Senior Citizen Savings Scheme: Smart Choice for Retirees

Senior Citizen Savings Scheme (SCSS) is a government backed saving scheme where principal and interest are backed by the government. This scheme provides a regular income with high safety and tax benefits.

Under this scheme an account can be opened in a post office or in a scheduled commercial bank.

Who can Apply under Senior Citizen Savings Scheme?

• An individual whose age is 60 years or above on the date of opening an account.

• An individual whose age is 55 years or more but below 60 years and has retired under Superannuation, VRs or Special VRS can open an account.

• Retired personnel of defence services (excluding Civilian Defence employees) may open an account on attaining the age of 50 years subject to the fulfillment of other specified conditions.

Points To Note

• A depositor may open an account individually or jointly with spouse.

• The amount deposited in the joint account will be attributed only to the first account holder.

• The depositor may nominate one person or more than one person.

Who cannot Apply under SCSS?

• Non Resident Indians ( NRIs)

• Hindu Undivided Families (HUF)

Tenure of The Account

The account can be closed after expiry of 5 years from the date of opening of account.

The depositors can extent the account for further period of 3 years.

Investment Amount Limit

The account shall be opened with a minimum deposit of Rs 1,000 but not exceeding Rs 30 Lakh w.e.f. 01.04.2023.

Interest Rate

• The interest rate applicable to SCSS is 8.20% per annum with effect from 01.04.2023.

• The interest will be paid on a quarterly basis.

• Interest can be credited automatically to a savings account at the same Post Office branch or through ECS.

• The rate is revised every quarter, and the final rate is decided considering factors like inflation, market scenario, etc.

Tax Implications for Account Holders

Individuals can claim exemptions up to Rs 1.5 Lakh in a financial year u/s 80C of Income Tax Act.

Interest payments are subject to taxation as per the tax slab rates.

If interest income exceeds Rs. 50,000 in a year, then it is subject to tax deducted at source.

The account holder can avoid TDS by submitting Form 15G/15H if total income is below the taxable limit.

Latest Changes

In 7 November 2023 notification, the finance Minister has brought a number of changes.

Spouses of deceased government employees (who died in harness after age 50) can open an SCSS account, subject to conditions.

“To die in harness’ refers to die while still working or on duty or before retirement.

Here, the government employees include all central state Government employees and they are eligible for retirement benefit or death compensation.

The maximum deposit limit for Senior Citizen Savings Scheme has been enhanced to Rs 30 Lakh from 15 lakh and it has been made effective from April 1,2023.

The account can be opened within three months from the date of receipt of the retirement benefits for a living employee and admissible financial assistance to an eligible government employee who died in harness.

Previously, the time limit was one month and only for living employees.

Account holders can extend the account for an additional three-year block by applying within one year from the date of maturity or the end of each block period.

Earlier this facility was to be used only once.

In case of an account extended after maturity, the deposit in such account will earn interest at the rate applicable to the scheme on the date of maturity or on the date of previous extended maturity.

Earlier, it was said that interest applicable on the date of maturity was applicable for an extended period.

Conditions for premature closure

If the account is closed –

• before 1 year after, interest paid on the deposit in the account will be recovered from the deposit (principal amount) and the balance will be paid to the account holder.

• closed after the expiry of 1 year but before the expiry of 2 years from the date of its opening, an amount equal to 1.5% of the deposit (principal amount) will be deducted.

• closed on or after the expiry of two years from the date of its opening, an amount equal to 1% of the deposit will be deducted.

FAQs