Senior Citizen Saving Schemes Rules

There are multiple Senior Citizen Saving Schemes Interest Calculators available online that can be used to determine the total interest that will be generated on a certain investment amount for a specified period of time.

Senior Citizen Savings Scheme is often considered the ideal means for pensioners to save on tax even though the limit of INR 15 lacs investment is a hitch as it restrains its utility as a tax-saving option to some extent. The interest rate is 100 basis points above the 5 year government bond income.

Quite different from PPF, the shift in the interest rate does not shake the current investments. The dip and rise in the rates are not something that most grey-haired depositors will be encouraged by. Lenders are contributing up to 10% to senior citizens at present, which is nearly 50 to 60 basis points more than what they offer to regular clients.

There is a good reason for this indulgence. Those in or about to step into their golden years usually have a huge amount of their capitals in fixed deposits. This makes them much-appreciated customers for all banks. So, even if you do write off the tax deduction specified under Section 80 C of Income Tax Act (1961), this cannot be considered as money-spinning as FDs. But, as a tax-saving tactic, the plan is cut above regular bank fixed deposits and NSCs because the three-monthly payment of the interest offers great liquidity to the depositor.

It is important to go through the guidelines however tedious they seem to be to avoid ‘shocks’ in future. But government schemes are normally as transparent as can be. Read on to know more.

SCSS Rules & Other Guidelines

  • The senior citizen saving scheme interest rate currently is 7.4% annually and will be paid out at the end of the months March, June, September and December regularly.
  • Only one single deposit is allowed in a person’s name.
  • The deposits have to be made in multiples of thousands but it should not be more than INR 15 lacs.
  • A person who has crossed the age 60 is eligible to open a Senior Citizen Savings Account.
  • One who is past age 55 and less than 60 and has already retired on superannuation or under Voluntary Retirement Scheme can also start account providing that it is started in 30 days after receiving all the retirement welfares and money put in should not be more than retirement benefits.
  • The tenure for this scheme is five years.
  • An investor shall manage more than one account in individual capacity or together with the spouse.
  • An account shall be started with hard cash for the sum less than INR 1 lakh or more by cheque only.
  • If one is paying by cheque, the date of realization of cheque in Government Account shall be date when the account was opened.
  • It is endowed with a Nomination Facility. The depositor can fill in the details and submit it when you open the account.
  • The account can be transferred from one post office to another.
  • The investor can start as many accounts as you want, providing the savings doesn’t exceed the stipulated limit.
  • The depositor can opt to have a joint account with his/ her spouse too.
  • The earned interest may be withdrawn through automated credit into savings account standing at the same post office using PDCs or Money Order system.
  • The interest for all the SCSS accounts, the accumulated interest in a quarter will be disbursed to the investor on the first working day of the months, January, April, July, and October. This shall be applicable at every CBS Post Offices.
  • If one wants to close the account prematurely that option is available as well. Only, it is permitted after one year and 1.5% of the total deposit will be deducted as penalty. And if the account is closed after two years, then only 1 percent of the deposit will be deducted.
  • Post maturity, the savings account can be prolonged for another three years within one year of the maturity. All it takes is submitting an application in approved format. In that case, the account can be closed whenever the investor wants without enduring pre-payment penalty.

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