Senior Citizen Savings Scheme (SCSS)

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Income Tax laws are not only meant to tax your income but also to encourage you to save or invest money. Therefore, the Income tax Act allows tax benefits on various investment schemes. Under section 80C of the I-T Act, provisions on several tax saving investment options like EPF, PPF, NSC etc. are mentioned. However, arguably the most lucrative option in terms of ROI is ELSS or Equity Linked Savings Scheme.
Senior citizen savings scheme is an investment product sponsored by Indian Government. This account can be opened for an Indian senior citizen and can also be jointly held by spouse regardless of age of secondary member (spouse).

 How to Open Senior Citizen Savings Scheme Account?

·         This account can be opened by any depositor at any deposit office. This scheme being an investment product of Indian government is one of the safest investment options.
·         An application needs to be filled up in Form A along with the deposit amount in multiples of one thousand rupees and age proof.
·         The subscriber to the scheme is allowed only one deposit in the account every year and cannot make multiple deposits in the same account. But on can open any number of accounts so that the total balance in all the accounts cannot exceed Rs 15 lakh.
·         The account may be opened in an individual capacity or jointly with the spouse. In the case of a joint account, the age of the first applicant is only considered for eligibility criteria, and there is no restriction on the age of the second applicant. The entire deposit is counted on account of the first holder. The second holder will also be eligible for another limit of Rs 15 lakh subject to the age limit. So you and your spouse together can deposit/invest up to Rs 30 lakh in the SCSS.
·         In case deposit amount is less than INR 1,00,000, the same can be deposited in cash. In rest of the cases, it has to be compulsorily by a cheque or demand draft or online transfer only.
·         The deposited amount cannot be withdrawn during the first year of investment. An account holder can withdraw amount only after completion of one year of account opening date, but that withdrawal is also with some penalty as under:
·         Up to 1 year – Not allowed
·         From 1 year – Up to 2 years – @1.5% of the Balance Deposit Amount will be deducted
·         On or After expiry of 2 years – @1% of the Balance Deposit Amount will be deducted
·         The Ministry of Finance decides and revises the rate of interest on SCSS from time to time. The interest rate on SCSS investments for the fourth quarter of the financial year 2017-18 i.e. January 2018 to March 2018 is 8.3% per annum, TDS is applicable here. TDS is deducted at source on interest in case the amount of interest exceeds INR 10,000 per annum.
·         Compounding on interest is not applicable here, and interest is paid on a quarterly basis to provide a fixed and regular income to the senior citizen. This rate implies simple interest on the investment on an annual basis. Account holders have an option to avail interest on a quarterly basis. Interest payment dates are usually 30th June, 30th September, 31st December and next calendar year’s 31st March.

Benefits of investing in SCSS

1. Safe and Reliable: This is an Indian government-sponsored investment scheme and hence is considered as the safest and reliable investment option.

2.Simple and easy process: The process to open an account is simple and can be opened at any authorized banks and any post offices across India and transferable across India.

3.Good returns: At 8.6 % the return rate is good as compared to a savings or FD account.

4. Nomination: Nomination facility is available at the time of opening an SCSS account by submitting an application as part of Form C  which is also accompanied by the passbook to the Branch.

5. Tax benefits: Tax deduction up to Rs 1.5 lakh can be claimed under Section 80C of Indian Tax Act 1961.

6. Flexible: Tenure of this investment scheme is flexible and it has an average tenure of 5 years but can be extended up to 3 more years.



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