Key feature of Senior Citizen Savings Scheme (SCSS)

 

In view of falling interest rates, taxpayers are looking for better options for earning interest income. Here is one option for the senior citizens in the form of a senior citizen saving scheme (SCSS). The Senior Citizens Savings Scheme (SCSS) was launched with the main aim of providing senior citizens of the country a regular income after they attain the age of 60 years old.  It can be availed by any individual who has attained the age of 60 years. However, individuals who have attained the age of 55 years old, but are below the age of 60 years old and have retired on superannuation are eligible to open an SCSS account. Non-Resident Indians (NRIs) are not eligible to open an SCSS account. Hindu Undivided Families (HUF) are not eligible to open an SCSS account as well.

It offers effective savings options for long term investments.

The key feature of the SCSS is as under:

Tenure of holding	5 years
Present Interest Rate	7.4% p.a.
Investment Amount	Maximum amount that can be deposited is Rs.15 lakh. Investment above Rs. 15 Lakh in aggregate is allowable.
Premature Withdrawal	Allowed

It is Safe to invest scheme & pre-matured withdrawal is allowed

Tax benefits under the SCSS

Under Section 80C of the Income Tax Act, 1961, individuals are eligible for tax deductions on investments up to Rs.1.5 lakh. In case the interest generated is more than Rs.10,000 p.a., the tax will be deducted at source.

How to open an SCSS account?

An SCSS account can be opened at a bank or a post office. One can SCSS account is mentioned below:

1. Visit the nearest post office or bank branch.
2. Submit the application form along with the KYC documents.
3. A cheque for the amount that is being deposited must be provided.

Senior citizens can add nominees to the account.

Documents required to open SCSS account

1. Two passport-size photographs
2. Form A must be completely filled and submitted.
3. Identity proof such as Passport or Permanent Account Number (PAN) Card must be submitted.
4. Individuals must submit proof of address such as Aadhaar Card or telephone bill.
5. A document confirming the individual’s age must be submitted. Age proof documents can be the PAN Card, Voter ID, Birth Certificate, Senior Citizen Card, or Passport.

All the documents that are submitted to open an account must be self-attested.

Maturity of the scheme: 

The maturity period of the scheme is 5 years. However, individuals can extend the maturity duration for 3 years by submitting an application in the required format within one year of maturity of the account. However, the account can be closed without any charges after the expiry of the account.

 

How many accounts can be opened by one Individual?:

 Individuals are allowed to operate more than one account by themselves or open a joint account with their spouse. However, joint accounts can be opened only with the spouse and the initial depositor is the investor of the joint account.

Only a single deposit is allowed to be made in the account. It can be in the multiples of Rs.1,000 and the maximum amount that can be deposited is Rs.15 lakh.

Deposit amounts less than Rs.1 lakh can be paid by cash, while amounts more than Rs.1 lakh must be paid by cheque. In case of cheque payments, the date the cheque realises will be the opening date of the account.

Premature withdrawal: 

After one year of opening the account, premature withdrawal is allowed. However, a 1.5% charge and a 1% charge of the total amount deposited will be charged in case of premature withdrawals after 1 year and 2 years, respectively.

Some of the additional features are as under:

1. Both the spouses can open separate accounts provided the deposit limit is a maximum of Rs.15 lakh.
2. TDS is applicable to the scheme & if the interest exceeds Rs.10,000 per annum, TDS is applicable. In this scheme, interest payments are no exemption to deduction of tax at source.