Urban Money

Senior Citizens Saving Scheme - SCSS

What is the SCSS Scheme?

SCSS stands for Senior Citizen Saving Scheme. It is a government-backed post-retirement scheme for the senior citizens of India. This programme can help a lot of senior citizens save for their life after superannuation apart from their regular income. SCSS also offers tax benefits. Investing in it helps make one's future secure.

How Does SCSS Work?

You can read the below-written steps and understand how SCSS works in favour of senior residents in India.

  • Any Indian resident above the age of 60 can open an SCSS account.
  • They can deposit a minimum of Rs. 1,000 to open an account or a maximum of Rs. 15 lakh in a single investment.
  • The deposited amount is restricted to retirement benefits received and must be done within a month from the date they start receiving retirement benefits from the employer.
  • Retirement benefits mean any payment due during retirement or otherwise. It includes the following:
    • Provident fund dues
    • Retirement or superannuation gratuity
    • Commuted value of pension
    • Leave encashment
    • Savings element of Group Savings Linked with Insurance Scheme
    • Retirement-cum-withdrawal benefit, and
    • Ex-gratia payments under a voluntary retirement scheme.
  • In case the deposit amount is in excess, it shall be refunded to the account holder instantly.
  • The interests will be paid only once every quarter.
  • The account holder can receive the interest through an auto credit card into the savings account at the same post office or via ECS.
  • The account can be closed anytime after the opening date.
  • The account can be extended for up to three years only.

How to Open an SCSS Account?

You can open a Senior Citizen Saving Scheme either at a post office or in an authorized bank.

SCSS Account Opening at Post Office

To open an SCSS account at an Indian post office, you have to fill out a=n account opening form. You have to submit the form and other KYC documents (address proof, identity proof, age proof, and two passport photos). 

SCSS Account Opening at an Authorised Bank Branch

You can select any private or public bank and open an SCSS scheme. The interest will be credited directly into the account holder's savings account held within the same bank branch.

Account statements will be shared with the account holder via post or email. Customer services will be available 24X7.

Eligibility Criteria for Senior Citizens Saving Scheme

The eligibility criteria for the Senior Citizens Saving Scheme are as follows:

  • The citizens of India are eligible if they are above 60 years of age.
  • People within the age bracket of 55 - 60 and who have applied for Voluntary Retirement Scheme or superannuation by 60.
  • Any retired defence person who is below the age of 50.
  • Non-resident Indians above the age of 60 are not eligible for the Senior Citizen Saving Scheme.

Senior Citizen Saving Scheme Interest Rate In Different Financial Years

The Senior Citizen Scheme interest rate for the first quarter of the fiscal year 2022-2023 is 7.4% p.a. It is one of the highest rates offered by a small saving scheme. Here are several rates over the quarters of different financial years.

Quarterly Months Quarterly Time Period Interest Rate (p.a.)
Jan to Mar Quarter 4 Financial Year 2021-22 7.40%
Oct to Dec Quarter 3 Financial Year 2021-22 7.40%
Jul to Sep Quarter 2 Financial Year 2021-22 7.40%
April to June Quarter 1 Financial Year 2021-22 7.40%
Jan to Mar Quarter 4 Financial Year 2020-21 7.40%
Oct to Dec Quarter 3 Financial Year 2020-21 7.40%
Jul to Sep Quarter 2 Financial Year 2020-21 7.40%
April to June Quarter 1 Financial Year 2020-21 7.40%
Jan to Mar Quarter 4 Financial Year 2019-20 8.60%
Oct to Dec Quarter 3 Financial Year 2019-20 8.60%
Jul to Sep Quarter 2 Financial Year 2019-20 8.60%
April to June Quarter 1 Financial Year 2019-20 8.70%
Jan to Mar Quarter 4 Financial Year 2018-19 8.70%
Oct to Dec Quarter 3 Financial Year 2018-19 8.70%
Jul to Sep Quarter 2 Financial Year 2018-19 8.30%
April to June Quarter 1 Financial Year 2018-19 8.30%
Jan to Mar Quarter 4 Financial Year 2017-18 8.30%
Oct to Dec Quarter 3 Financial Year 2017-18 8.30%
Jul to Sep Quarter 2 Financial Year 2017-18 8.30%
April to June Quarter 1 Financial Year 2017-18 8.40%

Documents Required to Open SCSS Account

Here are the documents one has to submit to open a new Senior Citizen Saving Scheme:

  • Two recent passport-sized photographs
  • The form must be entirely filled with every minor detail
  • The bank or post office will need identity proofs, such as a passport and PAN card
  • Applicants have to submit address proofs, like an Aadhaar card or a telephone bill
  • The applicant has to submit a document confirming the account holder's age.
  • The documents for proving age can be a PAN Card, Voter ID, Birth Certificate, Senior Citizen Card or Passport.
  • All the documents must be self-attested.

Features And Benefits of Senior Citizen Saving Scheme

Here are some prominent features of the senior citizen's savings scheme. 

