The Senior Citizen Saving Scheme (SCSS) is a government-sponsored savings scheme provided to people over 60 years of age. The loan matures after five years from the account opening date but may be extended by an additional three years once. The SCSS interest rate was set at 8.6 per cent for January to March 2020. This is the highest interest rate among India’s numerous small savings schemes. SCSS is accessible via the Public/Private Banks and Post Offices in India.
Being a government-backed saving tool, the terms and conditions applicable to the SCSS scheme are the same, irrespective of the bank/post office through which you invest.
Maximum and minimum deposit limits
Depositors with a minimum deposit of INR 1000 are allowed to make a lump sum deposit. Deposits in multiples of INR 1000 higher than INR 1000 must be made. The cumulative deposit on the SCSS cap is INR 15 lakh.
Although deposits can be made in cash in the SCSS accounts, this is only permitted for amounts less than INR 1 lakh. Where the deposit sum for Senior Citizen Saving Scheme reaches INR 1 lakh, it is compulsory to use a cheque/demand draft to make the deposit.
Maturity of Senior Citizen’s Savings Scheme
Deposits made to a Senior Citizen Saving Scheme accumulate after five years from the opening date of the account. The account holder, however, does have the option to extend the contract for an additional three years after it has matured. This extension option is currently available only once, and the request for an extension must be made within a year of the SCSS account maturity.
Eligibility
To benefit from the SCSS scheme, resident Indians must fulfil the following critical conditions:
The programme is open to any Indian citizen aged 60 years or older.
Additionally, people are at the age of 55 but are under the age of 60 are also eligible to apply for the Senior Citizens Savings Scheme if they retire under existing Superannuation or VRS regulations.
In such situations, the account should be opened within one month of obtaining pension benefits.
The scheme is also open to retired defence personnel irrespective of the age limits listed above subject to other terms and conditions being met.
Person of Indian Origin (PIOs) and Non-resident Indians (NRIs) are not eligible to open an account with the Senior Citizens Savings Scheme.
Furthermore, members of the Hindu Undivided Family are not entitled under these rules to open the account.
Advantages
SCSS scheme comes with all the security and declaration associated with all government schemes, i.e., sovereign debt, being a government-backed scheme.
The investment made under this scheme is tax-deductible under Section 80C of the 1961 Income Tax Act to INR 1.5 lakh per year.
Premature withdrawal option in the event of financial emergencies (with penalties applicable).
Closure of SCSS Account before Maturity
In the case of the primary account holder’s death before the account’s actual maturity, the account is closed and all maturity proceeds are passed to the legitimate heir/nominee.
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