Considered one of the most secured investment options available in the market, the Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings scheme that is specifically designed to provide financial security to the senior citizens of the country. The senior citizen savings scheme ensures a regular income after retirement securing the financial future of the individual. Moreover, it also provides the advantage of tax savings. The maximum tenure of the senior citizen savings scheme is 5 years, which can be further extended for 3 years from the date of maturity. Let’s read further to know in detail about the Senior Citizen Savings Scheme.
Senior Citizen Saving Scheme Interest Rate
A senior citizen savings scheme is a government scheme that helps the senior to save money for retirement and receive the quarterly interest payment. The interest rate of the scheme is regulated by the Ministry of Finance. The current interest rate applicable for the first quarter (April-June) of FY 2022-23 is 7.4% p.a. The SCSS interest rate is reviewed quarterly and is subject to periodic change. As compared to other savings schemes available in the market, the senior citizen savings scheme offers the highest rate of interest. Let’s take a look at the list of historical interest rates of the Senior Citizen Savings Scheme.
|Time Period||Interest Rate (% Annually)|
|Jan to Mar (Q4 FY 2021-22)||7.4|
|Oct to Dec (Q3 FY 2021-22)||7.4|
|Jul to Sep (Q2 FY 2021-22)||7.4|
|April to June (Q1 FY 2021-22)||7.4|
|Jan to March 2021 (Q4 FY 2020-21)||7.4|
|Oct to Dec 2020 (Q3 FY 2020-21)||7.4|
|Jul to Sep 2020 (Q2 FY 2020-21)||7.4|
|Apr to Jun 2020 (Q1 FY 2020-21)||7.4|
|Jan to March (Q4 FY 2019-20)||8.6|
|Oct to Dec 2019 (Q3 FY 2019-20)||8.6|
|Jul to Sep 2019 (Q2 FY 2019-20)||8.6|
|Apr to Jun 2019 (Q1 FY 2019-20)||8.7|
|Jan to March 2019 (Q4 FY 2018-19)||8.7|
|Oct to Dec 2018 (Q3 FY 2018-19)||8.7|
|Jul to Sep 2018 (Q2 FY 2018-19)||8.3|
|Apr to Jun 2018 (Q1 FY 2018-19)||8.3|
Eligibility Criteria of Senior Citizen Savings Scheme
The following are the eligibility criteria to invest in SCSS:
- Indian citizens above the age of 60 years
- A retired individual between the age group of 55-60 years who have opted for a voluntary retirement scheme (VRS) or superannuation
- Retired defense personnel above 50 years and below 60 years of age
Note – HUFs and NRIs are not eligible to invest in SCSS
Benefits of Investing in Senior Citizen Savings Scheme
Along with the benefit of regular returns, SCSS offers various other benefits. Let’s take a look at it:
Guaranteed Return: As a government-backed savings scheme, it is one of the most reliable options of investment for senior citizens. The scheme offers a guaranteed return to the individual after retirement.
High-Interest Rate: As compared to any other investment option available in the market, the Senior Citizen Savings Scheme offers a high rate of interest. The current interest rate offered by the scheme is 7.4 % for the first quarter (April-June) of FY 2022-23.
Tax Benefit: Along with the benefit of guaranteed regular return, the scheme also provides an opportunity to gain a tax benefit. The contribution made towards the SCSS up to the maximum limit of Rs.1 5 lakh in a financial year is eligible for tax exemption under Section 80C of the Income Tax Act.
Quarterly Interest Payouts: Under the Senior Citizen Savings Scheme, the interest amount is paid to the account holder quarterly, which ensures a periodic payout adding to the investment. The interest is credited on the first day of April, July, October and January of every financial year.
Simple Investment Process: The process of investing in SCSS is quite simple. One can open an account at any authorized bank or post office in India.
Premature Termination: In case of any financial emergency, an individual can close their SCSS account and access the money. Premature termination of the account is applicable after completion of 1 year from the date of account initiation. However, a penalty of 1.5% is charged in case of premature withdrawal before completion of 1 year and 1% is charged if the funds are withdrawn after 2 years.
Senior Citizen Savings Scheme Deposit Limit
An individual can make a minimum deposit of Rs 1000 in SCSS and can invest up to a maximum of Rs. 15 lakhs or the amount received on retirement, whichever is lower. While one can make a cash deposit in an SCSS account, it is allowed only for amounts less than Rs.1 lakh. For the deposit above Rs. 1 lakh, a cheque/ demand draft is mandatory.
Documents Required to Open Senior Citizen Saving Scheme Account
Important Documents that should be kept handy while opening a senior citizen savings account are:
- Two passport size photographs
- Form-A must be thoroughly filled and submitted
- Identity proof such as Passport or PAN (Permanent Account Number) must be submitted
- Address Proof- Aadhaar
- Age proof of the applicant
Tax Implementation of SCSS
The contribution made towards Senior Citizen Savings Scheme is applicable for tax exemptions in the following manner:
- The principal amount invested in SCSS account up to a maximum limit of Rs.1.5 lakh in a financial year is eligible for tax exemption under Section 80C of the Income Tax Act
- The interest earned on the deposited amount under senior citizen savings scheme is taxable as per the applicable tax slab to the person. In case, the interest amount earned in a financial year is more than 50,000, Tax Deducted at Source (TDS) is applicable to the earned interest. This limit for TDS deduction on senior citizen savings scheme is applicable from Assessment Year 2020-21 onwards