SCSS stands for Senior Citizens Savings Scheme.

This scheme is exclusively for Senior Citizens (aged 60 years or more).

This scheme provides regular income on a quarterly basis. 

How Does SCSS Work?

1.      Deposit a lump sum amount

2.      Every quarter you will receive interest till the end of the tenure

3.      At the end of the tenure, you will get your deposit amount back 

Features

1.      Scheme exclusively for Senior Citizens

2.      Backed by the Government of India

3.      Safe investment option

4.      Guaranteed returns

5.      Regular quarterly income

6.      Peace of mind during retirement life

7.      Income tax benefits

Income Tax Benefits

Effective 01-Apr-2020, the income tax benefits will depend upon whether you choose old tax system or new tax system.

Old Tax System:

Deposit amount (up to Rs. 1.5 Lakhs) qualifies for tax deduction under Section 80C of the Income Tax Act.

TDS (Tax Deducted at Source) is deducted on interest amount if the interest received is more than Rs. 50,000 in a financial year.

This new limit of Rs. 50,000 is from the financial year 2018-19. That is, from 01-Apr-2018 onwards. Note that the limit was Rs. 10,000 earlier.

Interest received under this scheme is taxable. You need to declare the interest income under "Income from Other Sources" during tax returns and pay the income tax as per your income tax slab.

New Tax System:

No income tax benefits. The deposit amount won't get any deduction benefit under Section 80C of the Income Tax Act.

TDS (Tax Deducted at Source) is deducted on interest amount if the interest received is more than Rs. 50,000 in a financial year.

This new limit of Rs. 50,000 is from the financial year 2018-19. That is, from 01-Apr-2018 onwards. Note that the limit was Rs. 10,000 earlier.

Interest received under this scheme is taxable. You need to declare the interest income under "Income from Other Sources" during tax returns and pay the income tax as per your income tax slab. 

Who Can Open the Account?

Only Indian residents can open the account. An individual of the age of 60 years or more can open the account.

An individual of the age of 55 years or more but less than 60 years and who has retired on superannuation or under VRS can also open account.

The retired personnel of Defense Services (excluding civilian Defense employees) of the age of 50 years or more can open the account.

Joint account can be opened with spouse only. First depositor in joint account is the investor.

A depositor can open more than one account either individually or jointly with spouse.

Any number of accounts can be opened. But total investment in all the accounts should not exceed the maximum investment limit of Rs. 15 Lakhs. 

Where Do You Open the Account?

SCSS accounts can be opened in

1.      Post Offices

2.      Nationalized Banks

3.      Private sector Banks

 How Do You Open the Account?

1.      For deposit amount less than Rs. 1 Lakh, account can be opened by cash

2.      For deposit amount Rs. 1 lakh and above, account can be opened by Cheque or Demand Draft (DD) only

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

Deposit Limits

1.      Minimum deposit amount is Rs. 1,000

2.      Maximum deposit limit is Rs. 15 Lakhs

3.      Deposit amount should be in multiples of Rs. 1,000 

Term

Maturity Period for this scheme is 5 Years. 

Interest Rate (%)

Current annual interest rate is 7.40%.

Interest amount is paid on a quarterly basis. That means interest is paid at the end of Calendar quarter (31^st March 30^th June 30^th Sept and 31^st December).

Interest rate (on the day of account opening) will remain the same throughout the tenure of SCSS. It will not change even if there are changes to the interest rate thereafter.

From 01-Apr-2016 onwards, the interest rate for this scheme has been announced on a quarterly basis. Note that this used to be on a yearly basis earlier. 

Compounding Frequency

Compound interest is not applicable in this scheme. Simple interest calculation is followed in this scheme. 

Interest Credit Method

You can receive quarterly interest in one of the following ways.

1.      Quarterly interest can be credited into Savings Bank (SB) Account present in the same deposit office

2.      Quarterly interest of SCSS accounts present at CBS (Core Banking Solution) Post Offices can be credited in any Savings Bank (SB) Account present at any other CBS Post Offices

3.      Post-dated cheque

4.      Money order 

Extension Period

After maturity, the account can be extended for further 3 years.

Account can be extended within one year of maturity by giving application.

During the extension period, account can be closed at any time after one year of extension without any deduction. 

Pre-Mature Closure

If you close the account pre-maturely after 1 year, then 1.5% of the deposit amount will be deducted and you will receive the remaining amount.

If you close the account pre-maturely after 2 years, then 1% of the deposit amount will be deducted and you will receive the remaining amount. 

Account Transfer

SCSS account can be transferred from one deposit office to another deposit office. 

Nomination Facility

Nomination facility is available.

You can nominate either at the time of account opening or after opening the account (but before maturity).