Senior Citizen Savings Scheme (SCSS): Here's a look at eligibility, interest rate, tax benefits, and investment limit

The Senior Citizens Savings Scheme (SCSS) is a government-backed retirement plan for those aged over 60 years, which allows them to invest between ₹1,000 to ₹30 lakh for a period of five years, at annual interest rate of 8.2%.

Investment under the scheme also qualify for tax deduction up to ₹1.5 lakh under Section 80C of the Income-Tax Act. The accounts can be opened by public banks or at your nearest post office.

It is a good investment at a time when active earnings from employment start to moderate and provides a good and steady pad up to your pension stream with quarterly interest payouts.

Senior Citizens Savings Scheme: Age, eligibility criteria, exclusions

• Senior citizens 60 years or above at the time of opening of account are eligible to invest in SCSS.
• Further, citizens aged 55-60 can also invest in SCSS, if they open the account within a month of getting their superannuation or retirement benefits. This includes employees who opted for the Voluntary Retirement Scheme (VRS), or Special VRS.

• For those retired from defence services, including civilian roles, SCSS investment can be made once they reach 50 years of age, subject to opening the account within a month of receiving retirement benefits.
• You can open more than one account, but joint accounts are only allowed with your spouse. Here the first name holder will be considered the primary investor.
• Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open a SCSS account.

How to open post office SCSS account?

• Download the SCSS application form from the India Post website or collect it at your nearest branch.

• The duly filled form will have to be submitted with two passport-size photos, ID proof such as Aadhaar Card, PAN Card or Passport copy, address proof copy — all copies being self-attested.

Investment: Key features and benefits — SCSS

• Interest rate for SCSS is at 8.2% per annum, among the highest when it comes to government's small savings schemes.
• It provides regular, quarterly interest payout and is a government-backed scheme which guarantees return upon maturity.
• The account tenure is for five years, extendable by another three years.

• Minimum investment is ₹1,000 and can go up to ₹30 lakh (in multiples of ₹1,000), according to Clear Tax.
• Notably, for deposits above ₹1 lakh, the payment needs to be made through cheque, while deposits below ₹1 lakh are allowed by cash.
• You can add or remove nominee for the account at any time during the five years tenure. The account can also be transferred between authorised banks and post offices for convenience.
• If you close your account before maturity even before completing one year, any interest paid is deducted as penalty. For accounts shut within one to two years of opening, 1.5% penalty is imposed on the principal amount, while after completion of two years, 1% penalty fee applies.

• The scheme offers tax benefit for investments up to ₹1.5 lakh annually, under Section 80C of the ITA, reducing taxable income.
• Further, if the total interest in SCSS accounts exceeds ₹1 lakh per annum, TDS will be deducted. For those below 60 years, TDS will be deducted if the total interest exceeds ₹50,000 per annum.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.