Unlike bank FDs, senior citizens saving scheme is known to be more secure, as it is a government-backed savings scheme, and the investments are held with the government.
The minimum amount for opening an SCSS account and maximum balance is set at Rs 1,000 and Rs 15 lakhs respectively.
Senior Citizens Savings Scheme is one of the popular investment options for senior citizens above 60 years of age. People after retirement usually look for places to keep their savings safe, at the same time earning a moderate rate of return on them. SCSS offers both to investors – highest safety, along with a regular stream of income and tax-saving benefits.
Even though other investment options like mutual funds also offer high-return but they are relatively high-risk investments. SCSS, on the other hand, is a low-risk fixed return investment similar to bank FD, PMVVY, and post office FDs.
But, unlike bank FDs, senior citizens saving scheme is known to be more secure, as it is a government-backed savings scheme, and the investments are held with the government. Even though the scheme comes with a tenure of 5 years, it can be extended by 3 years.
Here are a few things you need to know about SCSS before starting to invest:
Individuals above the age of 60 years can open the SCSS account. Having said so, individuals who have 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.
The minimum amount for opening an SCSS account and the maximum balance is set at Rs 1,000 and Rs 15 lakh, respectively. An individual can also select a nomination both at the time of opening the account or even after opening the account.
SCSS offers interest rates at 8.6 per cent per annum from 31 March/30 September/31 December. 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.
Investors can operate more than one account either by themselves or jointly with their spouse. Note that the joint account can be opened with a spouse and the first depositor in the joint account is the investor. These accounts can also be transferred from one post office to another.
You can prematurely close your SCSS account, but if done within 1 year, a deduction of 5 per cent from the deposit amount will be made and after 2 years, 1 per cent of the deposit is deducted. Tax Deducted at Source (TDS) will be deducted on interest, if the interest amount is more than Rs 10,000 per annum. Investors also qualify for the benefit of Section 80C of the Income Tax Act, 1961, when they make investments under this scheme.