Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme(SCSS) is a scheme run by the Government of India keeping in mind the requirement of Senior Citizens for regular income from safe investment. Eligibility: Any individual, who has attained the age of 60 years or above on the date of opening of the account can open an account under the Senior Citizen Savings Scheme(SCSS). An individual, who has attained the age 55 years or more but less than 60 years and has retired under a Voluntary Retirement Scheme(VRS) or a Special Voluntary Retirement Scheme can open an account provided it is done within one month from the date of retirement.\ There is no age limit for retired personnel of Defence services provided they fulfill other specified conditions. The account can be held singly or jointly with one’s spouse. Multiple accounts can be held subject to the overall investment limit. Non-residents and HUFs are not eligible to open an account under this scheme. Investment Limits:  The minimum amount of deposit required under this Scheme is INR 1,000 and the maximum amount that can be held under this account is INR 15,00,000 (total across multiple accounts). Rate of Return: 8.3​% per annum, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December Time Period: This account has a maturity of 5 years. It can be then extended for periods of 3 year each. Withdrawal: If the account is closed after one year but before two years from the date of opening of the years, an amount equal to 1.5% of the deposit will be deducted. If it is closed after two years, then an amount equal to 1% of the deposit will be deducted and the balance paid to the investor. An extended account can be closed after a period of one year from the date of extension. No deduction will be made if the account is closed on the death of the depositor. Tax Treatment: Amount deposited under this scheme is deductible under Section 80C of the Income Tax Act. However, the interest earned is taxable. TDS is deducted at source on interest if the interest amount is more than Rs.10,000 p.a. Others: The interest earned on the account can be transferred to another savings account every quarter. All transactions (account opening date, deposits, interest paid, nominations etc.) with respect to the account are maintained in the passbook provided to each depositor. FinPlan Café Note: Positives: SCSS is the safest Investment Avenue for Senior Citizens looking for regular income. Negatives: The interest earned on the deposit is taxable. The maximum amount a person can deposit is Rs. 15,00,000 translating into a monthly income of Rs. 11,250(pre tax) which may not be sufficient. Conclusion: When planning for retirement, funds must first be allocated towards SCSS and then towards other avenues like PO Monthly Income Scheme, Mutual Fund Monthly Income Plans(MIPs), etc. Having the quarterly interest transferred to a regular savings accounts enables you to earn interest on the unutilised amount in the savings account.

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