The Senior Citizen Savings Scheme is a post office savings plan for elderly people in India. It helps you to invest a lump sum with the maximum up to Rs.15 lakhs with the lock-in term of 5 years. Interest payments are made on a quarterly basis to guarantee daily money in the hands of senior citizens. Thus, the government-backed it, rendering it a risk-free program. In addition, expenditure in this scheme is liable for a deduction of income tax under 80C. So, if you’re looking forward to saving your lump sum savings assets and having a decent return, then this scheme is for you. Let’s learn about the scheme and schedule your and your beloved one’s retirement safely.
So, What is the Senior Citizen Savings Scheme?
5 Year SCSS is the best tax saving savings choice for elderly people of 60 years of age or older. It’s a government-backed program which provides protection in old age. Thus, the chance of losing the savings would be almost zero. As the title suggests, the initial maturity period is 5 years and can be prolonged by a further 3 years.
The 5 Year SCSS account can be opened with any postal service, private bank or public sector bank. It’s intended to provide.
- The best way to invest the lump sum of the retirement funds.
- Regular earrings (quarterly) for senior citizens following retirement.
Benefits of SCSS
The 5-year SCSS gives its investors the following incentive-
- Tax Benefit: Money invested is qualified for a tax benefit of up to Rs 1.5 lakhs within section 80C.
- Extended period: Even after the lock period of 5 years, if you wish, you can prolong the investment duration by three years.
- Joint Holding Permissible: You can keep senior citizen savings account with your husband/wife.
- Nominees: You may have either one two nominees for your SCSS account.
- Lump-Sum Investment: Offers you a stable opportunity to spend the lump sum money earned at the time of retirement. This is a one-time payout.
Who can invest?
The government has fixed the lowest possible investment age of 60 years.
Early retirees may still save between the ages of 55 and 60 whether they have decided for voluntary retirement or business retirement. Under this clause, the contribution should be made within one month of acceptance of the retirement payout. Please keep in mind that NRIs and HUF (Hindu Undivided Family) are excluded from investing in this scheme, 50 years or above Defense staff may also invest in this scheme.
How much interest is paid under SCSS?
Interest rates are set by the Ministry of Finance and are checked and updated by the Finance Department each quarter of the FY. For the quarter ended 31 March 2020, the interest rate was set at 8.6 per cent p.a. The interest rate is set mostly on investment only at a rate fixed for that quarter. If you expand your post-maturity portfolio, the interest existing at the period would apply.
The interest rate shall be measured and paid on various days.
| Interest Period FY 2019-20 | When the interest is calculated | When interest is charged or credited | Interest rate compounded and paid quarterly |
| April-June 2019 | 30/06/19 | 1/07/19 | 8.7% |
| July-Sep 2019 | 30/09/19 | 1/10/19 | 8.6% |
| Oct-Dec 2019 | 31/12/19 | 1/01/20 | 8.6% |
| Jan-March 2020 | 31/03/20 | 1/04/20 | 8.6% |
Investment limit under this scheme?
Let us consider the different contribution limitations of the SCSS one by one.
Minimum Investment.
The lowest possible investment needed is ₹1000.
Minimum Investment.
A limit of 15 lakhs could be spent in this system, but it was all in the denominations of ₹1000. You ought to be sure that the amount you spend is smaller than what you got on retirement. This implies that you can either spend 15 lakhs in this scheme or the money you got as your retirement bonus, whichever is lower in value.
Number of accounts
There really is no limitation on the number of accounts which can be held by a senior citizen. You may either invest in a single account under your name or even in a shared account with your partner. The Shared Depositor underneath the Joint Account cannot be a son or a daughter but must be a partner. However, the total amount of money in both banks does not surpass the maximum cap.
Investment in cash
If the investment value is less than ₹1 lakh, it could be opened by currency. If the investment value is greater than ₹1 lakh, the investment must be made by verification. The investment date for the check deposits shall be established whenever the balance is expressed in the Government Account.
Documents required to open an SCSS account
Documents needed are as follows:
- The account opening form is properly signed and filled. The form is publicly available on the website as well as via the post office.
- PAN number of the owners of the account.
- Address proof.
- A recent picture of the depositor. Pictures with both parties in the event of a shared account.
- KYC documents.
- Age proof: Every official certificate that confirms your age.
- In the event of retirement from work, a certificate by your employer is required. The certificate should also include the relevant information:-the cause for retirement, the rewards that you are qualified to after retirement, the job occupied while being in employment and the duration of your job.
- Document stating the date on which the pension benefit was allocated to the retiree.
