The Senior Citizen Savings Scheme (SCSS) is a deposit scheme offered by the government of India. It was introduced in 1983 to benefit senior citizens who want to save and invest their money. The scheme allows you to deposit your money in an SCSS account either through cheque or demand draft. You can also open joint accounts with your spouse or any other close relative who may be older than 60 years of age. The interest rate on SCSS deposits varies depending on the type of account you have opted for while opening it, but it’s always better than zero!
Senior Citizen Savings Scheme
The Senior Citizen Savings Scheme can be opened by any individual who is over the age of 60 years. The scheme is not available to minors and it also does not apply to people who are under 18 years of age.
It is a long-term investment option and can be opened in any currency, but it should be noted that the interest earned on this scheme is taxable in India.
Also, read Saving Schemes in India.
- You must be a resident of India and above 60 years of age to open an SCSS account.
- The maximum age for opening this scheme is 80 years.
- The minimum deposit amount is Rs 1,000 or its equivalent in another currency. The maximum investment is up to 15 lakhs (Rs 15 Lakhs).
- The account can be opened in the name of the minor by a guardian who will have complete access to all transactions done through this scheme
The account can be operated by the guardian and he/she is responsible for all transactions done through this scheme.
The upper age limit
No upper age limit is present for senior citizens. They can open an SCSS account at any age and continue to earn interest on their deposits.
What will happen when the individual dies?
In case of an individual’s death, the spouse will be eligible to continue the account and receive payments till maturity. The maturity amount is payable in one lump sum after 5 years from the date of opening of the account.
In case of joint income between spouses (both are above 70 years), if one spouse dies without leaving any heirs or legal successors, then the remaining spouse has the right over this scheme for his/her lifetime till he/she attains 70 years of age limit or until she passes away whichever comes first
The minimum deposit required and the interest rate
The minimum deposit required for opening an SCSS account is Rs 1,000 and its multiples.
The maximum investment in a single SCSS account can be as high as Rs 10 lakhs per person per year. However, it is advisable to invest at least 5% of your annual income (before tax) into this scheme because the interest rate on these investments will be higher than the prevailing interest rates available from other saving schemes like PPF Fixed Deposit, etc.
The interest rate on these deposits is paid quarterly and the interest rate will be determined by the government on an annual basis. The rate of interest for this scheme was 5% in 2018-19.
The maximum investments for various cases
- The maximum investment that can be made in SCSS is Rs 15 lakh for an individual and Rs 30 lakh for a joint account.
- Investment in NRI accounts is also subject to the same limit of Rs 15 lakh per person, with an upper limit of Rs 50 lakh per family.
- In addition to the above, an individual can also invest Rs 1 lakh in foreign currency convertible bonds (FCCBs) and another Rs 2 lakh in Indian Depository Receipts (IDRs).
- There are also several other investment options available for NRIs, including debt instruments and gold. However, the maximum that can be invested in these products is Rs 15 lakh per person. This restriction does not apply to NRI accounts opened by Indian companies and institutions for their employees or business partners working overseas.
- In the case of a joint account, no maximum limit has been prescribed on the value of the deposits. The interest rate applicable on such deposits is fixed at 6% per annum with effect from 1st December 2016 and will go up to 7% with effect from 1st July 2021 for all new subscribers who join after that date.
- The minimum amount which can be deposited in an individual account is Rs 10,000/- which must be maintained till maturity to avoid premature withdrawal or forfeiture of interest earned by you during this period as well as any penalty charges levied against you if withdrawn before maturity even if due to death or illness etc.
Deposits in SCSS can be made only by cheque or demand draft. Cash payments are not allowed.
You can deposit your savings as per the following guidelines:
- Multiple Rs 1,000 can be deposited only once a month; otherwise, you will have to wait for another month before depositing any amount again. So, if you have deposited Rs 10,000 in one month and now want to make another deposit of Rs 10,000 on the same day (within one working day), then it will be considered as two separate transactions and hence you won’t be able to make another deposit.
SCSS vs Fixed Deposit
Senior Citizen Savings Scheme (SCSS)
7.6% (October-December 2022)
6.5%-7.5% (For Senior Citizens)
Tax Benefits on investments
Tax Benefits on returns
Allowed anytime after opening but with a penalty
SCSS is a useful service for senior citizens and those who wish to start their retirement fund. As mentioned above, it makes sense for anyone who meets the eligibility requirements to open an SCSS account. It is a savings plan that provides a fixed interest rate of 5% per annum on deposits up to Rs. 1 lakh and 8% per annum on deposits above Rs. 1 lakh.
The scheme has been designed to encourage senior citizens to save money and invest it in safe instruments such as Indian Government bonds and other securities issued by the National Securities Depository Limited (NSDL). The scheme also provides for a subsidy of 40% on the amount invested along with an interest subsidy of 20%. The scheme is also open to all senior citizens, irrespective of their income levels, occupation, or assets.
But, investing in alternative investments like real estate can increase your chances of gaining profits in high portions, which is not the case with these savings schemes. Also, investing is made a lot easier by platforms like Assetmonk, where you can invest in a wide array of residential as well as commercial real estate assets. To your comfort, even fractional ownership is available on Assetmonk, where you can be the rightful owner of a property by purchasing just a fraction of the asset.
Senior Citizen Savings Scheme (SCSS) - Eligibility, Interest Rate & Benefits FAQs
No, you cannot open an SCSS account online. For opening an SCSS account, you have to visit the respective bank or post office nearest to you where SCSS account opening forms are available.
Yes, the investments made in SCSS are taxable under section 80C of the IT Act.