Post Office Senior Citizen Savings Scheme (SCSS) Interest Rate 2022: SCSS is a savings product available for senior citizens aged 60 or above. On the date of opening an SCSS account, the subscriber must be 60 years old or above. However, age relaxation is provided to certain categories of individuals (see below). The scheme offers a decent interest rate and guaranteed income over the period of deposit to senior citizens.
With the SCSS account, senior citizens can receive quarterly interest on deposits up to Rs 15 lakh. Read on to find all important details about SCSS, interest rate and how to calculate returns.
Where to Open SCSS Account
A senior citizen can open an SCSS account with Post Office and at some banks.
SCSS Joint Account Rule
A senior citizen can hold an SCSS account in his/her individual capacity or jointly with the spouse. Both spouses can open a single SCSS account and joint accounts with each other. However, in the case of a joint account, age restriction will apply only to the first holder. The whole amount of deposit is attributable to the first account holder only in joint accounts.
SCSS account nominee
The depositor is allowed to nominate one or more than one person. The name of the nominee can be cancelled or changed by the depositor.
SCSS Term/Maturity Period
The amount deposited in the SCSS account earns interest for a term of five years. An account holder can apply for a one-time extension of three years within one year of the maturity of the account.
The deposit in an extended SCSS account will earn interest at the rate applicable on the date of maturity.
Also, the deposit made at the time of opening of an SCSS account is paid to the account holder on or after the expiry of five years from the date of opening the account, or 8 years in cases of an extended account.
SCSS Maximum and Minimum Deposit
You can invest a maximum of Rs 15 lakh in an SCSS account. The minimum amount required to open the SCSS account is Rs 1000.
Can you have multiple SCSS accounts?
Yes. A senior citizen can open multiple SCSS accounts. However, the combined deposits in all such accounts should not be more than Rs 15 lakh at any point of time.
SCSS Withdrawal Rule
Multiple withdrawals from an SCSS account is not allowed. While interest on SCSS investment is payable on a quarterly basis, the principal amount (deposit made at the time of opening of the account) is paid on or after the expiry of five years, or after the expiry of eight years in case of an extended account.
SCSS Interest Rate 2022
Currently, the SCSS interest rate is 7.4%. The Government of India revises the SCSS interest rate, along with other savings schemes, on a quarterly basis. The SCSS Interest Rate 2022 (for the first quarter of the New Year 2022) has remained unchanged.
SCSS Interest Rate Calculation: Examples
As per SCSS Rules, the interest earned on deposits in the account is paid on a quarterly basis. In case the account holder doesn’t claim the payable interest, such an amount does not earn any additional interest.
SCSS account holders can withdraw payable interest through auto credit into a savings account.
At the current 7.4% interest on the SCSS account, a deposit of Rs 15 lakh will fetch Rs 5,55,000 as interest in five years. The quarterly interest deposited to your savings account in this case will be Rs 27,750.
In case you have deposited Rs 10 lakh in the SCSS account, the total interest in five years will be Rs 3.5 lakh and the quarterly interest will be Rs 18,500.
SCSS Age Limit
The required age of an individual to open an SCSS account is 60 years or above. However, there are certain exceptions to this rule.
Civilian employees above 55 years of age and below 60 years can open an SCSS account only within 1 month of receipt of retirement benefits.
Retired Defense Employees above 50 years and below 60 years of age can also open the SCSS account within 1 month of receipt of retirement benefits.
SCSS Income Tax Benefit
The deposits/investment made in an SCSS account qualify for deduction under Section 80C of the Income Tax.
According to the official Post Office website, the interest is taxable if the total interest in all SCSS accounts is more than Rs 50,000 in a financial year. In such cases, TDS is deducted from the total interest paid.
However, no TDS is deducted if the account holder submits form 15G/15H and the accrued interest is not more than the prescribed limit.
SCSS Premature closure Rules
An SCSS account holder can close the account pre-maturely any time after opening the account. In case the account is closed before 1 year, then no interest is payable. If interest has been paid then that is recovered from the principal amount.
In case the SCSS account is closed between 1-2 years, an amount equal to 1.5% is deducted from the principal amount.
If the SCSS account is closed between 2-5 years from the date of opening the account, then an amount equal to 1% of the principal amount is deducted.
You can close an extended SCSS account anytime after the expiry of 1 year from the date of extension. And no deduction is made in this case.
Should you open an SCSS account?
SCSS is an attractive scheme for senior citizens as it offers a guaranteed income and generally higher interest rates.
However, the upper limit on the investment in the SCSS account limits the income that senior citizens can generate. Nevertheless, it is a good scheme for someone who has a lump sum amount to invest and doesn’t have earnings from any pension scheme or other sources.