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5 Year Senior Citizen Savings Scheme(SCSS) Know the latest interest rates, investment limit, taxability, who can invest, how to open SCSS, maturity

The Senior Citizen Savings Scheme is a savings program for adult post office in India. Allows you to invest a lump sum amount of up to Rs.15 lakhs over a 5 year lock period. Interest payments are made quarterly to ensure that the money always falls into the hands of the elderly. The government is thus supported, making it a harmless system. Also, the investment in this program is worth deducting less than 80C of income tax. So, if you are looking forward to investing in your retirement savings and getting good profits, this program is for you. So, without wasting too much time, let's learn about the plan and plan your retirement and that of your loved one with commitment.

What is the Senior Citizen Savings Scheme?

The 5 Year Senior Citizen Saving Scheme is the safest way to invest tax savings for adults 60 years of age or older. It is a government-sponsored program, providing security in the past. Therefore, the risk of losing your investment is almost negligible. As the name suggests, the first five-year maturity period can be extended to 3 years. A 5-Year Senior Citizen Protection Program account can be opened at any post office, private bank or public sector bank. It aims to provide

  • The safest option for investing your retirement income
  • Normal (quarterly) earrings for adults after retirement
  • Investing under this scheme also provides tax deductions under section 80 C of income tax. To find out the required documentation, tax benefits, unlocking process etc read more.

What are the benefits of investing in 5 year Senior Citizen Saving Scheme (SCSS)?

5 year Senior Citizen Saving Scheme (SCSS) offers following benefits to its investors :

  • Tax Profit: The investment is worth a tax profit of up to Rs 1.5 lakhs under section 80C
  • Extended Term: Even after a five-year closure if you want you can extend your investment period by 3 years
  • Shared Hosting Allowed: You can hold a senior citizen savings account with your spouse
  • Selected: You may have one or more nominees in your senior citizen savings account
  • Lump Sum Investment: Provides you with a secure investment option for your retirement savings. Thus, one-time payment.
  • Deposit Method: Deposit can also be made in cash or by DD. Electronic transmission is not mandatory. However, a deposit of more than 1 lakh should be made by check.
  • Multiple Accounts: Holding a savings account for a senior citizen over 5 years up to a maximum of Rs 15 lakh is allowed.
  • Good Rewards: Provides a good return on the current interest rate of 8.6% combined and paid quarterly

Who can invest in SCSS?

The minimum investment age for individuals is set at 60 by the Government. Early retirees can invest between the ages of 55 and 60 if they choose to retire voluntarily or retire from the company. Under this arrangement, investments must be made within one month of receiving retirement benefits. Please note that NRIs and HUF (Hindu Undivided Family) are prohibited from investing in this program. For 50 years or more Security personnel can invest in this program

How much interest is paid under SCSS?

Particulars Case-1 Case-2 Case-3 Case-4 Case-5
Income from salary (after Standard deduction) 2,90,000 2,71,000 8,92,000 4,98,000 1,90,000
HRA, Medical and other allowances- EXEMPT 8,000 74,000 2,43,000 1,00,000 0
Net taxable salary 2,82,000 1,97,000 6,49,000 3,98,000 1,90,000
Other Income 31,000 - - - -
Capital Gains - - 1,30,000 - -
Gross Total Income 3,13,000 1,97,000 7,79,000 3,98,000 1,90,000
Deductions (80C,80D etc.) 45,000 - 1,90,000 1,50,000 -
Total Income Taxable 2,68,000 1,97,000 5,89,000 2,48,000 1,90,000
ITR filing required Yes NO Yes Yes NO

Example for interest rate calculation on SCSS

Let's consider an example to better understand interest statistics:

The amount invested in the old age pension scheme - Rs 5,00,000

Calculate the benefits of the FY 2019-20 senior citizenship savings scheme

Particulars Amount Invested Rate of Interest Amount of interest
April -June 500,000 8.70% 10,875
July - Sep 500,000 8.60% 10,750
Oct - Dec 500,000 8.60% 10,750
Jan - March 500,000 8.60% 10,750
Total 43,125
Note: It's better to reinvest interest amount to earn more interest.

What is the investment limit under this scheme?

Let's understand the various investment restrictions under the Senior Citizens Protection Scheme one by one

  • Low Price: The minimum investment required is Rs 1000 and more for your multiplication
  • Maximum Price: Maximum Rs. 15 lakhs can be invested in this program but all in Rs. 1,000. You must make sure your investment is lower than your retirement income. This means that you can invest Rs. 15 lakhs in this program or the money you received as your retirement benefit, any low value.
  • Account Number: There is no limit to the number of accounts that a senior citizen can maintain. You can invest one account under your own name or a shared account with your spouse. Combined deposits under a Joint Account will not be it a son or a daughter, it must be a partner. However, the total amount in all accounts should not exceed great limit.
  • Investing in Money: If the investment value is less than Rs. 1 lakh can be opened in cash. If the investment value is high than Rs. 1 lakh, then the investment should be made by check. Here is the investment date of the check is determined when the value is displayed in a government account.

Please note that before investing in the post office or bank, you need to have a valid savings account for each quarter.

How to open a 5 year Senior Citizens Savings Account?

Opening an account under this program is very easy. Collect the required documents and follow the step-by-step process to open an account under the 5 Year Citizens Protection Program:

  • Visit any post office or bank that is authorized to open an adult savings scheme account.
  • Complete the account unlock form.
  • Collect all the documents, verify yourself, and submit them along with the completed account opening form
  • Once your account has been unlocked, you will be given a ‘passbook’ for your account. Your password will include your account number, account opening date, your (deposit) name, your address, your photo, and the duration of your account. It will also contain details on deposit deposits and interest rates paid at the end of each quarter.

