The Senior Citizens Savings Scheme (SCSS) is primarily for senior citizens of India that offers regular income and is a risk-free tax saving investment.
1. Why should you invest in SCSS?
Investing in SCSS is a very good opportunity for senior citizens above 60 years to make money. This is an effective & long term saving option which offers security and features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available through certified banks and post offices across India.
2. Eligibility for SCSS
The following people/groups are eligible to opt for SCSS:
1. Senior citizen of India aged 60 years or above.
2. Retirees who have opted for the Voluntary Retirement Scheme (VRS) or Superannuation with the age between 55-60. Here the investment has to be done within a month of receiving the retirement benefits.
3. Retired defense personnel with a minimum age of 50 years.
4. HUFs and NRIs are not allowed to invest in this scheme.
3. Investment Amount
An individual can invest a maximum amount of Rs 15 lakhs, singly or jointly in an SCSS account (in multiples of Rs 1,000). The amount invested in the scheme cannot exceed the money that has been received on retirement. Hence, the individual can invest either Rs 15 lakhs or the amount received as a retirement benefit whichever is lower. The account can be opened by cash for an amount below Rs 1 lakh and by cheque for an amount above Rs 1 lakh.
4. Benefits of investing in SCSS
1. Safe and Reliable: This is an Indian government-sponsored investment scheme and hence is considered as the safest and reliable investment option.
2.Simple and easy process: The process to open an account is simple and can be opened at any authorized banks and any post offices across India and transferable across India.
3.Good returns: At 8.6 % the return rate is good as compared to a savings or FD account.
4. Nomination: Nomination facility is available at the time of opening an SCSS account by submitting an application as part of Form C which is also accompanied by the passbook to the Branch.
5. Tax benefits: Tax deduction up to Rs 1.5 lakh can be claimed under Section 80C of Indian Tax Act 1961.
6. Flexible: Tenure of this investment scheme is flexible and it has an average tenure of 5 years but can be extended up to 3 more years.
5. How to open a SCSS account
The SCSS account can be opened in any of the authorized banks or post office branch across India with following documents:
1. Form A has to be filled for opening SCSS Account.
2. Identity proof like PAN card, Passport.
3. Address proof such as Telephone bill, Aadhar card.
4. Age Proof Document is required like as Passport, Senior Citizen Card, a Birth certificate issued Corporation or registrar of births and death, Voter ID card, PAN card etc.
5. 2 Passport size photographs.
All the above documents should have to be self-attested.
6. Interest rate on SCSS Account
Below are the interest rates offered historically on the Senior Citizens’ Savings Scheme:
| Period | Interest Rate |
|---|---|
| Up to 2012 | 9% |
| 2012-13 | 9.3% |
| 2013-14 | 9.2% |
| 2014-15 | 9.2% |
| 2015-16 | 9.3% |
| 2016-17 | 8.5% |
| 2017-18 (Q1) | 8.4% |
| 2017-18 (Q2) | 8.3% |
| 2017-18 (Q3) | 8.3% |
| 2017-18 (Q4) | 8.3% |
7. Tenure of the fund and withdrawal
The tenure of this scheme is 5 years with the option to extend it for further 3 years. In order to extend the scheme for another 3 years after completion of 5 year tenure the investor needs to submit the duly filled Form B which is regarding the extension of the scheme. Only one extension is allowed and such extended accounts can also be closed after one year of extension without any penalty.
The premature withdrawals are allowed but only after 1 year of account opening. When the closure of the account after one year takes place but before the end of 2 years, 1.5% of the deposit shall be deducted as pre-mature withdrawal charges. On the closure of the account after 2 years an amount equal to 1% of the deposit shall be deducted as charges
In the event of death of the depositor no charges or penalty are levied for premature closure of the account.
8. Banks applicable for SCSS Account
Following are the banks where SCSS account can be opened :
1. Allahabad Bank
2. Andhra bank
3. Bank of Maharashtra
4. Bank of Baroda
5. Bank of India
6. Corporation Bank
7. Canara Bank
8. Central Bank of India
9. Dena Bank
10. IDBI Bank
11. Indian Bank
12. Indian Overseas Bank
13. Punjab National Bank
14. State Bank of India
15. Syndicate Bank
16. UCO Bank
17. Union Bank of India
18. Vijaya Bank
19. ICICI Bank
In short, SCSS is a very good scheme for senior citizens who want a decent risk free return on a corpus fund. At a 8.5% interest rate and a investment amount of 15 lakhs the monthly income for the investor is stated to be Rs 10,625 per month for each investor.
