Senior Citizens Savings Scheme (SCSS)
The Senior Citizens Savings Scheme (SCSS) is a government-backed savings scheme specifically designed for senior citizens in India. It offers a regular income stream and tax benefits, making it a popular investment option for retirees.
Eligibility:
- Individuals aged 60 years or above.
- Individuals aged 55 years or above but less than 60 years who have retired under applicable superannuation or VRS rules can also open an account within one month of receiving retirement benefits.
- Retired defense personnel, irrespective of the above age limits, are eligible subject to certain conditions.
Key Features:
- Interest Rate: The scheme offers a high interest rate, which is reviewed quarterly by the government. The interest is payable quarterly.
- Tenure: The tenure of the scheme is 5 years, which can be extended once for an additional 3 years.
- Minimum and Maximum Investment: The minimum deposit amount is ₹1,000, and the maximum is ₹15 lakhs, in multiples of ₹1,000.
- Premature Withdrawal: Premature withdrawal is allowed after one year of opening the account, subject to a penalty.
Tax Benefits:
- Investments in SCSS are eligible for tax deduction under Section 80C of the Income Tax Act, subject to the overall limit of ₹1.5 lakhs.
- Interest earned on SCSS is fully taxable and subject to TDS as per applicable rates.
How to Open an SCSS Account:
- SCSS accounts can be opened at authorized banks and post offices.
- Documents required include proof of age, identity proof, address proof, and passport-sized photographs.
- The account can be opened individually or jointly with the spouse.
Example Calculation:
Let's consider an example where Mr. Sharma, aged 62, invests ₹10 lakhs in SCSS at an interest rate of 7.4% per annum.
- Annual Interest = ₹10,00,000 × 7.4% = ₹74,000 [For simplicity we have not cosidered compounding interest for the quarterly paid interest ]
- Quarterly Interest Payment = ₹74,000 / 4 = ₹18,500
Mr. Sharma will receive ₹18,500 every quarter as interest income from his SCSS investment.
Contact Information:
For more details and to open an SCSS account, visit your nearest authorized bank or post office, or refer to the official government website.