Senior Citizen Savings Scheme (SCSS) - Interest Rate 2023, Tax Benefits, Eligibility, Rules & Opening SCSS Account

Budget 2023 Latest Update: The maximum deposit for senior citizen saving scheme has been enhanced from Rs 15 lakhs to Rs 30 lakhs.

The Senior Citizens Savings Scheme (SCSS) is primarily for the senior citizens of India. The scheme offers a regular stream of income with the highest safety and tax saving benefits. It is an apt choice of investment for those over 60 years of age. 

What is the Senior Citizen Savings Scheme (SCSS)?

A Senior Citizens’ Saving Scheme (SCSS) is a government-backed retirement benefits programme. Senior citizens resident in India can invest a lump sum in the scheme, individually or jointly, and get access to regular income along with tax benefits. It is a Post Office savings scheme. Senior citizens can open an SCSS account to get the benefits of the SCSS. They can open an account in a Post Office branch or an authorised bank. 

Features of SCSS

Secure investment

SCSS is a government-backed scheme. Hence, the invested amount is secure and there is guarantee of returns upon its maturity. 

Interest payment

Individuals who open an SCSS account get an interest on the principal deposited amount at the rate fixed by the government. They will receive a quarterly interest against their deposited amount. Interest payment will be credited to an individual’s account on the first date of April, July, October, and January.

Mode of deposit

An individual can deposit the money in cash when the amount is below Rs.1 lakh. When the deposit amount is above Rs.1 lakh, an individual should make the payment in cheque.

Maturity of the scheme 

The maturity period of SCSS is 5 years. However, individuals can extend the maturity period for 3 more years by submitting an application. The application for extension of maturity should be given in the 4th year.

Nominations

Individuals can appoint nominees either while opening an SCSS account or after opening the account.

Number of accounts 

Individuals can open more than one SCSS account. They may open another account either by themselves or a joint account with their spouse. 

Minimum and maximum deposit amount 

The minimum deposit is Rs.1,000 and the maximum is Rs.30 lakh. The deposits can be made in the multiples of Rs.1,000.

Transfer of an account 

An SCSS account can be transferred from a post office to a bank and vice versa. 

Premature closure

Individuals can withdraw the amount after one year of opening the account. There is no charge for premature closure of the account within one year of opening it. However, a 1.5% charge will be deducted from the principal amount if the account is closed after one year but within two years of opening it. A 1% charge will be deducted from the principal amount if the account is closed after two years but within five years of opening it.

Eligibility for SCSS

The following individuals can open a SCSS account with a post office or bank:

• Individuals above 60 years.
• Retired civilian employees above 55 years and below 60 years. However, the investment should be made within 1 month of receipt of retirement benefits.
• Retired defense employees above 50 years and below 60 years. However, the investment should be made within 1 month of receipt of retirement benefits.
• Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open a SCSS.

SCSS interest rate

The current interest rate applicable to SCSS is 8.2% p.a. This interest rate is applicable from 1st April 2023 until 30th June 2023. The interest will be paid on a quarterly basis. 

How SCSS works?

Here is how an SCSS account works:

• Open an SCSS account by depositing a minimum amount of Rs.1,000 up to Rs.30 lakh in a single instalment.
• The deposit amount is restricted to the retirement benefits received and must be deposited in the SCSS account within a month from the date of receiving the retirement benefits from the employer.
• Retirement benefits here means any payment due to the account holder on account of retirement on superannuation or otherwise. It includes provident fund dues, retirement or superannuation gratuity, commuted value of pension, leave encashment, savings element of Group Savings Linked Insurance Scheme payable by the employer on retirement, retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme and ex-gratia payments under a voluntary or a special voluntary retirement scheme.
• If the deposit is in excess to the ceiling amount, the excess amount shall be refunded to the account holder immediately.
• Interest on the deposit will be paid once every quarter.
• Interest can be drawn through auto credit into the savings account held at the same Post Office branch or through ECS.
• The account can be prematurely closed at any time, after the date of opening.
• The account may be extended for a further period for 3 years from the date of maturity.
• The extension can be done within 1 year from the date of maturity.

SCSS Calculator – Senior Citizens Savings Scheme Calculator

Benefits of SCSS

Here are a few reasons on why you should invest in SCSS:

• SCSS is an Indian government-sponsored investment scheme and hence is considered safe and most reliable.
• SCSS account includes a simple process and can be opened at any authorided bank or any post office in India.
• The account is transferable across India.
• The scheme offers a high interest rate on the deposit.
• Get an income tax deduction of up to Rs.1.5 lakh under Section 80C of the Indian Tax Act, 1961.
• The 5-year tenure of the account can be extended for another 3 years.

SCSS application process

You can open an SCSS account either at an authorised bank branch or at a post office branch. If the bank allows, you can open the SCSS account online on the bank’s internet banking portal or mobile banking app. There is no option to open the SCSS account online with the post office. 

You can also download the SCSS application form from the India Post website. You need to fill the form and submit it with the authorised post office along with the required documents and pay the deposit to open the account.

How to fill the Post Office SCSS application form?

