SCSS i.e. Senior Citizen Saving Scheme is a saving scheme offered by the post office for senior citizens. The scheme offers a regular stream of income with the highest of security and safety along with tax-saving benefits. It is an ideal choice of investment for those over 60 years of age. Individuals older than 55 years but less than the age of 60 can also initiate post office SSCS if they have voluntarily taken retirement or have retired on superannuation (subjected to terms & conditions). The scheme promises to make regular & steady interest payouts to the individuals on a lumpsum investment made at the time of opening the account. For a sum lesser than Rs. 1 lakh the payment can be done in cash. For sums above Rs. 1 lakh the payment needs to be done via cheques. In this article, we will be discussing all the aspects of this scheme in detail. 

Who is Eligible for Post Office Senior Citizen Scheme?

1. An individual above the age of 60 yrs.
2. Retired Civilian employees above the age of 55 yrs and below the age of 60, subject to the terms that investment to be made within a month of receipt of retirement benefits.
3. The account can be initiated in an individual or joint capacity. (Joint account can be opened with spouse only).
4. Retired defense employee above the age of 50 years and below the age of 60 years, subject to the terms that investment to be made within a month of receipt of retirement benefits.
5. The whole sum of the deposit in a joint account shall be attributable to the 1st account holder only.

Post Office Senior Citizen Scheme Interest Rates

From 1st April 2020, interest rates are 7.4 ​% p.a., payable from the date of initiation/deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest will be paid on 31st March, 30th June, 30th September, and 31st December. It should be noted that the rates are subject to revisions every quarter by the Government of India. Here are the rates of the past few quarters:

Interest can be transferred by auto credit into a savings account standing at the same post office, or ECS. In the case of the account at CBS Post offices, monthly interest can be transferred in a savings account standing at any CBS Post Offices.

Also Read : Post office Saving Scheme

Why Should one Invest?

Investing in SCSS is an ideal opportunity for senior citizens or retired individuals to have regular & steady income along with getting tax benefits. The scheme can help to meet the regular financial needs & requirements of investors through periodic payouts into their savings account. This scheme is available through post offices and authorized banks across India.

Documents Required to Open Post Office SCSS Account

An SCSS account can be initiated in a post office branch or any certified bank across India with these documents:

1. Form A  has to be filled for initiating an SCSS Account.
2. Identity proof like Passport, PAN Card to be presented.
3. Address proof such as Aadhar Card, Telephone bill is compulsory.
4. Document for proof of age is mandatory. This could be in the form of a Senior Citizen Card, Passport, a Birth certificate issued by the Registrar of Births and Deaths or corporation, PAN card, Voter ID card,  etc.
5. Two Passport size photos.

All the above-mentioned docs must be self-attested.

Benefits of Post Office Senior Citizen Saving Scheme

Safe and Reliable:

This is a government-backed saving scheme and hence is considered to be one of the most reliable and safest investment options.

Simple and easy process:

The process to initiate an SCSS account is easy and can be opened at any certified bank or any post office branch across the nation. It is also transferable across the country.

Good returns: 

At 7.4%, the interest rate is great when compared to ordinary savings or fixed deposit account.

Nomination:

The nomination facility is offered at the time of initiating an SCSS account by means of submitting an application as part of Form C. This submission is also complemented by the passbook to the Branch.

Flexible:

Although the scheme has a fixed maturity tenure of 5 years, it can be extended further for 3 more years.

Deposit And Amount Under Post Office SCSS

The minimum deposit shall be Rs. 1,000 and is subject to the maximum limit of up to Rs. 15,00,000 in all SCSS accounts initiated by an investor. Investment in a senior citizen saving scheme is eligible for claiming tax deductions under Section 80C of the Income Tax Act,1961.

Taxability of Interest on Post office SCSS

Interest is taxable if total interest in all SCSS accounts exceeds Rs.50,000 in an FY and TDS (Tax Deducted at source) at the prescribed rate shall be deducted from the total interest. No TDS will be deducted if form 15G/15H is submitted and accrued interest is not more than the prescribed limit.

