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Senior Citizens Savings Scheme

Retirement brings with itself several complications and doubts, but there are savings products that are safe and ensure guaranteed retirement income. The Senior Citizen Savings Scheme (SCSS), launched in 2004 is a deposit scheme introduced by the government of India to provide guaranteed returns to senior citizens through a safe investment. This scheme ensures a regular income stream for senior citizens in retirement.

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Frequently Asked Questions on Senior Citizens Savings Scheme

Eligibility

You need to be a retired Resident Indian to open an account

Entry Age

  • 60 years
  • 55 years for those who have retired on superannuation or under a voluntary or special voluntary scheme
  • The retired personnel of Defence Services (excluding Civilian Defence Employees) shall be eligible to invest irrespective of the age limits subject to the fulfilment of specified conditions

Investments

  • Minimum: Rs 1,000
  • Maximum Rs 15 lakh
  • Deposits have to be in multiples of Rs 1,000

Interest

  • Interest from 01.10.2017 to 31.12.2017 is 8.3% per annum compounded quarterly.
  • Interest shall be payable from the date of deposit to 31st March/30th June/30th September/31stDecember on 1st working day of April/July/October/January as the case may be, in the first instance and thereafter, interest shall be payable on 1st working day of April/July/October/January.

Tenure

5 years which can be extended by 3 more years

Account holding categories

  • Individual
  • Joint with spouse

Nomination

Facility is available

Interest Guarantees

The interest rates on this scheme will be notified by Ministry of Finance / Reserve Bank of India before April 1 of that year and is aligned with G-Sec rates of similar maturity.

Liquidity

The SCSS is liquid, despite the 5-year stipulated lock-in.

The liquidity is offered in the form of withdrawals subject to conditions and penalties.

Exit Option

  • Premature closing of the account is permitted with penalty.
  • The facility of pledging the deposit in the SCSS account to obtain loans is not permitted as it defeats the purpose of regular income.
  • Premature withdrawal or closure of the SCSS account is permitted after completion of one year from the date of opening the account after deducting a penalty for early withdrawal or closure that varies from 1-1.5 per cent depending on the completed tenure of the account.
  • If the account is closed after the first year and before the end of the second year, an amount equal to 1.5 per cent of the deposit shall be deducted as penalty.
  • If the account is closed on or after the second year, an amount equal to 1 percent of the deposit shall be deducted.

Tax Implications

Interest earned on the deposit is fully taxable and tax is deducted at source (TDS) as per applicable Income Tax Rules. However, if the income is not taxable, one has to provide form 15H or 15G so that no tax is deducted at source.

How to Open an Account

Open a savings bank account along with SCSS Account and you will need the following documents to be tendered at Branch Counter

  • An account opening form which the branch will provide.
  • Two passport size photographs.
  • Address and identity proof such as copy of the passport, PAN (permanent account number) card or declaration in form No 60 or 61 as per the Income Tax Act 1961, driving license, voter`s identity card or ration card.
  • Carry original identity proof for verification at the time of account opening.
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