Senior Citizens Saving Scheme (SCSS)

Introduced in 2004 by the Government of India, the Senior Citizens Saving Scheme (SCSS) offers a steady stream of income for individuals over 60 years old. As it is a government-backed scheme, there is minimal risk associated with SCSS. Individuals can apply for this scheme in post offices and public and private banks.

Now, let’s discuss this scheme in detail –

What Is SCSS?

As the name suggests, the Senior Citizens’ Saving Scheme is a retirement benefit programme by the Government of India. Individuals over 60 years can opt for the SCSS scheme by investing by making an individual or joint investment. In addition, this scheme provides tax benefits.

In SCSS, the instalment amount ranges between ₹1,000 and ₹15 lakhs. This amount is constricted to the retirement benefits. One must deposit it in the Senior Citizen Scheme account within a month from receiving retirement benefits from his/her employer.

Moreover, if an individual deposits more than the given amount, the additional funds get refunded to the account holder. One can extend the scheme for 3 more years from its date of maturity.

What Are the Features of the Senior Citizens Saving Scheme?

The Senior Citizen Saving Scheme features are as below:

1. Varying Interest Rates

The SCSS interest rate is modified once in every 3 months. Therefore, this rate of interest is subject to revision 4 times in a year.

2. Assured Returns

The returns on this scheme are issued as it is a government-backed instrument. Moreover, contrary to market-linked investments, which are subject to fluctuations, SCSS is safe and offers assured returns to individuals.

3. Maturity Duration

SCSS comes with a maturity period of 5 years. That said, one can extend the scheme for another 3 years by submitting a duly filled-up Form B. Nonetheless, in this regard, the interest rate as per the quarter is levied.

4. Deposit Limit

Individuals can deposit a minimum of ₹ 1,000 to open their accounts. Moreover, one can deposit ₹ 15 lakh or the amount of retirement benefit, whichever is lower.

5. Account Closure

Deductions are made against premature withdrawals. If closed before a period of 2 years, 1.5% deduction will be made as a penalty. Furthermore, if closed after 2 years, 1% is deducted. However, for extended accounts, one can withdraw funds post one year without attracting penalties.

6. Quarterly Disbursals

One can expect quarterly disbursements against the deposited amount. The interest gets credited to the account on the 1st of April, July, October, and January.

7. Nomination Option

The account holder can register a nominee to the Senior Citizens Saving Scheme. So, if the account holder passes away before maturity, the nominee will receive the due amount.

What Are the Current Interest Rates for SCSS?

Valid from 1st October to 31st December 2021, the current Senior Citizen Saving Scheme interest rate is 7.40%. Also, both bank and post office SCSS interest rates 2021 are the same.

Go through the interest rate chart and trend of the last 9 years to understand how it has changed over time:

Year (FY)	Interest Rate
Till 2012	9.00%
2012-2013	9.20%
2013-2014	9.30%
2015-2016	9.30%
2016-2017	8.40%
2017-2018	8.70% (Q1) and 8.30% (Q4)
2018-2019	8.30% (Q2), 8.60% (Q3), 8.70% (Q4)
2019-2020	8.70% (Q1), 8.60% (Q2 to Q4)
2020-21	7.40% (Q1 to Q4)

What Are the Benefits of the Senior Citizens Savings Scheme?

The below pointers are a few Senior Citizen Saving Scheme benefits:

Hassle-Free Process: Individuals can open their accounts at any post office or authorised bank in India.
SCSS Tax Benefits: Under Section 80C of the Income Tax Act, the principal amount invested in this scheme is eligible for deduction up to a limit of ₹1.5 lakhs in a year. Furthermore, interest earned on SCSS is taxable according to an individual’s tax slab. However, if the amount exceeds ₹50,000 for a fiscal, TDS (Tax Deducted at Source) is applicable.
High Interest Rate: SCSS offers an interest rate of 7.4% per year.

Eligibility Criterias to Apply for SCSS

Senior Citizen Saving Scheme eligibility is as follows:

Individuals have to be 60 years old or above.
Applicants with Voluntary retirement Scheme (VRS) within an age limit of 55 to 60 years.
Retired defence personnel above 50 years of age and below 60 years.

Furthermore, NRIs and HUFs are not eligible for this scheme.

How to Open an SCSS Account?

The steps to open an SCSS account are as follows:

Visit your nearest bank branch or post office and collect the application form.
Submit the duly filled-up form.
Attach required documents for identity, address and age proofs.

However, the Senior Citizen Saving Scheme online application is not available at a post office. That said, one can open an SCSS account online if his/her bank offers this facility. Banks offering Senior Citizens’ Savings Scheme include the following:

State Bank of India
Bank of Baroda
ICICI Bank
Bank of India
Corporation Bank
Punjab National Bank
UCO Bank
Allahabad Bank
Syndicate Bank
Union Bank of India

Moreover, opening an SCSS account at any authorised bank comes with a range of benefits.

The total interest will be directly credited to the applicant’s savings account (held with the branch).
Depositors will be updated about their account statements via posts or emails.
Availability of 24X7 customer support via phone banking facility.

What Are the Documents Required to Open an SCSS Account?

Applicants have to submit the following self-attested documents to open their SCSS accounts.

1. KYC Documents

Aadhaar Card
Voter ID Card
PAN Card
Passport

2. Utility Bills

Telephone bill
Electricity bill

3. Senior Citizen Card or Birth Certificate

4. 2 passport-size photographs

Furthermore, senior citizens can get confused while choosing between SCSS and fixed deposit. So, let’s now discuss how these savings schemes differ from one another.

Senior Citizens’ Savings Scheme Vs Senior Citizens’ Fixed Deposit

Criteria of Comparison	SCSS	FD Scheme for Senior Citizens
Interest rate	Currently at 7.40%	Varies between different financial institutions and ranges between 5.4% and 6.25%.
Premature Withdrawal	After 1 year (1.5% deduction)	Not allowed
Tax Benefits	Available under Section 80C	Available under Section 80C
Maturity Duration	5 years	5 years

In addition, interest earned on a senior citizens’ fixed deposit can be converted into monthly payments. As a result, it offers a steady income to account holders.

Regardless, the Senior Citizen Savings Scheme is an ideal investment instrument for retired individuals without any significant source of regular income. We hope that this article offered you a thorough understanding of SCSS so that you can opt for it without a hitch.

Frequently Asked Questions

✓ How many SCSS accounts can an individual open?

One can open multiple individual and joint SCSS accounts.

✓ For partial withdrawals, will there be any penalty charges?

If you make partial withdrawals after completing 1 year of account opening, no penalty is levied.