There are a plethora of saving schemes for senior citizens. But, with time not on their side, senior citizens look for investment avenues that carry minimal risk. Senior Citizen Savings Scheme (SCSS) is one such safe investment scheme offered by the Government of India.
Must Read: Top 6 Best Safe Investment Options in India
This post discusses everything you need to know about Senior Citizen Savings Scheme (SCSS).
Table of Contents
Senior Citizen Savings Scheme (SCSS)
Senior Citizen Savings Scheme is a government-backed savings instrument for the senior citizens of India. The Senior Citizen Scheme is offered by Government of India and hence is one of the safest investment option. It is a good choice of investment for individuals above the age of 60.
At present, the interest rate for SCSS is 7.4% per annum. Rate of interest is reviewed by Ministry of Finance every quarter. But the interest rate applicable at the time of investment remains fixed for the entire tenure of the scheme.
Senior Citizen Savings Scheme is available through post office or through a bank. The terms and conditions applicable to this scheme are the same either you invest through post office or bank.
Features of the Senior Citizen Savings Scheme
The following are some key features of the senior citizen scheme.
1. The account can be opened with a minimum amount of Rs.1000 or any sum in multiple of Rs.1000. The maximum not exceeding Rs.15 lakhs.
2. The account can be opened by cash for the amount below Rs.1 lakh and for Rs.1 lakh and above by cheque only.
3. An individual can operate more than one account in individual capacity or jointly with spouse. However, the total amount deposited in all such accounts shall not exceed Rs.15 lakhs.
4. Joint account can be opened with spouse only and first account holder in joint account is the investor.
5. The tenure of the SCSS scheme is 5 years. It can be further extended for 3 more years.
6. Nomination facility is available at the time of opening and also at a later date. You may nominate a person or more than one person.
7. An SCSS account can be transferred to another bank or post office. However, there is a nominal fee for this facility.
8. Premature withdrawals are allowed under Sr. Citizen Savings Scheme after one year. However, multiple withdrawals from an account shall not be permitted.
Benefits of Investing in Sr. Citizen Saving Scheme
The following are the main benefits of senior citizen scheme:
1. SCSS scheme is offered by Government of India and hence is one of the most reliable and safest investment option.
2. The scheme offers an interest rate of 7.4% per annum which is higher as compared to most safe investment avenues.
3. Investment done under this scheme is eligible for tax deduction under Section 80C up to Rs1.5 lakh per financial year.
4. You can avail this scheme through India post offices or through any of the authorized bank. Moreover, it is transferable across India.
5. The maturity tenure of the scheme is 5 years. However, post maturity, there is an option to extend it for 3 more years.
6. Premature closure of the scheme is also allowed in the event of financial emergencies with a penalty.
7. You can invest with a minimum amount of Rs.1000 and in multiples thereof up to the maximum investment of Rs.15 lakhs.
Senior Citizen Saving Scheme Interest Rate
At present, the Senior Citizen Saving Scheme Interest Rate is 7.4% per annum. SCSS interest rate is decided by the government for each quarter in advance. However, the interest rate applicable at the time of investment remains fixed throughout the tenure of the scheme.
Interest in SCSS scheme is calculated and paid quarterly. The interest amount is credited to your account on the first working day of April, July, October and January. To receive the quarterly interest, you must have a savings account with the bank/post office where the SCSS account has been opened.