You can collect the SCSS application form either at the post office branch or on the official website of the India Post. The process of filling the application form is:

• Enter the post office branch name on the top left corner of the form.
• If you already have a savings account with the post office, enter the account number.
• Under the ‘To’ section, enter the branch address of the Post Office.
• Paste the account holder’s photograph.
• Now, write the account holder’s name in the first blank space and tick on ‘SCSS’ option among the other options.
• You don’t have to select any options provided under the ‘Additional Facilities Available’ section as they are valid only if you are applying to open a savings account.
• Next, select the account holder type, i.e. self, minor through guardian, or person of unsound mind through guardian.
• Select the account type, whether single, either or survivor, or all or survivor.
• Move to the field number 2 where you have to enter the deposit amount in figures and then in words. If you are presenting a cheque, write down the cheque number and date.
• Enter the personal details of account holder(s).
• Tick the cells where you have provided the requested document proofs at the end of the table.
• Tick the SCSS declaration and enter the details.
• Signatures of all the account holders must be added at the end of the page 1 of the form and in Page 2.
• Mention the nominee for the account and the relevant details of the nominee you have chosen. Add the signatures of all account holders to validate this information.

How to open a SCSS account with a Bank?

Below are the steps to open a SCSS account with an authorised bank:

Step 1: Go to the nearest authorised bank branch and collect the SCSS application form. 

Step 2: Fill in the necessary information on the application form. 

 Step 2: Fill in the necessary information on the application form. 

Step 3: Attach the required documents. 

Step 4: Submit the application form, documents and the deposit money with the bank staff. 

Step 5: The bank employees will process the application and open the SCSS account. 

Which banks offer SCSS?

The following banks offer SCSS:

• Allahabad Bank
• Andhra bank
• Bank of Maharashtra
• Bank of Baroda
• Bank of India
• Corporation Bank
• Canara Bank
• Central Bank of India
• Dena Bank
• IDBI Bank
• Indian Bank
• Indian Overseas Bank
• Punjab National Bank
• State Bank of India
• Syndicate Bank
• UCO Bank
• Union Bank of India
• Vijaya Bank
• ICICI Bank

Along with these banks, the Post Office also offers SCSS.

Documents required to open SCSS account

• Two passport-size photographs
• Identity proof, such as a PAN card, Voter ID, Aadhaar card or passport.
• Proof of address, such as Aadhaar card or telephone bills.
• Proof of age, such as PAN card, Voter ID, birth certificate or senior citizen card.

All the documents must be self-attested.

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 the case the interest amount is more than Rs.50,000 p.a., TDS will be deducted.

To sum it up, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At 8.2% p.a. interest rate and an investment amount of Rs.30 lakh, the monthly income is stated to be Rs.20,500 per month for each investor. 

Frequently Asked Questions

How many accounts can be opened under SCSS by a senior citizen?

Please note that you can make the deposit to the account in a single payment. Therefore, an account holder may operate more than one account under the scheme subject to the condition that the deposits in all the accounts taken together shall not exceed the maximum limit, i.e. Rs.30 lakh. Also, more than one account shall not be opened in the same deposit branch during a calendar month.

How to open an SCSS account online?

As of now, there is no option for you to open an SCSS account online. Neither do the authorised banks nor the Post Office provides you a platform to open the account online. Please follow the steps provided above to open the account offline.

How to open a SCSS account with SBI?

Step 1: Visit the nearest SBI branch or the SBI branch with which you have a savings account.

Step 2: Request for the application form and fill up the relevant details in the form.

Step 3: Attach the supporting documents with the application form, such as the employer’s letter stating the retirement benefits you have received.

Step 4: Submit the documentation and the deposit amount to the SBI personnel.

Step 5: The personnel from SBI will process your application and the payment received. Once the payment is processed, the SCSS account will be created.

How to open a SCSS account in ICICI Bank?

Step 1: Visit the nearest ICICI Bank branch or the ICICI Bank branch where you have a savings account.

Step 2: Request for the application form and fill up the form with your personal details.

Step 3: Submit the application form with supporting documents as well as the deposit amount in cash or cheque to the bank personnel.

Step 4: The personnel from ICICI Bank will process your application and the payment received. Once the payment is processed, the SCSS account will be created.

How can a SCSS account be transferred from a post office to a bank?

You can transfer the SCSS account by submitting Form G to the post office along with the required documents for transfer of account to the bank of your choice.

Can I open a joint SCSS account with my wife who is below 60 years?

Yes. Since you are above 60 years, you can appoint your spouse as the joint account holder. You will be the primary account holder, thus your wife’s age will not affect opening the account.

What is the share of the joint account holder of SCSS?

The whole amount in the SCSS account is given to the first account holder or first depositor. Thus, adding a spouse as a joint account holder does not matter in this case.

Can both spouses open separate SCSS accounts?

Yes, both spouses can open individual SCSS accounts provided both of them are aged above 60 years. 

Is TDS applicable to the interest earned from the SCSS account?

Yes, TDS is applicable on the interest if it exceeds Rs. 50,000 per annum. However, if the interest is below Rs.50,000 in a financial year, TDS will not be deducted if you submit Form 15G/15H to the post office. 

In the case of a joint account, if the first account holder expires before maturity, can the account be continued?

Yes, in the case of a joint account, the spouse can continue the account after the death of the first account holder only if the spouse is above 60 years and does not have another SCSS account. If the spouse is below 60 years, the nominee can continue the account until its maturity, and the account will earn interest till maturity. 

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