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!
If you are a senior citizen looking for the best investment opportunities in India looking for fixed income, then you must invest in the real estate market. A promising avenue within this sector is the realm of structured debt investments, particularly in commercial real estate. Structured debt investments in real estate involve tailored financing solutions designed for commercial real estate projects, providing investors with the opportunity to potentially achieve attractive returns and regular earnings. The entry into this investment avenue is accessible with a relatively modest initial amount of 10 lakhs, and it offers the potential for returns ranging from 12% to 20%. These investment opportunities are facilitated through reputable alternative investment platforms like Assetmonk.
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.
Eligibility Criteria of the Senior Citizen Savings Scheme
- 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 Rs.30,00,000 (Rs 30 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.
Benefits of the Senior Citizens Savings Scheme
Here are some compelling benefits of investing in the Senior Citizens Savings Scheme (SCSS):
- SCSS is a government-backed investment scheme in India, making it a secure and highly dependable option for investors.
- Opening an SCSS account is a straightforward process, available at any authorized bank or post office in India.
- The SCSS account is portable, allowing you to transfer it across different locations in India with ease.
- This scheme provides an attractive high interest rate on your deposited funds.
- Investors can benefit from an income tax deduction of up to Rs. 1.5 lakh under Section 80C of the Indian Tax Act, 1961, which can reduce their tax liability.
- The SCSS offers flexibility, as the initial 5-year tenure of the account can be extended for an additional 3 years, giving you more control over your investment timeline.
Tax Benefits of Senior Citizen Savings Scheme
Under Section 80C of the Income Tax Act, 1961, individuals can claim deductions on investments of up to Rs. 1.5 lakh. However, please note that if the interest earned exceeds Rs. 50,000 annually, TDS (Tax Deducted at Source) will be applicable.
In summary, the SCSS is an excellent choice for senior citizens seeking a secure and stable return on their investment. With an annual interest rate of 8.2% and an investment of Rs. 30 lakh, investors can expect a monthly income of Rs. 20,500.
The upper age limit for Senior Citizen Savings Scheme
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 for Senior Citizen Savings Scheme
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 Rs.30,00,000 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 is 8.2% in 2023.
Maximum investments for various cases for the Senior Citizen Savings Scheme
- 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 30 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 that 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.
Deposit rules for Senior Citizen Savings Scheme
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.
Methods to Open SCSS Account
The SCSS application process offers flexibility for both bank and post office branches. Here’s how you can initiate your SCSS account:
- For Post Office SCSS Account
- Visit an authorized post office branch or download the SCSS application form from the official India Post website.
- Complete the application form with the following steps:
- Specify the name of the post office branch in the top left corner.
- If you have an existing savings account with the post office, include your account number.
- Provide the branch address in the “To” section.
- Affix a recent photograph of the account holder.
- Enter the account holder’s name in the designated space and select “SCSS” among the options.
- Skip the “Additional Facilities Available” section, as these apply to savings accounts.
- Choose the account holder type: self, minor through a guardian, or a person of unsound mind through a guardian.
- Indicate the account type: single, either or survivor, or all or survivor.
- Specify the deposit amount in both figures and words in field number 2. If you’re using a cheque, include the cheque number and date.
- Provide personal details of the account holder(s).
- Tick the cells where you’ve submitted the requested document proofs at the end of the table.
- Check the SCSS declaration box and enter the necessary details.
- Signatures of all account holders are required at the end of page 1 and on page 2.
- Designate a nominee for the account and provide relevant nominee details. Ensure all account holders sign to validate this information.
- For Bank SCSS Account
- Visit your nearest authorized bank branch and request the SCSS application form.
- Fill in the application form with the necessary information.
- Attach the required documents to the application.
- Submit the completed application form, necessary documents, and the deposit amount to the bank’s staff.
- The bank personnel will process your application and open your SCSS account.
Banks Offering SCSS Account
- Andhra Bank
- Punjab National Bank
- Corporation Bank
- State Bank of India
- Union Bank of India
- Central Bank of India
- Dena Bank
- Indian Overseas Bank
- Indian Bank
- Bank of India
- IDBI Bank
- Bank of Baroda
- UCO Bank
- Allahabad Bank
- Vijaya Bank
- ICICI Bank
- Bank of Maharashtra
- Syndicate Bank
- Canara Bank
Additionally, the Post Office also provides SCSS.
Required Documents For Opening SCSS account
To open an SCSS account, you will need to provide the following documents, all of which should be self-attested:
- Two recent passport-size photographs.
- Proof of identity, which can be a PAN card, Voter ID, Aadhaar card, or passport.
- Proof of address, which can be an Aadhaar card or recent telephone bills.
- Proof of age, which can be a PAN card, Voter ID, birth certificate, or senior citizen card.
Senior Citizen Savings Scheme vs Fixed Deposit
|Features||Senior Citizen Savings Scheme||Fixed Deposit|
|Interest Rate||8.2%||6.5-7.5%, but varies across banks (for Senior citizens)|
|Maturity Period||5 years||5 years|
|Minimum deposit amount||Rs. 1k||Differs across banks|
|Maximum deposit amount||Rs. 30 lacs||Differs across banks|
|Taxation on Returns||Yes||Yes|
|Premature Withdrawal||You can withdraw funds anytime after opening the account, subject to a penalty.||Cannot withdraw|
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 of a limit of Rs. 1 lakh and 8% annually on deposits more than 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.
However, 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 structured debt of commercial real estate assets. It offers an assured IRR of 17 percent.
- Saving Schemes In India 2023 Check Interest Rates & Eligibility
- 18 Best Investment Options in India to get Higher Returns 2023
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.