The Indian Govt is very friendly to senior citizens in financial matters and not only gives benefit of higher tax slabs to senior citizens but also gives them extra interest on govt deposits. One such deposit scheme of the Indian govt especially framed for the benefit of senior citizens is the Senior Citizen Saving Scheme (SCSS) and this scheme has been discussed in detail below.

Senior Citizen Saving Scheme: Eligibility and Account Opening

The Senior Citizen Saving Scheme Deposit can be opened in any Post Office across India. Earlier these deposits were only limited to Post Offices but now the govt has also allowed such deposits to be opened in certain specified branches of Nationalised and Private Banks. Allowing nationalised and private banks to facilitate the deposits for senior citizen savings scheme will ensure higher reach and ease of access.

Deposit in the senior citizen savings scheme can be made by making an application in Form A along with amount of deposit as per pay-in-slip in Form D. Senior Citizen Saving Scheme Account can only be opened by the individuals who fall in any of the below mentioned categories:-

  1. Individual who has attained 60 years of age
  2. Individual who has attained 55 years of age  and has retired on superannuation or has taken VRS
  3. Retired Personnel of Defence Services are eligible to invest irrespective of their age subject to fulfillment of certain conditions

The Individual may open a single account or a joint account with the spouse. The spouse may or may not be a senior citizen on the date of opening of account. The age of only the 1st application would be considered for opening the deposit under senior citizen saving scheme.

The depositor may at the time of opening the account or at any time in future before its closure, nominate any person by making an application in Form C.

NRI’s and HUF’s have been specifically excluded from the benefits of this scheme and therefore they are not allowed to open Senior Citizen Saving Scheme Account.

Interest Rate on Senior Citizen Saving Scheme

The Interest Rate on Senior Citizen Saving Scheme is decided by the Govt of India and it keeps on changing every year. The Interest Rate on Senior Citizen Saving Scheme for the first quarter of the financial year 2016-17 is 8.6% p.a.

Although the interest rate on senior citizen saving scheme is almost equivalent to the interest paid on fixed deposits by banks, the additional advantage here is that interest on senior citizen saving scheme is paid quarterly whereas interest on fixed deposits is paid yearly.

So, if we see the effective yearly interest rate on Senior Citizen Saving Scheme, it would come out to more than 9.5% approx. To calculate the interest that would be payable to you, kindly refer this senior citizen interest rate calculator.

The Interest on SCSS is not tax free and tax is required to paid as per Income Tax Slab Rates. Moreover, TDS on Interest @ 10% would also be deducted if the interest paid during the year is more than Rs. 10,000.

Maximum and Minimum amount of deposit in SCSS

The SCSS Deposit Scheme is governed by the Senior Citizen Saving Scheme Rules, 2004 and as per these rules, there shall only be 1 deposit in an account and that too in multiples of Rs. 1000. Therefore the minimum amount of deposit is Rs. 1000. The maximum amount of deposit is Rs. 15 Lakh.

The maximum amount that can be deposited in senior citizen saving scheme (SCSS) is restricted to the retirement benefits received by the person or Rs. 15 Lakh (whichever is lower). The amount deposited in SCSS is also allowed to be claimed as a deduction under Section 80C.

Although there shall only be 1 deposit in a account but a person is allowed to open multiple accounts as compared to PPF wherein a person is allowed to open only 1 account.

Tenure of Senior Citizen Saving Scheme

The Tenure of Senior Citizen Saving Scheme (SCSS) is 5 years and from the date of opening the account and on maturity the amount in the SCSS Deposit can be withdrawn by submitting an application in Form E along with the passbook.

SCSS Deposit can be further extended for a period of 3 years by submitting an application in Form B within 1 year from the date of maturity. If an application for the same is made within 1 year from the date of maturity, the extension shall come into effect from the date of maturity and not from the date of submission of application.

In case the depositor neither closes the account on maturity nor requests for extension within 1 year, the account shall be treated as closed. And in such cases where the account is closed and the amount has not been withdrawn, interest as applicable on Post Office Saving Account shall be payable on such matured deposit.

In case of death of the depositor before maturity, the account shall be closed and deposit refunded along with interest on an application being made in Form F. In case it is a joint account, or where the spouse is the sole nominee, the spouse may continue the account or may close the account.

Premature Closure of Senior Citizen Saving Scheme Deposit

A depositor on an application being made in Form E is permitted to withdraw the amount from the Senior Citizen Saving Scheme and close the account at any time after expiry of 1 year from the date of opening of account subject to the following conditions:-

  1. In case the SCSS Deposit Account is closed after the expiry of 1 year but before the expiry of 2 years, 1.5% of the deposit amount would be deducted and the balance paid to the depositor.
  2. In case the SCSS Deposit Account is closed after the expiry of 2 years, 1% of the deposit amount would be deducted and the balance paid to the depositor.

The depositor availing the facility of extension of account may be permitted to withdraw the amount from the senior citizen saving scheme and close the account at any time after the expiry of 1 year from the date of extension of account without any deduction.