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Apart from their health, the second major area of focus for people as they age is financial security. In those twilight years, the appetite for risk diminishes and people look for safe havens to park their savings. But, contrary to popular belief, safe havens too offer good returns. One of them is the government-backed Senior Citizen Savings Scheme (SCSS). In the 2023 Union Budget, the government had increased the maximum deposit limit to Rs 30 lakh, and, currently, it is offering attractive interest of 8.2 per cent. Interested? Let us find out more about this scheme.
Features of senior citizen scheme
Interest rate?
The interest rate offered on SCSS is often higher compared to other fixed income options, making it an attractive choice for retirees seeking stable returns. The government fixes the interest rate on it every quarter. Right now, it is 8.2 per cent.
Who can avail it?
An individual must be 60 years of age or older at the time of opening an account. Someone between 55 and 60 years who has retired under superannuation, VRS, or Special VRS is also eligible to open an account under the Senior Citizen Savings Scheme. For ex-servicemen, it is 50 and above.
Fixed Income
The Senior Citizen Savings Scheme offers a fixed income to its investors in the form of interest payments. This interest is disbursed quarterly, as payments are credited into the individual’s account on the first date of April, July, October, and January.
Minimum and maximum Deposit
The minimum deposit under this scheme is Rs 1,000. While the upper cap has now been revised to Rs 30 lakh or the sum received as a retirement benefit, whichever is lower.
Mode of deposit
For deposits below Rs 1,00,000, individuals have the option to deposit the amount in cash. However, for amounts exceeding Rs 1,00,000, it is necessary to make the payment via cheque.
Maturity tenure
The tenure of the savings scheme is five years. You can choose to extend the tenure for another three years. You have to submit a request to the bank within one year from the maturity date. You can select to extend the tenure just once.
Premature closure
Premature withdrawal is allowed, but there is a price for it. So if you are closing the account within a year of opening it, there will be a one per cent charge. If the account is closed after one year but within two years of opening, a 1.5 per cent charge will be deducted from the principal amount. And if it is closed between two to five years, the same one per cent charge will be deducted.
Tax Benefits
Investments made in the SCSS are eligible for tax benefits under Section 80C of the Income Tax Act up to a limit of Rs 1,50,000 in a financial year. However, the interest earned is taxable.
Number of accounts
Individuals can open more than one SCSS account. They may open another account either by themselves or a joint account with their spouse.
Transfer of an account
An SCSS account can be transferred from a post office to a bank and vice versa.
Easy investment process
Opening an SCSS account is fairly easy. It can be opened in simple steps at any authorised bank or any post office.
Nomination facility
Individuals have the option to nominate a beneficiary when opening an account under the Senior Citizen Savings Scheme or at a later time. If the account holder passes away before the account matures, the nominated individual will be entitled to receive the accrued amount.
