Old age often brings uncertainty. Senior citizens face questions about their physical, emotional and financial health. The Government of India recognises the importance of financial security for the senior citizens and has started the Senior Citizen Savings Scheme (SCSS). Apart from providing financial security to senior citizens, it is one of the best tax saving options for senior citizens.
Who is eligible for the SCSS?
- An Indian resident aged 60 years or above.
- Indian resident above 55 years but below 60 years who have retired under the Voluntary Retirement Scheme rules or have appropriate superannuation. Under this, the SCSS account needs to be opened within a month of receipt of retirement benefits.
- Retired defence personnel (excluding defence civilians) meeting particular terms and conditions can also avail the scheme on attaining the age of 50 years.
Non-Resident Indians, Person of Indian Origin, and members of a Hindu Undivided Family are not eligible for the SCSS.
Where can one avail the SCSS?
An eligible individual can avail the scheme through a private or public sector bank or the Indian Post Office. Since SCSS is a Central Government scheme, the rules and regulations of the scheme are standard across these institutions.
What is the interest rate on the SCSS?
The interest rate on the SCSS changes every quarter. The amount is calculated and credited every quarter, too. For the last financial quarter of 2019-20 i.e. January- March 2020, the interest rate is 8.6%.
What is the minimum and maximum deposit limits?
Individuals availing the SCSS can make lump sum deposits into their account. The minimum deposit stands at Rs.1000 while the maximum amount is Rs. 15, 00, 000. Any deposit greater than Rs.1000 will have to be made in multiples of Rs.1000.
When will the scheme mature?
The deposited amount matures 5 years after the date of account opening. The account holder can extend the account once, by a period of 3 years. However, the application for maturity extension needs to be made within one year of account maturity.
What is the interest on senior citizen scheme taxability?
- There is SCSS tax exemption under Section 80C of the Income Tax Act, 1961. However, SCSS tax benefit is capped at Rs. 1, 50, 000.
- In case of interest amounting to more than Rs. 50, 000, for a fiscal year, TDS is applicable starting FY 20-21.
What are the different benefits of the SCSS?
- Being a government initiative, the depositor is protected by the facts associated with government schemes. This means, the depositor will not be affected by the economy.
- The Senior Citizen Saving Scheme tax benefit serves as a good way of saving money as the SCSS tax is deductible under the Section 80C of the Income Tax Act, 1961.
- In case of financial emergencies, the depositor can prematurely withdraw the amount with applicable penalties.
Now that you know how SCSS works, you can understand if it is the best financial option for you.