  • Scheme Maturity: The scheme gets mature in 5 years. However, individuals can extend their maturity for up to 3 years. They have to submit an application as per the requirement within one year of the account. Further, the account can be closed without any charges once it expires.
  • Nominations: The applicant can nominate anyone as per the policy. They can nominate anyone either at the time of account opening or after the account is opened.
  • Several Accounts: As an individual, you can have one or more than one account individual or open an account with your spouse. The joint accounts can be opened only with the spouse.
  • Minimum and Maximum Amount: There is only one single deposit allowed in the account. The amount can be in the form of multiples of Rs. 1000 or the maximum amount of Rs. 15 lakh. Also, any amount more than Rs. 1 lakh has to be paid using a cheque. However, the date the cheque is released will be the opening date of the account.
  • Account Transfer: Senior citizen saving accounts are easily transferable from one bank to a post office and vice-versa. The procedure is quite easy and hassle-free.
  • Premature Withdrawal: You can make a premature withdrawal only after one year of opening the account. For further premature withdrawals after one or two years, a 1.5% charge and 1% charge of the total deposited are chargeable.

Rules on SCSS Premature Closure

An account holder of SCSS can prematurely close the account at any time once the account is open. However, if the account is closed before the completion of one year, then there will be no payable interest. But if the interest has been paid, then that will be recovered from the principal amount. 

  • If the premature closure happens between 1-2 years, an amount equal to 1.5% will be deducted from the main amount.
  • For a premature closure between 2-5 years, an amount equal to 1% of the principal amount will be deducted.
  • However, you can close your extended account anytime after one year from the date of extension. There will be no deduction in this case.

Tax Benefits Under the SCSS

The tax saving schemes for senior citizens make them eligible for tax deductions under Section 80C of the Income Tax Act 1961. For the deduction, the amount must be Rs. 1.5 lakh. Further, if the interest is more than Rs. 10,000 p.a. The tax is deductible at the source. However, if the account holder submits Form 15G/15H, then no TDS will be deducted.

List of Banks That Offer SCSS

Here is the list of banks that offer the best rate of interest for Senior Citizen Saving Schemes:

ICICI Bank Dena Bank
Vijaya Bank Central Bank of India
Union Bank of India Canara Bank
UCO Bank Corporation Bank
Syndicate Bank Bank of India
Indian Bank Bank of Baroda
Punjab National Bank Bank of Maharashtra
IDBI Bank Andhra Bank
Indian Overseas Bank Allahabad Bank
State Bank of India

Who Can Invest in Senior Citizens Saving Scheme?

Anyone above the age of 60 is eligible to apply for a Senior Citizen Saving Scheme. This is how they can save some amount of money for their post-retirement. Those who are planning to save some money can benefit from the SCSS scheme. The senior citizens can open a savings account either as joint ownership or a sole account.

Frequently Asked Questions (FAQs)

What is the Senior Citizen Saving Scheme?

The government of India offers the Senior Citizen Saving Scheme to assist senior citizens in saving for their retirement and receiving quarterly payments. The latest SCSS interest rate offered is 7.4% for the quarter ending on 31st March 2022.

How do we open a Senior Citizen Savings Scheme account?

You can open a Senior Citizen Savings Scheme account at an Indian post office. You just have to fill out all the forms for opening an account and submit them along with copies of KYC documents such as identity proof, address proof and age proof with recent passport size photos.

Is SCSS tax-free?

The interest on SCSS is taxable and as per the tax slab applicable to the person. If the interest earned is more than Rs. 50,000 in a financial year, the TDS is applicable to the earned interest.

What is the current SCSS rate?

The current SCSS rate of interest is 7.4% p.a.

Which bank gives the highest interest rate for senior citizens?

The highest interest rate for the Senior Citizens Saving Scheme is offered by the State Bank of India. The interest rate is 6.30%.

Is a joint account facility available under this scheme?

Yes, the joint account facility is available under the Senior Citizens Saving Scheme. Both the spouses can open either joint or individual accounts with a maximum deposit of Rs. 15 lakh. Also, both are individually eligible for investing under the relevant rules of the scheme.

Can both the spouses open separate accounts?

Yes, both spouses can have separate accounts.

Is TDS applicable to the scheme?

Yes, Tax Deducted at Source (TDS) is applicable to the interest earned under this SCSS scheme.

In the case of a senior citizen joint account, if the first holder/depositor expires before maturity, can the account be continued?

Yes, the account can be continued. The respective spouse can continue the account with the same terms and conditions as specified previously under the SCSS scheme.

Is there any fee prescribed for nomination and/or change/cancellation of nomination in the senior citizen scheme?

No fee is charged for nomination and/or change/cancellation of nomination in the Senior Citizen Scheme.

What is the mode of deposit if the amount is Rs. 15 Lakh?

The deposit mode for an amount of Rs. 15 lakh is a cheque.