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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 –
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.
The Senior Citizen Saving Scheme features are as below:
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.
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.
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.
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.
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.
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.
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.
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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) |
The below pointers are a few Senior Citizen Saving Scheme benefits:
Senior Citizen Saving Scheme eligibility is as follows:
Furthermore, NRIs and HUFs are not eligible for this scheme.
The steps to open an SCSS account are as follows:
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:
Moreover, opening an SCSS account at any authorised bank comes with a range of benefits.
Applicants have to submit the following self-attested documents to open their SCSS accounts.
1. KYC Documents
2. Utility Bills
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.
|
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.
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