Last Updated on Jul 26, 2022 by Aradhana Gotur
During retirement, the focus should be to manage your accumulated funds rather than investing it in risky avenues like equity. An ideal investment then would be one that primarily offers capital protection, so you don’t gamble away your funds. And if the savings avenue offers stable returns, nothing like it. One such option is the government-backed Senior Citizens Savings Scheme (SCSS), which offers the safety of capital, steady returns, and tax benefits.
Read more about SCSS, benefits, eligibility, the application process, and tax rules in this article.
| Particulars | Details |
| Investment amount | A maximum of Rs.15 lakh |
| Tenure | 5 yrs |
| Senior Citizens Saving Scheme interest rate | 7.40% p.a. (Q2 FY 2022-2023) |
| Premature withdrawal | Allowed |
Table of Contents
What is the SCSS (Senior Citizens Savings Scheme)?
The Senior Citizens Savings Scheme is a retirement benefits scheme backed by the government. It was launched to provide senior citizens with a regular income after attaining 60 yrs. The applicant invests a lump sum either individually or jointly with the spouse and gets regular income in addition to tax benefits.
Features and benefits of the Senior Citizens Savings Scheme (SCSS)
- Safety of capital: Since the scheme is backed by the government, it is safe to invest in. You can be sure to receive your invested amount on maturity.
- Minimum and maximum investment: A minimum of Rs. 1,000 and a maximum of Rs. 15 lakh can be deposited in an SCSS account. The scheme accepts a single deposit in multiples of Rs. 1,000. While a deposit less than Rs. 1 lakh can be in cash, any amount over Rs. 1 lakh is to be paid by cheque/demand draft.
- Maturity: The tenure of a Senior Citizens Savings Scheme account is 5 yrs. However, the account holder can extend this for 3 yrs by submitting an application within a year of maturity of the account. The closure of the account after its expiry attracts no charges.
- Interest and returns: SCSS interest rate is higher than that of a savings bank account and an FD. The scheme offers guaranteed quarterly returns, with interest being credited on the first day of April, July, October, and January every year.
- Tax benefits: The investment amount is eligible for a tax deduction, which is discussed in detail below.
- Premature withdrawal: To help deal with emergencies, the scheme allows you to withdraw funds after one year of opening the account. However, this attracts premature withdrawal charges of 1.5% and 1% of the investment amount after 1 yr and 2 yrs, respectively.
- Transfer of an account: You can transfer an SCSS account from one post office/bank to any other branch across India. You can also transfer it from a post office to a bank and vice versa.
- Number of accounts: An individual is allowed to operate more than one account provided the combined investment doesn’t exceed the maximum limit of Rs. 15 lakh. Further, the individual cannot open more than one account in the same branch during a calendar month.
- Nomination: A nominee can be appointed either at the time of account opening or anytime after.
Tax benefits of Senior Citizens Savings Scheme (SCSS)
Only the deposit made is eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961. Interest earned is taxable as per the applicable tax slab rate. In case the interest exceeds Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is applicable.
Where can you open an SCSS account?
You can open an SCSS account at post offices and authorised banks across India. Note that the scheme can’t be opened online.
How to open an SCSS account?
- Visit a post office or an authorised bank nearest to you
- Submit the SCSS application form along with KYC documents
- Deposit investment amount via cash/cheque/demand draft for the investment amount
- Add nominees to your SCSS account
SCSS eligibility
- The individual should be aged 60 yrs or above at the time of opening a Senior Citizens Savings Scheme account
- The individual should be at least 55 yrs old but below 60 yrs and retired on superannuation
- An individual who is 55 yrs old and retired before SCSS rules were implemented
- The individual should not be a Non-Resident Indian (NRI)
- Hindu Undivided Families (HUF) cannot open an SCSS account
SCSS interest rate
The interest rate on SCSS is higher than that of savings accounts and Fixed Deposits (FD). For Q2 FY 2023, the SCSS account earns interest at 7.4% p.a.
Documents required to open an SCSS account
Following is a list of documents needed to open a Senior Citizens Savings Scheme account. Note that these must be self-attested:
- A duly filled Form A
- Two passport-size photos
- Identity proof like a passport or Permanent Account Number (PAN) Card
- Address proof like Aadhaar Card or utility bill
- A document confirming the applicant’s age, such as the PAN Card, Birth Certificate, Voter ID, Passport or Senior Citizen Card
How to fill out the post office Senior Citizens Saving Scheme form?
