Tax Act up to โน1.5 lakhs, the interest earned is fully taxable as per the investorโs applicable income tax slab rate.
How to avoid tax on SCSS interest?
While the interest earned on SCSS is taxable, senior citizens can claim a deduction under Section 80TTB of the Income Tax Act, which allows for a deduction of up to โน50,000 on interest income from savings accounts, fixed deposits, and SCSS. Additionally, submission of Form 15H can prevent TDS if the total income is below the taxable limit.