Premature Closure of Senior Citizen Saving Scheme

1. The account can be prematurely closed any time after the date of initiation. This result in these cases:
2. If the account is closed before a year, no interest will be granted, and if any interest paid in the account will be recovered from principle.
3. If the account is closed after a year but before 2 yrs from the date of initiation, an amount equal to 1.5 % will be deducted from the principal sum.
4. If the account is closed after 2 yrs but before 5 yrs from the date of initiation, an amount equal to 1 % will be deducted from the principal sum.
5. The extended account can be closed after the expiry of 1 year from the date of extension of the account without any type of deduction.

Closure on Maturity

The account may be terminated after 5 yrs from the date of initiation by completing the necessary procedure. In case of the unfortunate demise of the investor, the account shall earn a return at the rate of saving the account at a post office. Moreover, In case the spouse is the join holder or sole beneficiary/nominee, the account can exist in continuation till maturity but only when the spouse does not hold another SCSS account and is eligible to open an SCSS account.

Extension of Senior Citizen Saving Account

The investor may want to extend the account further. He/she can do so but only for a period of 3 years from the date of maturity and it should be extended within a year of maturity. The further extended account will gain interest at the rate applicable on the date of maturity.

Tax Implication

This scheme is one of the most ideal and beneficial investment options for senior citizens, given its high returns, security of capital, and also the tax benefit it offers.

The principal amount deposited in this account is eligible for tax deductions u/s 80C, up to the limit of Rs. 1,50,000 under Section 80C of the Income Tax Act,1961. It is not permitted if an investor chooses to file tax returns under the new system introduced in Union Budget 2020.

However, the interest credited is subject to taxation as per the applicable slab of the investor.

For example, if Ms. lakshay earns Rs. 80,000 annually as interest from SCSS and his total income in a year amounts to Rs. 4,00,000, then the interest will be taxed at a 5% rate; his tax outgo on account of SCSS interest income, therefore, would be Rs. (80000 * 4%) or Rs. 3200.

Moreover, if an investor’s interest income in a year exceeds Rs. 50,000, then it is subject to TDS (Tax Deducted at Source).

Frequently Asked Questions

Q. What is the Post Office Senior Citizen Saving Scheme?

A. It is a scheme for the senior citizens which is offered by the post office. The scheme offers a regular income with the highest safety and security. The scheme is only available for individuals above the age of 60 years, individuals above 55 retired on superannuation or VRS and retired defence employees above the age of 50 years. It offers a fixed rate of interest which is subject to revisions quarterly by the Government of India.

Q. What is the eligibility of the post office senior citizen saving scheme?

A. The eligibility to apply the Post office saving schemes for senior citizen:

1. Age should be above 60 years.
2. Retired Civilian employees between the age of 55 years and below the age of 60 years. The investment should be done within a month of receipt of retirement benefits.
3. Joint or individual account can be opened. But, a joint account can only be opened with a spouse.
4. Retired defense employee between the age of 50 years and below the age of 60 years. The investment should be done within a month of receipt of retirement benefits.

Q. What is the interest rate offered on the Post office senior citizen saving scheme?

A. The interest offered on the Post office senior citizen saving scheme is 7.4% as of Q1 of FY 21-22.

Q. What are the documents required to open a post office senior citizen saving scheme?

A. The documents required to open a post office senior citizen saving scheme are:

• Form A has to be filled to open an account.
• Identity proof like PAN card,passport, driving license, etc.
• Address proof like Aadhar card or telephone bill, etc.
• Age proof like senior citizen card, passport, birth certificate, etc.
• Two passport size photographs.

Q. Does the post office senior citizen saving scheme give the benefit of tax deductions under Section 80C?

A. Post office senior citizen saving scheme gives the tax deductions under Section 80C of the Income Tax Act, 1961. An investor can claim the tax deductions on the deposited amount of upto Rs.1.5 lakh per financial year.

Q. What is the minimum deposit amount in SCSS?

A. The minimum amount to open an account is Rs.1,000 while the maximum investment limit is Rs. 15,00,000.

Q. What is the maturity period of the post office senior citizen saving scheme?

A. The maturity period of the post office senior citizen saving scheme is 5 years. But, it can further be extended for 3 more years. The request has to be submitted to extend the tenure and it should be done within a year before the maturity.

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