Senior Citizens Savings Scheme: 10 things you need to know about SCSS

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Published: July 24, 2019 4:19:27 PM

Though options like mutual funds also offer a high return but are relatively high-risk. SCSS is a low-risk fixed-return investment option, similar to bank FD, post office FDs, and PMVVY.

income tax, senior citizens, tds, exemption, tdsHere are 10 things you need to know about the Senior Citizens Savings Scheme;

Post-retirement, senior citizens above 60 years of age usually look for the best place to keep their savings safe while earning a moderate rate of return on them. The Senior Citizens Savings Scheme (SCSS) is popular because along with the highest of safety, it offers a regular stream of income along with tax-saving benefits. Though options like mutual funds also offer a high return but are relatively high-risk. SCSS is a low-risk fixed-return investment option, similar to bank FD, post office FDs, and PMVVY.

However, unlike bank FDs, SCSS is a government-backed savings scheme and is known to be more secure, because the investments are held with the government. Senior Citizens Savings Scheme comes with a tenure of 5 years which can be extended by 3 years.

SCSS is offering interest rate at 8.6 per cent per annum from 1 July 2019, payable from the date of deposit of 31st March, 30th Sept, and 31st December in the first instance and subsequently, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December.

Here are 10 things you need to know about the Senior Citizens Savings Scheme;

  1. Senior citizens or individual of 60 years of age or above can open an SCSS account. Also, an individual who has retired on superannuation or under VRS, aged 55 years but less than 60 years, can also open an account, given that the account is opened within 1 month of receiving retirement benefits and the deposit amount should not exceed the amount of retirement benefit.
  2. Senior Citizens Savings Scheme comes with a maturity period of 5 years, which can further be extended by 3 years, by giving the application in the prescribed format.
  3. One can operate more than one account either by themselves or jointly with their spouse. The joint account can only be opened with the spouse and the first depositor in the joint account is the investor.
  4. The SCSS account can be opened both by cash and cheque. For cash, the amount has to be below Rs 1 lakh and for cheque, the amount can go above Rs 1 lakh.
  5. An individual can select a nomination either at the time of opening the account or even after opening the account.
  6. Even though any number of accounts can be opened in any post office, the maximum investment can only be made by adding balance in all accounts. These accounts can also be transferred from one post office to another.
  7. Interest is auto-credited into the savings account of the depositor at the same post office and can be drawn through either through PDCs or Money Order.
  8. Investors can premature close their account, but if done within one year, a deduction of 5 per cent from the deposit amount and after 2 years 1 per cent of the deposit is deducted.
  9. If the interest amount is more than Rs 10,000 per annum, Tax Deducted at Source (TDS) is deducted on interest.
  10. Investors also qualify for the benefit of Section 80C of the Income Tax Act, 1961, when they make investments under this scheme.

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