What documents are required to open an SCSS account?

There is a list of documents you need to qualify to open an account under a senior citizen savings scheme. Required documents are:

  • Account opening form is duly completed and signed. The form is available online and at post offices.
  • Account Manager's Permanent Account Number.
  • Address proof.
  • Latest photo of investor. If it is a shared account, photos of both partners.
  • KYC documents.
  • Proof of age: any legal document confirming your age.
  • When you retire from work, a certificate from your employer is required. The certificate should contain the following information: - reason for retirement, benefits after retirement, position held during employment, and term of employment.
  • Document stating the date of retirement benefit for retirees.

What are tax exemptions under SCSS - on Maturity, premature withdrawal and extension?

Various tax deductions and benefits are available under the Five-Year Older Savings Scheme

Tax DeductionTax Benefit Particulars
Section 80C Upto Rs 1.5 lakh Tax benefit for investments made under the Senior Citizen Savings Scheme.*
Section 80TTB Upto Rs 50,000 According to section 80TTB of the Income Tax Act, you can save up to Rs. 50,000 on interest earned in one FY. TDS (Tax Deducted at Source) is deducted when annual interest amount exceeds Rs.10,000.
  • During maturity - investments made are exempt from the investment year but tax deductions are tax deductible.
  • During premature withdrawal
    1. In the event of a death of the investor - if premature withdrawal is made as a result of the death of the investor it means that the principal amount is not taxable but the tax is still charged on the interest rate earned by legal heirs or nominees.
    2. In some cases - if the amount invested in the senior citizens' savings scheme is deducted before maturity unless it dies at the time, the total amount earned i.e. head and interest is taxable.
  • In the event of an extension - No tax benefits available

What is the tax treatment in case of premature withdrawals?

In the case of early withdrawal, the principal amount and interest collected will be added to the individual 'total income' and will be taxed. In the event that early withdrawal is made as a result of the death of the depositor, the principal amount issued by the nominee / legal heir is exempt from tax. However, taxes will be charged on the interest earned on the deposit after the death of the depositor.

What is the Maturity period? What happens in case of premature withdrawals?

5 years for the working or maturing period of the Senior Citizens Care Program. If you want, you can extend the maturity of the account for 3 more years but this needs to be done before the account can reach maturity. Under this scheme, early withdrawal is allowed but comes with certain conditions such as:

  • Early withdrawal is only allowed after one year of account opening.
  • If you withdraw money after one year but before two years of opening the account, the cost of the deposit will be 1.5%.
  • In the event that you withdraw money after two years of opening an account, 1% of the deposit fee will be paid.
  • If the account is closed prematurely due to the death of the investor, no deposit will be charged.

Growing up, you can close your account and gain maturity or you can extend your account for a further 3 years. If you wish to close your account, you will need to submit a 'Lock Form' along with your login account. In order to expand the account after maturity, a properly completed Extension Form will be required. If the investor does not take action as he grows up, the deposits will continue to earn interest on the fixed amount of the post savings plan.

What is the Nomination facility under SCSS?

When opening an account, do not mention the nominee on the account opening form. It is important to nominate the nominee as it comes in handy in the event of a sudden disappearance of the depositor. You can also nominate a ‘minor’ as your own. To nominate a child as your priority, you will need to provide a birth certificate and details of the child's guardians. Nominating and changing nominees can be done ‘n’ times as the process is free.

If you fail to appoint a nominee while opening your savings account, do not worry. You also have the opportunity to nominate a nominee for the duration of your account. All you have to do is fill out the ‘nomination form’ and submit it when you have your savings account. In the event of a nomination for a joint account, the consent of all contributors will be required to sign a nomination form.

Other important information regarding the Senior Citizen Savings Scheme

You have the opportunity to transfer your account from the post / bank to another post / bank. All you need to do is fill out an ‘account transfer form’ and submit it when you have your savings account. You will be charged a small fee to complete this transfer center. It is important that you provide the correct information in the form when opening an account. If false information is obtained by the authorities, your account will be deactivated immediately. Your investment will be refunded to you, but after deducting the excess interest is already credited to your account.

You can open your account at any post across India. Outside of the post office, Government has authorized 24 public sector banks and one private bank to provide the benefits of the Senior Citizens Protection Scheme. ICICI Bank is the only limited private bank that provides this facility. Under state-owned banks, these banks have the authority to open accounts under SCSS:

  • Punjab National Bank
  • Indiana Bank
  • Punjab National Bank
  • State Bank of India
  • Syndicate Bank
  • Canara Bank
  • UCO Bank
  • Allahabad Bank
  • Bank of Maharashtra
  • State Bank of Mysore / Patiala / Bikaner / Jaipur / Travancore / Hyderabad
  • IDBI Bank
  • Vijaya Bank
  • United Bank of India
  • Indian Overseas Bank
  • Union Bank of India
  • Dena Bank
  • Central Bank of India
  • Corporation Bank
  • Bank of India
  • Bank of Baroda

Frequently asked questions

SCSS interest rate is compounded which is payable quarterly.

No SCSS under the post office or SBI can be considered as collateral for a loan.

A senior citizen can invest in this program by opening an individual or organizational account (and his or her spouse). You can invest in any number of SCSS accounts that limit the addition of all accounts.<

Yes. Just as a PPF account for a senior citizen savings account can be transferred from one branch to another bank, one bank to another bank and one bank to the post office and vice versa.

The amount deposited under the Senior Citizens Savings Scheme Rules, 2004 is eligible for deduction of Rs.1.50 lakhs under section 80C of the Income Tax Act, 1961.

Krishna Gopal Varshney

Krishna Gopal Varshney co-founder & CEO of Myitronline is amongst the top emerging startups of Asia and authorized ERI by the Income Tax Department. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. ”

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