SCSS - Senior Citizen Saving Scheme _{Last Updated : 16 Dec 2019}

The Senior Citizens Savings Scheme (SCSS) was launched with the main aim of providing senior citizens of the country a regular income after they attain the age of 60 years old. Some of the main benefits of the scheme are:

• Tax benefits are provided
• Safe to invest in the scheme
• High rate of interest of 8.7% p.a.
• Premature withdrawal is allowed

The scheme comes with various security features and provides individuals a savings option for the long run. The SCSS is available at post offices and certified banks across the country.

SCSS Eligibility

The eligibility criteria for the SCSSare mentioned below:

• An individual who has attained the age of 60 years or above at the time of opening an SCSS account.
• Individuals who have attained the age of 55 years old, but are below the age of 60 years old and have retired on superannuation are eligible to open an SCSS account.
• Individuals who have attained the age of 55 years old and have retired before the implementation of the SCSS rules are eligible under the scheme.
• Under the SCSS, retired Defence Services personnel are eligible irrespective of their age. However, certain other specific conditions must be met by these individuals.
• Non-Resident Indians (NRIs) are not eligible to open an SCSS account.
• Hindu Undivided Families (HUFs) are not eligible to open an SCSS account as well.

Documents required to open SCSS account

Given below are the documents that individuals must submit in order to open an SCSS account:

• Two passport-size photographs
• Form A must be completely filled and submitted.
• Identity proof such as Passport or Permanent Account Number (PAN) Card must be submitted.
• Individuals must submit proof of address such as Aadhaar Card or telephone bill.
• A document confirming the individual’s age must be submitted. Age proof document can be the PAN Card, Voter ID, Birth Certificate, Senior Citizen Card, or Passport.

All the documents that are submitted to open an account must be self-attested.

SCSS Features

The main features of the Senior Citizens Savings Scheme are mentioned below:

• Maturity of the scheme: The maturity period of the scheme is 5 years. However, individuals can extend the maturity duration for 3 years by submitting an application in the required format within one year of maturity of the account. However, the account can be closed without any charges after the expiry of the account.
• Nominations: Nominations can be added to the policy at the time of opening an account or after the account has been opened.
• Number of accounts: Individuals are allowed to operate more than one account by themselves or open a joint account with their spouse. However, joint accounts can be opened only with the spouse and the initial depositor is the investor of the joint account.
• Minimum and maximum amount: Only a single deposit is allowed to be made in the account. It can be in the multiples of Rs.1,000 and the maximum amount that can be deposited is Rs.15 lakh. Deposit amounts less than Rs.1 lakh can be paid by cash, while amounts more than Rs.1 lakh must be paid by cheque. In case of cheque payments, the date the cheque realises will be the opening date of the account.
• Transfer of an account: An SCSS account can be transferred from a bank to a post office and vice versa. The process to open an SCSS account is also easy and hassle-free.
• Premature withdrawal: After one year of opening the account, premature withdrawal is allowed. However, a 1.5% charge and a 1% charge of the total amount deposited will be charged in case of premature withdrawals after 1 year and 2 years, respectively.

SCSS Interest Rate

Currently, the SCSS interest rate is 8.7% p.a. The returns of the SCSS is high when compared to savings and Fixed Deposit (FD) accounts. On the first instance, the interest is payable on the deposit date of March 31, September 30, and December 31, thereafter, interest is payable on March 31, June 30, September 30, and December 31. Quarterly interests are paid on the initial working day of April, July, October, and January. However, quarterly interest payments are available only at Core Banking enabled post offices.

Given below are the interest rates of the SCSS from 2012 till date:

Tax benefits under the SCSS

Under Section 80C of the Income Tax Act, 1961, individuals are eligible for tax deductions on investments up to Rs.1.5 lakh. In case the interest generated is more than Rs.10,000 p.a., the tax will be deducted at source.

List of banks that offer SCSS

Given below is the list of banks that of the scheme:

• ICICI Bank
• Vijaya Bank
• Union Bank of India
• UCO Bank
• Syndicate Bank
• Indian Bank
• Punjab National Bank
• IDBI Bank
• Indian Overseas Bank
• State Bank of India
• Dena Bank
• Central Bank of India
• Canara Bank
• Corporation Bank
• Bank of India
• Bank of Baroda
• Bank of Maharashtra
• Andhra Bank
• Allahabad Bank

FAQ's

1. What will be the share of the joint account holder in the deposit in an account?

The whole amount is attributed to the first depositor or applicant. The addition of a spouse as a joint account does not matter in this case.

2. Can both the spouses open separate accounts?

Yes, individual accounts can be opened as well, provided the deposit limit is a maximum of Rs.15 lakh. Of course, it has to adhere to the rules of the scheme.

3. Any income tax rebate / exemption is admissible?

No, not with this scheme.

4. Is TDS applicable to the scheme?

Yes if the interest exceeds Rs.10,000 per annum, TDS is applicable. In this scheme, interest payments are no exemption to deduction of tax at source.

