Senior citizen savings scheme ( SCSS )

It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.

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 of safety and tax saving benefits. It is an apt choice of investment for those over 60 years of age.

What is the SCSS scheme?

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.

What is SCSS in the Post Office?

Senior Citizens’ Saving Scheme is one of the Post Office savings schemes. You can open an account under SCSS in the Post Office like you can open it in any authorised bank. Like any other Post Office saving schemes, you can visit the nearest Post Office branch or the branch where you hold a savings account to open the SCSS account. Check the eligibility criteria and the features of the scheme before opening the account.

What is an SCSS account?

A Senior Citizens’ Saving Scheme (SCSS) account is an account that offers retirement benefits and is backed by the Government of India. Senior citizens residing in India can avail the benefits of the account by investing a lump sum in the scheme, either individually or jointly. The account will provide access to regular income post-retirement along with income tax benefits.

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.15 lakh. Also, more than one account shall not be opened in the same deposit branch during a calendar month.

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.15 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.

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.

Who can invest in SCSS?

Resident individuals who satisfy the following criteria can invest in SCSS:

• Senior citizens of India aged 60 years or above
• Citizens who have opted for the Voluntary Retirement Scheme (VRS) or Superannuation and in the age bracket of 55-60 years
• Retired defense personnel above 50 years of age and below 60 years of age
• HUFs and NRIs are not allowed to invest in this scheme
• The investment has to be done within a month from the date of receiving the retirement benefits

Why SCSS?

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

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

What is the maximum amount one can deposit under SCSS?

The maximum amount you can invest in the SCSS account is up to Rs.15 lakh.

What is the current interest rate of SCSS?

The current interest rate applicable to SCSS is 7.4% p.a. This interest rate is applicable from 1 July 2021 until 30 September 2021.

Where to open an SCSS account?

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.

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 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 Post Office. The process of filling the application form is:

1. Enter the Post Office branch name on the top left corner of the form.
2. If you already have a savings account with the Post Office, enter the account number.
3. Under the ‘To’ section, enter the branch address of the Post Office.
4. Paste the account holder’s photograph
5. Now, write the account holder’s name in the first blank space and tick on ‘SCSS’ option among the other options.
6. 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.
7. Next, select the account holder type, i.e. self, minor through guardian, or person of unsound mind through guardian.
8. Select the account type, whether single, either or survivor, or all or survivor.
9. 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.
10. Enter the personal details of account holder(s).
11. Tick the cells where you have provided the requested document proofs at the end of the table.
12. Signatures of all the account holders must be added at the end of the page 1 of the form and in Page 2.
13. 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 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.

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 7.4% p.a. interest rate and an investment amount of Rs.15 lakh, the monthly income is stated to be Rs.9,250 per month for each investor.