Senior Citizens Saving Scheme {New} – All You Wanted to Know

Quick Briefs about New Senior Citizen Saving Scheme

Individuals over 60 can open an SCSS account. Further, a person who is 55 years old and has taken voluntary retirement can invest in such an account. It provides quarterly interest payouts and the investment allows tax deduction under Section 80C of the Income Tax Act.

Changes Made w.e.f 12-12-2019

Premature closure norms relaxed: Now, the account can be closed prematurely any time after it is opened. Now, you don’t need to wait for the expiry of 1 year from the date of opening the account before availing the premature closure facility.

Notes: But if section 80C deduction has been claimed in respect of a deposit account under the scheme in the past, premature encashment of such account will be treated as income in the year of encashment.

Comparison Between Old and New Senior Citizen Saving Scheme

Tax Benefits of Senior Citizens Saving Scheme

A deduction shall be allowed to be the extent of lower of

(a) Rs.50,000 and

(b) Actual interest income [u/s 80TTB]

The amount deposited in a financial year qualifies for deduction u/s 80C up to the limit of Rs.1,50,000.

Notes: The said rules have been replaced by a new scheme.

Eligibility

• Only Resident Indian
• 60 Years of Age
• 55 years (If retires)
• 50 Years (Retires personnel of defence services)

Joint Account Availablity

• Yes, it is available. You can open a joint account with a spouse under Senior Citizen Saving Scheme.
• The age of the first account holder shall be considered to determine the eligibility to open the Senior Citizen Saving Account.
• There shall be no age limit for the second applicant.
• The whole amount of deposit in a joint account shall be attributable to the first account holder only.
• Both the spouses can open a single account and joint accounts with each other with the maximum deposit of up to 15 lakhs rupees in each account provided both are individually eligible to open the account.

How Many Accounts Are Allowed to Open?

You can open the unlimited account under Senior Citizen Saving Scheme but subject to the maximum amount invested in all accounts up to Rs.15,00,000.

Min and Max Amount Investment

• The Senior Citizen Saving Scheme account can be opened with a minimum deposit of Rs.1000.
• There shall be only one deposit in the account.
• The maximum limit to invest in the Senior Citizen Saving Scheme is Rs.15,00,000.
• You can not deposit more than Rs.15,00,000 in all the accounts taken together.
• Both the spouses can open single accounts and joint accounts with each other with the maximum deposit of up to Rs. 15,00,000 in each account provided both are individually eligible to open the account.

Where a deposit in excess to the amount of Rs.15,00,00 then the accounts officer shall refund the excess deposit to the account holder immediately. The excess amount gets the interest at the rate applicable from time to time to the Post Office Saving Account.

Modes of Payment

You can deposit the amount in Senior Citizen Saving Scheme 2020 by the following ways:-

• in cash
• by crossed Cheque, a Demand Draft or a Pay Order
• by submitting a signed withdrawal form in respect of a saving account
• by electronic transfer

Interest Rates on Senior Citizen Saving Scheme

• The interest rate on Senior Citizen Saving Scheme will remain fixed until maturity once the account is opened.
• Any changes in interest rates will only apply to new accounts opened.
• Existing accounts will not be affected by interest rate revisions.
• You have the option to credit the interest to your savings account.
• The interest is payable every quarter so you need to credit or claimed otherwise it will not get any additional interest.
• Interest shall be payable from the date of deposit to 31st March/30th June/30th September/31st December on the first working day of April/July/October/January.
• Interest after maturity will applicable to the Scheme on the date of maturity.

How to Open Senior Citizen Saving Scheme Account?

You can open Senior Citizen Saving Scheme Account in any authorised bank or Post Office.

Step 1: Visit the bank branch in which you want to open Senior Citizen Saving Scheme Account.

Step 2: Fill the form.

Step 3: Attach the documents like age proof, identity proof, address proof, cheque etc.

Step 4: Attach the documents of nominee.

That’s it!

Loan Facility

There is no loan facility available against the Senior Citizen Saving Scheme account.

Premature Closure of Account

Yes, the premature closure option of the Senior Citizen Saving Scheme is available. You can encash premature any time after opening the account as per the following conditions.

• You can withdraw the deposit and close the account at any time.
• Multiple withdrawals from an account shall not be allowed.
• Premature closure will have to be by way of one single withdrawal.
• In case of extension of the account of more than 3 years, there is no penalty after 1 year from the date of extension of account.

There will be the interest and penalty deducted from the interest if you encash premature as follows.

In the Case of Death

• In the case of death, the nominee or legal heirs can close the account.
• The nominee or legal heirs can get the deposits along with interest.
• The tax implications will be applicable in the hands of the nominees or legal heirs.
• In case of a joint account the sole nominee, the spouse can continue the account.

Maturity of Senior Citizen Saving Scheme

• The maturity period is 5 years.
• You can get the deposit after the expiry of five years or after the expiry of eight years if the account will be extended.
• You can close the account on maturity or extend of account for 3 years after maturity.
• In case you will not close or extend the account, you will get the interest applicable to the Post Office Saving Account.

Tips for Maximum Return and Less Penalty on Premature

• You can open multiple Senior Citizens Saving Schemes Accounts.
• You should not deposit more than Rs.1,50,000 in one account.
• So, in case of any emergency of fund you can be prematurely closed the entire account. You should not close that account for which you have already claimed deduction under section 80C.
• You should keep a record of all accounts of which you have already claimed deduction under section 80C.
• You should not close the account of which you have already claimed deduction under section 80C. It will become taxable in the year of encashment.

Expected Return under Senior Citizen Saving Scheme

There is table of expected return on deposit of Rs. 1,00,000. We assume interest rate as 8.6% p.a. You can calculate as per the latest interest rate applicable.

Important Links

List of Banks Offered SCSS Account

The following is a list of top public sector banks offering the facility of opening a Senior Citizen’s Savings Scheme account –

1. Allahabad Bank
2. Andhra bank
3. State Bank of India
4. Bank of Maharashtra
5. Bank of Baroda
6. Bank of India
7. Corporation Bank
8. Canara Bank
9. Central Bank of India
10. Dena Bank
11. Syndicate Bank
12. UCO Bank
13. Union Bank of India
14. Vijaya Bank
15. IDBI Bank
16. Indian Bank
17. Indian Overseas Bank
18. Punjab National Bank
19. United Bank of India

FAQ About Senior Citizen Saving Scheme

What is Senior Citizen Saving Scheme?

Individuals over 60 can open an SCSS account. Further, a person who is 55 years old and has taken voluntary retirement can invest in such an account. It provides quarterly interest payouts and the investment allows tax deduction under Section 80C of the Income Tax Act.

What is the current interest rate on Senior Citizen Saving Scheme?

The current interest rate is 7.4% w.e.f 1-4-2020 to 30-06-2020.

How to open SCSS account?

You can open Senior Citizen Saving Scheme in Post office or in banks.

What is the maturity period of the Senior Citizen Saving Scheme?

The maturity period is 5 years for Senior Citizen Saving Scheme.

Is tax deduction u/s 80C is available on Senior Citizen Saving Scheme?

Yes, the tax deduction is available under section 80C under Senior Citizen Saving Scheme.