5. Any minimum limit has been prescribed for deduction of tax at source?

As per government regulations, tax has to be deducted at source as per the minimum balance.

6. Can a person holding a Power of Attorney sign for the nominee in the nomination form?

No a person holding a Power of Attorney cannot sign in place for the nominee in the nomination form.

7. In case of a joint account, if the first holder / depositor expires before maturity, can the account be continued?

Yes, the nominee can hold the account of the expired depositor in case of a death, provided it pertains to the SCSS Rules.

8. Is there any fee prescribed for nomination and / or change / cancellation of nomination?

No fee is charged.

9. Can an account holder obtain loan by pledging the deposit / account under the SCSS, 2004?

Periodic withdrawals for loans is not possible in this scheme as it defies the very nature of the scheme.

10. Is premature withdrawal of the deposits from the accounts under the SCSS, 2004 permitted?

Yes, premature withdrawals are allowed, although a premature closure of the savings account is permitted only after a year, whereby the account holder will be charged 1.5% of the savings and 1% after two years.

11. Are Non-resident Indians, Persons of Indian Origin and Hindu Undivided Family eligible to invest in the SCSS, 2004?

No, it is not possible, though an Indian moving abroad and having a SCSS can continue to maintain it.

12. Can an account be transferred from one deposit office to another?

Using Form G, an account can be transferred from one deposit office to another.

13. Can an SCSS account be extended?

Yes, within one year after maturity a depositor can extend their SCSS for a period of three years.

14. What happens if an account is opened in contravention of the SCSS Rules?

The account will be close, interest deducted and the deposit money returned to the depositor.

15. Whether commission is payable to the agents under the Scheme?

Payments of commission under this scheme has been discontinued.

16. Why must I choose to open my SCSS account in a bank rather than a post office? Which is better?

The senior citizens savings scheme is an Indian government sponsored program that is administered to the general public through two mediums- a list of certified banks and the offices belonging to the Indian Postal Department. The latter are just the medium and do not possess any control over the terms, rules and regulation of the actual SCSS product. Thus, it will be wrong to put one medium over the next.

However, owing to the rapid advancement of online and digital technology in the banking sector, a number of features are now available that make banking simple and the management of investments, a child’s play. These features will help you manage your SCSS account better, though the difference as compared to the post office hosted SCSS account may not be much. The following features are the highlights-

Facility of direct credit of accumulated interest into the depositor’s savings bank account. In the case of the post office, such a savings account must first be created.

Regular account statements are forwarded to the depositor via post and/or email.

Higher grade of customer service through phone banking facility.

17. What documents must be submitted when opening up a senior citizens savings scheme account?

Essentially, the documents that help the bank ascertain your age are required when opening up the SCSS account. These include, Passport/ Birth Certificate/ Voter’s ID/ Senior Citizen Card/ PAN, etc.

18. What will happen to my account if I were to pass away?

If you have opened an individual account (without any joint investor) and unfortunately, you were to pass away unexpectedly, the SCSS account will be primed up for closure. To affect such a termination, the account holder’s nominee must forward an application in Form ‘F’. The Annexures II & III of such a form must be attested by a public notary or the Oath Commissioner.

19. I keep hearing the term ‘retirement benefits’, what does this mean exactly?

When speaking of the eligibility for the senior citizens savings scheme, people belonging to the age group of 55 years- 60 years can apply, provided that they must open this account within one month of receipt of ‘retirement benefits’. Also, the invested amount must not exceed the net value of the ‘retirement benefits’.

What then is ‘retirement benefits’? In the context of the rules governing the SCSS accounts, retirement benefits are defined as any payment that is credited to the depositor post his/her retirement (on superannuation or otherwise) and includes such monetary components as PF dues, gratuity, encashment of unused leaves, earnings from Group Savings linked Insurance scheme, payments per the voluntary retirement scheme, etc. When applying for a SCSS account, the applicant must disclose such benefits in line with the regulations that govern the operation of such SCSS accounts.

20. Can I cancel or change my nomination?

When applying for the SCSS account, you are free to propose a nominee. This activity can also be completed after your account has been in existence for a specified duration of time. Alternatively, the nomination made by you can easily be canceled or edited by submitting a fresh nomination in Form-C to the bank/post office wherein said SCSS account is being maintained.

21. My wife is just 45 years old, can I appoint her as partner in a joint account?

Since you already have an SCSS account, you are free to appoint your spouse as the joint account holder. Its your age that is the qualifying factor here and not your wife’s. Thus, her age doesn’t affect her eligibility to act as your joint partner in the account. However, the converse of this isn’t possible as your wife is just 45 years old and the minimum age to be eligible to own a SCSS account is 60 years.

22. What to keep in mind before opening a SCSS Account

Before you open a Senior Citizens Savings Scheme account, ensure that you provide all the necessary information that has been requested. If it is found that the information provided by you is incorrect or false, the account shall be closed with immediate effect. The deposited amount will be refunded to the depositor after the deduction of interest that has already been paid into the account.