Senior Citizens Savings Scheme (SCSS) is a government-backed investment scheme in India. Government introduced this scheme in year 2004 to provide senior citizens with a regular source of income after their retirement.
What is Senior Citizens’ Savings Scheme?
This scheme is the best investment choice for those with 60+ years of age, as it offers highest safety for investment capital and comes with tax saving benefits.
It is one of the popular savings schemes for senior citizens in India, as it offers substantial returns on investments. Moreover, it is backed by the government of India, so there is no risk of capital loss.
SCSS Key Information
|5 years with further extension of 3 years
|Up to Rs. 15 lakh can be invested
|7.4% per annum
|Up to Rs. 1.5 lakh
Who Can Invest in SCSS?
Eligibility Criteria to invest in SCSS:
- Indian resident individuals who are senior citizens (60+ years of age)
- Citizens in the age group of 55-60 years who opted retirement under Voluntary Retirement Scheme
- Retired defence personnel with above 50 years but below 60 years of age
- Investments need to be done within a month from the date when you receive the retirement benefits
- NRIs and HUFs are not eligible to invest in this scheme
Features of Senior Citizen Savings Scheme
The important features of Senior Citizens Savings Scheme, are as discussed below.
The interest rate at the time of investment remains fixed through the entire investment tenure. The effective rate of interest on your investment does not change, even if it changes in a later quarter.
For example, Mr. Sahil deposited Rs. 5 lakh on 15th August 2019. The interest rate at that time was 8.70%, so his investment will accrue interest @8.70% per annum for his entire investment term. It doesn’t matter, if the interest rate is increased or decreased in another quarter.
Amount of Investment
To open an account under SCSS scheme, you need to deposit a minimum of Rs. 1,000. The maximum amount that you can deposit in this scheme is Rs. 15 lakh or retirement amount received, whichever is lower.
For instance, if Mr. Sahil receives an amount of Rs. 8 lakh as a retirement benefit. Then you can invest up to Rs. 8 lakh in this scheme.
Total Number of Accounts
Under this scheme, you can open and operate more than one account. The only condition that the deposits in all your SCSS accounts should not exceed Rs. 15 lakh investment limit. Moreover, you cannot open more than one amount in a branch during the same calendar month.
Note: You need to deposit amount into SCSS account in a single payment.
Under SCSS account, you can invest for up to 5 years, which can be further extended to the next 3 years. So, in total you can invest for 8 years in this scheme. To extend the investment term, you need to submit Form B and this extension of investment term is available only for one time.
Mode of deposit
An investor can make deposit in cash for amount less than Rs. 1 Lakh. If the deposit amount is over Rs. 1 lakh, you need to pay in cheque.
An individual can choose a nominee either at the time of account opening or at a later date. It’s essential to appoint a nominee under the Senior Citizens Savings Scheme. After the death of the account holder, the nominee becomes eligible to receive the savings accumulated under this scheme.
Security of capital
It is a government-backed scheme, and hence, you get the unmatched security and guarantee for your investments.
The current interest rate applicable for the Senior Citizens Savings Scheme is 7.4% per annum (revised every quarter). This interest rate is applicable from 1st July 2021 to 30th September 2021.
This scheme tends to offer high interest rate to its investors. Due to a fixed interest rate on your SCSS scheme, it enables you to accumulate a fixed lump sum amount at the maturity. Under this scheme, the interest is compounded and disbursed quarterly. The interest rate under this savings scheme is higher than a fixed deposit or recurring deposit.
Last 5 years Interest Rate on SCSS Account
|Interest Rate (p.a)
|2nd quarter (July to September)
|1st quarter (April to June) FY 2020-21
|4th quarter (January to March) FY 2019-20
|3rd quarter (October to December) FY 2019-20
|2nd quarter (July to September) FY 2019-20
|1st quarter (April to June) FY 2019-20
|4th quarter (January to March) FY 2018-19
|3rd quarter (October to December) FY 2018-19
|2nd quarter (July to September) FY 2018-19
|1st quarter (April to June) FY 2018-19
|4th quarter (January to March) FY 2017-18
|3rd quarter (October to December) FY 2017-18
|2nd quarter (July to September) FY 2017-18
|1st quarter (April to June) FY 2017-18
How to Open an SCSS Account?
You can open an SCSS account through a post office or an authorised bank branch. You need to visit the branch offering facility for account opening under Senior Citizens Savings Scheme (no online option).
Following is a step-wise procedure that you require to follow for opening an SCSS account.
Step 1: Visit the post office or designated bank branch. You need to have a savings account for investing in this scheme.
Step 2: Get the application form (Form A) and fill it correctly and completely.
Step 3: With the application form, also attach the copies of required documents.
Step 4: Submit the form with the documents attached to the concerned personnel in the branch.
Step 5: Deposit the minimum amount of Rs. 1,000. Once receiving the amount, a bank/ post office will create your account in SCSS scheme.
What are the Documents Required for Opening an SCSS Account?
Following are the documents required for opening an SCSS account.
- PAN card
- Aadhaar Card
- Voter ID card
- Telephone bill
- Electricity bill
- Senior citizen card
- 2 passport-size photographs
You need to carry the self-attested copies of documents along with the original documents, while visiting branch to open the account.
Which Banks Offer SCSS Account?
Given below are the banks that offer SCSS account opening facility:
- State Bank of India
- Union Bank of India
- Bank of Baroda
- Canara Bank
- Corporation Bank
- Central Bank of India
- Punjab National Bank
- UCO Bank
- Bank of India
- Indian Overseas Bank
- Syndicate Bank
- Indian Bank
- Allahabad Bank
- Dena Bank
- IDBI Bank
- Vijaya Bank
- ICICI Bank
- HDFC Bank
- Andhra bank
- Bank of Maharashtra
Account Closure and Premature Withdrawals
If you choose to close the account before 2 years, 1.5% of the deposited amount gets deducted as penalty. Upon closure of account after 2 years, 1% of the amount is deducted. For extended accounts, you can close your account after the completion of first year with no penalty.
Under SCSS scheme, you can withdraw prematurely after one year of account opening.
Tax Benefits of Senior Citizen Savings Scheme
The principal amount that you deposit in a Senior Citizens Savings Scheme qualifies for tax benefit up to a maximum of Rs. 1.5 lakh under section 80C of the Income Tax Act, 1961.
The interest amount is subject to taxation. If you receive the interest income that exceeds Rs. 50,000 in a financial year, then it is applicable to Tax Deducted at Source.