The government recently announced interest rates for a number of small savings schemes, including the Public Provident Fund, Sukanya Samriddhi Yojana, and Senior Citizens Savings Scheme (SCSS). The rates of these small savings schemes have remained unchanged for the July to September quarter. The interest rates on these small savings schemes, however, are significantly higher than those on bank fixed deposits.
The Senior Citizen Savings Scheme (SCSS), is a special savings scheme specifically designed for the older population, who must be 60 years old or above. The subscribers, given that they have retired from their services by opting a VRS, are also eligible to open an SCSS Account. The SCSS provides an interest rate of 7.4 per cent per annum.
What are the features of Senior Citizens Savings Scheme
• A person can open an SCSS account with a minimum deposit of Rs 1,000, and maximum can be raised to Rs 15 lakh. The amount deposited in the account should be in multiples of Rs 1,000.
• The interest rate under this scheme is 7.4 per cent, which is the one of the highest. Interest is on quarterly basis and applicable from the date of deposit to March 31, June 30, September 30 and December 31.
• In case any excess deposit is made in SCSS account, excess amount will be refunded immediately to the depositor.
• The maturity period under this scheme is five years, but can be extended beyond that by three years.
• Investment under this scheme qualifies for the benefit of section 80C of Income Tax Act, 1961. However, interest is taxable if total interest in all SCSS accounts exceeds Rs 50,000 in a financial year. Under Section 80C, individuals are eligible for tax deductions on investments up to Rs 1.5 lakh.
• If an SCSS account is closed before one year, no interest will be payable and if any interest paid in account shall be recovered from principle, as per the rules.
• In case of death of account holder, from the date of death, the SCSS account will earn interest at the rate of general savings account.
Senior Citizens Savings Scheme Eligibility
• An individual above 60 years of age and must be an Indian citizen.
• Retired Civilian Employees above 55 years of age and below 60 years of age, subject to condition that investment to be made within one month of receipt of retirement benefits.
• Retired Defense Employees above 50 years of age and below 60 years of age can open SCSS account, subject to condition that investment to be made within one month of receipt of retirement benefits.
• HUFs and NRIs are not allowed to invest in the SCSS scheme
Banks Offering SCSS Services
Apart from the post office, several banks like the State Bank of India, Punjab National Bank, ICICI Bank, Central Bank of India, Bank of Baroda, Bank of Maharashtra and others offer Senior Citizens Savings Scheme services.