Historical Interest Rates of the SCSS Scheme
The following table shows the historic interest rates of the Senior Citizen Savings Scheme.
| Time Period | Rate of Interest |
| 2nd Quarter of FY 2020-21 | 7.40% |
| 1st Quarter of FY 2020-21 | 7.40% |
| 4th Quarter of FY 2019-20 | 8.60% |
| 3rd Quarter of FY 2019-20 | 8.60% |
| 2nd Quarter of FY 2019-20 | 8.60% |
| 1st Quarter of FY 2019-20 | 8.70% |
| 4th Quarter of FY 2018-19 | 8.70% |
| 3rd Quarter of FY 2018-19 | 8.70% |
| 2nd Quarter of FY 2018-19 | 8.30% |
| 1st Quarter of FY 2018-19 | 8.30% |
| 4th Quarter of FY 2017-18 | 8.30% |
| 3rd Quarter of FY 2017-18 | 8.30% |
| 2nd Quarter of FY 2017-18 | 8.30% |
| 1st Quarter of FY 2017-18 | 8.40% |
| Financial Year 2016-17 | 8.50% |
| Financial Year 2015-16 | 9.30% |
| Financial Year 2014-15 | 9.20% |
| Financial Year 2013-14 | 9.20% |
| Financial Year 2012-13 | 9.30% |
| Up to 2012 | 9.00% |
Eligibility for Senior Citizens Saving Scheme
1. An individual can open an account in individual capacity or jointly with spouse.
2. An individual aged 60 years and above.
3. An individual aged 55 years or more but less than 60 years and who has retired on superannuation or under VRS on the date of opening an account. Subject to the condition that the account is opened within a month of receiving retirement benefits.
4. A retired personnel of Defence Services attaining the age of 50 years. Subject to the fulfilment of other specified conditions.
5. Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open a SCSS account under these rules.
How to open an account under SCSS Scheme?
Senior Citizen Savings Scheme is available through post office or through a bank. Therefore, you can open a SCSS account either with a post office or any of the authorized bank. The procedure for opening the account is mentioned below:
1. Visit your nearest post office or a branch of an authorized bank.
2. Fill the Form A available at the post office or bank for opening an SCSS Account.
3. You need to present the original and photocopies of all the necessary documents such as address and identity proof.
4. Permanent Account Number (PAN) is mandatory.
5. Age proof document.
6. Two passport size photographs.
Click here for the account opening form for Sr Citizen Saving Scheme.
Once your account is opened, you are given a passbook. The passbook includes the account number, the amount deposited, the interest payable dates and amount, maturity date etc. other than your personal information.
Tenure of the Senior Citizen Scheme
The tenure of Senior Citizen Savings Scheme is 5 years. However, post maturity, there is an option to extend it for 3 more years. To extend the SCSS scheme for 3 more years, you need to submit the duly filled Form B. It can be done within one year of maturity.
Note only one extension allowed. The interest rates applicable at that quarter would apply for the extension period. You can close the extended account after one year of extension without any penalty.
Premature closure of SCSS Account
Premature closure of SCSS account permitted at any time after opening the account but with penalty.
1. If closed before the completion of 1 year, no interest payable, if paid already will be recovered.
2. If closed between 1 year and 2 years of account opening, an amount equal to 1.5% of the deposit deducted as penalty.
3. If closed on or after 2 years of account opening, an amount equal to 1% of the deposit deducted as penalty.
4. In the event of the death of the depositor, the account closed without any charges. The deposit refunded along with interest at the rate of SCSS till the date of demise.
Taxation under Senior Citizen Savings Scheme
Investment in Sr Citizen Saving Scheme is eligible for tax deduction under Section 80C up to Rs1.5 lakh per financial year. However, this exemption not allowed if you choose to file tax returns under the new income tax regime.
The interest received on SCSS scheme is fully taxable as per the applicable tax slab of the recipient. The tax deducted at source (TDS) on the interest earned if the amount is more than Rs.50,000 per year.
Must Read: Post Office Time Deposit Account (POTD): Interest Rate, Features & Benefits
Final Thoughts
Senior Citizen Savings Scheme (SCSS) is a very good saving schemes for senior citizens. The Senior Citizen Scheme offers a sovereign guarantee because it is a Government of India product. Therefore, SCSS scheme is an ideal investment option for senior citizens who want a risk free return on their investment.
Note: This post was originally published on September 11, 2020 and has been completely updated for accuracy and comprehensiveness.
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