Senior Citizen Savings Scheme ( SCSS) – Features and Benefits

 

Senior Citizen Savings Scheme is a famous savings scheme for Old Age People whose age is more than 60 years of age.

Here, In this article I will explain all the features and benefits of this scheme.

Who Can Apply for this Senior Citizen Savings Scheme?…

An Individual whose age is more than 60 years of age can open this account.

In addition, a person who got superannuation or retired under VRS after age 5 and before 60 years of age can enter in this scheme.

However, he/she should invest within one month of retirement, and the total investment should not be more than the retirement benefits.

In addition, retired personnel of Defence Servies ( excluding Civil Defence Services ) can invest after attaining  50 years of age.

However, subject to some conditions.

Huf and Non-Resident Indians not eligible to open this account.

In addition, Both husband and wife can open in a single name or jointly.

How much money that you can invest in this SCSS?…

You can invest a minimum of Rs.1,000 and thereafter multiples of Rs.1,000.

In addition, You can invest a maximum amount of 15 lakh in this account.

You can any number of accounts in your name or jointly ( wife/husband), but subject to a maximum limit of  15 lakh in your name.

In addition, You can invest up to Rs.1,00,000 in the form of cash.

However, if the amount is more than Rs.1,00,000, then you have to give a cheque to invest in this scheme.

In case of cheque, the date of realization of the amount in the Government account will be the date of the account opening.

What is the tenure of this account?…

The tenure of this account is 5 years.

However, you can extend this account for 3 more years.

But you should extend the term within 1 year of the maturity by applying with form B.

In addition, the extension of the account is allowed only once.

But you are free to open a new account when the old account is active ( subject to max 15 lakh limit).

And can open a new account after maturity( subject to a maximum of 15 lakh ceiling).

In addition, You withdraw your money after you extended the account also if  1 year (after 6th year) is completed after extension without any penalty.

Premature Closure is allowed in this Senior Citizen Savings Scheme?…

Yes, Pre Mature closure of this account is allowed.

But subject to some conditions.

• If pre-close this account within one year, no interest will be paid.
• In addition, If the interest is already paid, then paid interest will be recovered.
• If you pre-close this account after 1 year, 1.5% of the deposit account will be recovered.
• Again, if you pre-close the account after 2 years, 1% of the deposit will be deducted.

What are the Tax Benefits for this account?…

This scheme is eligible to get tax benefits under section 80 C up to 1.5 lakh.

However, You can get a total benefit of 1.5 lakh only under 80 C ( like including children school fee, PPF, home loan principal, and Life Insurance Premium, etc).

When it comes to the interest, it is taxable as per your income tax slab.

In addition, There will be TDS of 10% if the interest income is more than Rs.50,000 per year.

Moreover, You can claim the tax deduction up to Rs.50,000 under section 80TTB of the Income Tax Act.

What is the interest rate of the Senior Citizen Savings Scheme? (SCSS)?…

As of 1st April 2020, the interest rate is 7.4%.

In addition, the interest rate will be declared on a quarterly basis ( earlier it was yearly once).

Moreover, these quarters are April-June, July-September, October-December, and January-March.

How You will be paid interest in this account ( Scheme) ?…

Interest will be paid to you every quarter on 1st working day of April, July, October, and January.

In addition, You should miss claiming the interest.

If you failed to claim, then that interest will not earn any extra interest amount.

Moreover, the unclaimed interest will be kept idle.

Loan Facility in this scheme?…

It is not possible to get a loan from this scheme by pledging it.

As this scheme is meant to regular income from the investment.

Nomination Facility in Senior Citizen Savings Scheme (SCSS)?…

You can nominate in this scheme at the time of account opening and also after account opening.

In addition, You can nominate more than one nominee in this account.

You can change or cancel the nominee any time in this scheme.

In addition, You have to use form “C” and passbook to change the nominee.

In the case of joint holders, the nominee will come into picture only after the death of both the holders of this scheme.

What happens to the investment in this SCSS account in case of investor dies?…

If the investor in this scheme dies before maturity, then the invested amount and interest pending will be paid to the nominee.

In case, there is no nominee or if the nominee is also not alive at the time of investor’s death, then the invested amount will be paid to the legal heirs.

If the total claim is including the interest amount is up to Rs.1,00,000, then the claim amount will be paid to the legal heirs if they produce the following documents.

• Letter of Indemnity.
• A letter of disclaimer on an affidavit.
• An Affidavit.
• A certificate of the death of the depositor in a stamp paper in the form of Form F.

Can You transfer your account from one post office to another post office?…

Yes, You can transfer this account from one post office to another post office.

In addition, you have to fill the form G and should enclose the passbook.

However, this SCSS account can not be transformed from one person to another person.

Joint Account Rules under the Senior Citizen Savings Scheme (SCSS) are…

In this scheme a You can open a joint account with your spouse(husband/wife) only.

At the time account opening, only the first holder age is considered.

If the first holder of this account dies, then the 2nd holder can continue this account subject to a max of 15 lakh including all his accounts ( Individual and Joint).

In the case of a joint account, the only first holder has the right over the investment, when he is alive.

Both the holders can open as many accounts either individual but subject to a maximum of 15 lakh per individual.

If the first holder dies, and the second holder continuing the scheme but the 2nd holder limit crossed 15 lakh limit, then the amount which is over and over 15 lakh will be refunded to the holder.

If both husband and wife are holding individual accounts and any one of them dies, then the other has to close the account ( can not continue as it is not a joint account).

Conclusion…

Senior Citizen Savings Scheme is a safest and high interest-paying scheme for the old aged people which gives them a regular income for their livelihood.

So, one can not ignore this scheme in your retirement life.

But some people, if they more fund than 15 lakh, then they have to look into other options like Pradhan Mantri Vaya Vandana, mutual fund equity schemes and debt funds, etc…

The source for this article is Indiapost.gov.in.