- Collect the SCSS application form at the post office branch or download it from the official website
- On the top left corner of the form, enter the post office branch name
- If you have an active savings account with the post office, fill in the account number
- Under the ‘To’ section, fill in the post office branch
- Paste the savings account holder’s photo
- Enter the account holder’s name in the first blank space and tick on the ‘SCSS’ option
- If you do not already have a savings account, fill up the details required in the ‘Additional Facilities Available’ section
- Select the account holder type—self, minor/person of unsound mind through guardian
- Select the account type
- In field two, enter the deposit amount in figures and words. If you are depositing the funds via a cheque, enter the cheque number and date
- Enter your/account holder’s personal details
- At the end of the table, tick against the requested document proof you have furnished
- All the account holders must sign at the end of pages one and two
- Enter nominee details and get all the account holders’ signatures
List of banks that offer SCSS
- Allahabad Bank
- Andhra Bank
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- ICICI Bank Ltd
- IDBI Bank Ltd
- Indian Bank
- Indian Overseas Bank
- Oriental Bank of Commerce
- Punjab National Bank
- State Bank of India
- Syndicate Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
SCSS frequently asked questions
What is the SCSS full form?
SCSS stands for Senior Citizens Saving Scheme. It is a retirement benefits scheme launched by the government to help senior citizens get access to a regular source of income.
What is an SCSS account?
A Senior Citizen Saving Scheme (SCSS) account offers retirement benefits to eligible senior citizens in India. Beneficiaries earn stable returns on investing a lump sum in the scheme. SCSS also offers tax benefits.
What is the maximum deposit under the Senior Citizens Saving Scheme?
The maximum amount you can deposit in the SCSS account is Rs. 15 lakh. Deposits are to be made in a lump sum in multiples of Rs. 1,000.
How to open a Senior Citizens Savings Scheme (SCSS) account online?
As of now, there is no option for you to open an SCSS account online. You have to visit the nearest post office or an authorised bank to apply for the Senior Citizen Saving Scheme.
How many SCSS accounts can be opened by an individual?
An individual can operate more than one account provided that the combined deposit doesn’t exceed Rs. 15 lakh. One individual cannot open more than one account in the same branch during a calendar month.
Can I open a Senior Citizens Saving Scheme account online?
No. There is no facility to open an SCSS account online. You need to visit the nearest post office or bank.
Can spouses open individual accounts?
Yes. Spouses are allowed to open individual accounts, provided the maximum investment is Rs. 15 lakh.
Does the Senior Citizens Saving Scheme (SCSS) have tax benefits?
Yes. Investments made in an SCSS account are eligible for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Indian Tax Act, 1961.
Is TDS applicable to SCSS?
Yes. Interest earned on SCSS attracts TDS if it exceeds Rs. 50,000 p.a.
Is premature withdrawal from an SCSS account allowed?
Yes. Premature withdrawals from a Senior Citizens Savings Scheme account are allowed after a year of opening the account. Charges of 1.5% of the investment and 1% of the amount are applicable after 1 and 2 yrs, respectively.
No interest is payable on the deposit amount in case of withdrawals made before completing one year from the account opening date. If any interest was paid, it will be recovered from the account. Nonetheless, the closure of an account will not be penalised if it is closed after a year from the date of extension.
Is SCSS interest taxable?
Yes. SCSS interest is taxed at the tax slab rate applicable to the account holder. Interest exceeding Rs. 50,000 in a fiscal attracts TDS.
Can NRIs invest in the Senior Citizens Savings Scheme (SCSS)?
No. SCSS is only applicable to senior citizens in India. NRIs are not eligible to invest.
Can an SCSS account be transferred from one post office/bank to another?
Yes. You can transfer an SCSS account from one deposit office to another using Form G.
Can you extend the Senior Citizens Savings Scheme account?
Yes. You need to apply for an extension within a year after the maturity of the SCSS account. The account can only be extended for 3 yrs.
What happens to an SCSS account in case of the account holder’s demise?
If an individual who had an SCSS account passes away, it will be closed on transferring the funds to the nominee. To this effect, the nominee must submit Form ‘F’ along with the Death Certificate. Annexures II and III of this form should be attested by a public notary or the Oath Commissioner.
Can I open a Senior Citizens Savings Scheme (SCSS) account with the SBI Bank?
Yes. You can open senior citizen savings account with an authorised bank like the State Bank of India. Do this by visiting the nearest bank branch.
Can I cancel or change my nominee for the Senior Citizens Savings Scheme (SCSS)?
Yes, you can easily cancel or change your nominee by submitting a fresh nomination in Form-C to the office where you have your SCSS account.
Can you open a joint SCSS account with any family member?
No. You can only open a joint SCSS account with your spouse.
What are the eligibility criteria for a joint SCSS account?
A joint SCSS account can only be opened with the spouse. The age of the first depositor should be above 60 yrs while opening a joint Senior Citizens Savings Scheme account; there is no restriction for the second applicant. The entire investment in a joint account is attributed to the first account holder only.
Which bank is best for SCSS?
The government has identified select banks to operate SCSS. Therefore, you can open an SCSS account at any bank.
Is it possible to know the returns on an SCSS account in advance?
Yes. You can ascertain the approximate returns that you can earn on this account using an SCSS calculator. The Senior Citizen Saving Scheme calculator helps you find the value of SCSS investment and interest earned thereon the end of the tenure.
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