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Senior Citizen Savings Scheme

  • Akshatha Sajumon
  • 07 Sep
  • 6 minutes

Retired people in India are often searching for investment avenues that offer higher safety and regular income. Most people prefer to invest in schemes that are designed for senior citizens since these are considered safe due to sovereign guarantee or backing of the government. One such preferred investment option is the Senior Citizens Savings scheme that was launched by the government in 2004. 

What is Senior Citizen Savings Scheme (SCSS) and how does it work?

This scheme is a fixed income investment option available for people who are at least 60 years of age. The scheme is designed to ensure a steady income for senior citizens post their retirement. It offers guaranteed returns every quarter and can be availed from any associated banks or post offices in the country.

Interest rate

The interest rate on Senior Citizen Savings Scheme (SCSS) for July-Sep 2021 is 7.4% p.a. It is reviewed every quarter and is subject to change from time to time. The calculation and distribution of interest earnings also takes place once every quarter.

Deposit limit

Investors can deposit a lump sum amount in the Senior Citizen Savings Scheme (SCSS). Additional deposit related details are as below:

  • Minimum deposit amount is Rs. 1,000
  • Maximum deposit limit is Rs. 15 lakhs or the amount one receives at retirement

Cash deposits in SCSS accounts are only permitted up to maximum Rs. 1 lakh. Any deposit above this amount has to be made through a cheque or demand draft. 

Maturity

The maturity of a Senior Citizen Savings account is set at 5 years and it is considered from the date of account opening. The account holder can request an extension of up to 3 years post maturity of the account. This option can be availed only once. An extension request must be submitted within 1 year from the date of maturity of the account.

Recommended read – Best investment plans for senior citizens

Eligibility criteria to enroll in SCSS

Mentioned here is the list of eligible individuals who can open an SCSS account:

  • Applicants must be at least 60 years of age.
  • Retirees in the age range of 55-60 years who have chosen Voluntary Retirement Scheme (VRS) or Superannuation are eligible provided the investment is made within one month from availing the retirement benefits.
  • Retired defence personnel who are at least 60 years of age.

HUFs and NRIs cannot invest in the Senior Citizen Savings Scheme.

What are the benefits to be availed from Senior Citizen Savings Scheme investment

Some of the noteworthy benefits that can be availed from SCSS are:

  • Assured returns: This government-backed savings scheme is one of the safest investment options for senior citizens, as it is government-backed.
  • High interest earnings: With current interest rate set at 7.4% per annum, SCSS is one of the beneficial investment options available for senior citizens when compared to other traditional savings options like bank FDs or bank savings accounts.
  • Easy investment process: It is very easy and straightforward to invest in SCSS as investors can reach out to any authorized bank or post office in India for the same.
  • Periodic payouts: The interest payouts from SCSS accounts are made every quarter, thus ensuring sufficient liquidity for investors. These are credited to the beneficiary on the first day of April, July, October, and January during a financial year.

What is the process to open a Senior Citizen Savings Account

Here are the details of the process to be followed while opening a SCSS account:

SCSS account opening at the post office

All India post offices across the country offer the facility of SCSS account opening. For the same, one must fill the account opening form before submitting it with KYC document copies. Some of the documents required include proof of identity, proof of address and proof of age and recent passport size photographs.

SCSS account opening at an authorized bank

SCSS accounts can also be opened at certain public or private sector banks. Some of the benefits of opening an account at an authorized bank are:

  • The accrued interest earnings on an SCSS account can be directly credited to the depositor’s savings bank account held with the bank branch
  • Depositors can access account statements through post or email as forwarded by the bank
  • Account holders can avail customer service through the bank’s phone banking services

Which banks offer SCSS accounts?

Here is a list of banks that offer the facility of opening a Senior Citizen’s Savings Scheme account –

  • ICICI Bank
  • Corporation Bank
  • State Bank of India
  • Bank of Baroda
  • Canara Bank
  • Andhra Bank
  • Syndicate Bank
  • UCO Bank
  • IDBI Bank
  • Punjab National Bank
  • Bank of India
  • Vijaya Bank
  • Union Bank of India
  • Dena Bank
  • Allahabad Bank

What are the tax benefits of investing in Senior Citizen Savings Scheme (SCSS)?

Tax deduction can be availed on the principal amount deposited in an SCSS account. Maximum deduction that can be availed is Rs. 1.5 lakh per financial year under section 80C of the Income Tax Act, 1961. Interest earnings from SCSS are taxable as per the income tax slab rate applicable to the individual investor. From FY 2020-21 onwards, interest earnings of over Rs. 50,000 within a fiscal year attract Tax Deducted at Source (TDS). 

Recommended read – Tax saving options for Senior Citizens

Conclusion

There are many lucrative investment options available in India for senior citizens. Most of the options are simple to follow and efficient investments that can generate reasonable returns without many risks. While investing in any of these schemes, including SCSS, one must be sure about the investment amount, duration for which the investment has to be made, and the yields that can be expected from the investment.

FAQs

  1. Can the senior citizens’ savings scheme account be closed before maturity?

In case the primary account holder dies before the account maturity, the account is closed and the maturity proceeds are transferred to the legal heir or nominee. For this, the nominee or the legal heir must furnish the account holder’s death certificate combined with a written application in a prescribed format. 

  1. What is the maximum age for opening a senior citizen saving account?

Any individual who is above 60 years of age can open a Senior citizen savings account.

  1. Can I open a joint SCSS account?

You can open a joint SCSS account with the spouse, and the maximum amount that can be invested in a joint SCSS account is Rs.15 lakhs. The age of the first applicant must be at least 60 years and there is no age limit for the second applicant. 

  1. Which are the other investment options available for senior citizens?

Some of the investment options other than SCSS available for senior citizens include Pradhan Mantri Vaya Vandana Yojana (PMVVY), Post Office Monthly Income Scheme (POMIS), Senior Citizen Fixed Deposits, and mutual funds. 

  1. Are there separate criteria for defense personnel to invest in SCSS?

Yes, retired defense personnel can invest in SCSS without any age bar, provided all the other eligibility criteria are met. (reference link – https://indianarmy.gov.in/Site/FormTemplete/frmCalculateSCSS.aspx?MnId=rs7nYD4Gsy5JFp2XoL+mVg==&ParentID=nO5fYMgtRbxVTZdicQfAuA==)

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Akshatha Sajumon

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