Senior Citizen Saving Scheme (SCSS) is started with an idea to provide a risk free investment avenue to senior citizens who are looking for an investment option to invest their retirement corpus.
Some of the benefits of SCSS are as -
- Risk free investment options for retirees. Scheme is backed by government.
- Tax benefit, investment is SCSS can be be claimed for deduction under 80C with in a permissible limit of Section 80C.
- Provides one regular source of income in form of quarterly interest payment.
Where to open Senior Citizen Saving Scheme account
SCSS account can be opened in any public sector bank or in a network of post offices by making an application in Form A.
Right now only one private bank ICICI can open SCSS acount.
A depositor may open the account in individual capacity or jointly with spouse. In case of joint account age eligibility criteria is applicable on the primary depositor.
Required documents
- Account opening form. (Reference form - https://www.sbi.co.in/portal/documents/21386/22045/FORM-A+%28SCSS+Ac+OPENING+form%29_28_NOV_2016.pdf)
- Photograh of the applicant(s).
- Age proof.
- Address proof.
- PAN card.
- Aadhaar details.
- Certificate from employer in case of superannuation or VRS when opening account between the age of 55 and 60.
Eligibility for opening SCSS account
An individual who has attained the age of 60 years and above can open SCSS account.
Any individual who has attained the age of 55 years or more but less than 60 years and who has retired on superannuation or VRS can also open SCSS account. In that case SCSS account must be opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.
The retired personnel of Defence Services (excluding civilian Defence employees) can open SCSS account after the age of 50 years. Earlier they could open with out any age limit but the rule has been changed.
NRI's are not eligible to open an SCSS account. Hindu Undivided Family (HUF) is also not eligible to open an SCSS account.
SCSS investment limits
There shall be only one deposit in the SCSS account and the minimum amount that can be deposited is Rs. 1000 and in multiple of Rs. 1000. The maximum amount that can be deposited is Rs. 15 lakhs.
Also the deposits by depositors shall be restricted to the retirement benefits.
So it is either deposit of amount received as retirement benefit or Rupees Fifteen lakhs whichever is lower.
Mode of deposit
While opening SCSS account you can make deposit by -
- Cash, if the amount of deposit is less than one lakh rupee.
- By cheque or demand draft drawn in favour of the depositor.
How many SCSS accounts for an individual
There is no limit on the number of accounts that can be opened by an individual subjected to the maximum investment limit. Which means deposits in all accounts taken together shall be restricted to the retirement benefits or Rupees Fifteen lakhs whichever is lower.
Duration of SCSS account
The maturity period of the Senior citizen saving scheme account is five years. The depositor may extend the account for a further period of three years after the maturity period of five years.
For an extension of SCSS account request should be made within a period of one year after the date of maturity period.
SCSS Interest rate
From FY 2016 - 2017 the rate of interest will be reviewed every three months so interest rate on small saving schemes will be fixed on quarterly basis and may change every quarter.
For the quarter Jan, 2018 – Mar 2018 interest rate is 8.3% for Senior Citizens Savings Scheme.
Here note that the prevailing interest rate at the time of opening SSY account will be same for 5 years. Quarterly interest rates changes won’t change the interest rate for already existing accounts.
As Example – If you are opening an SCSS account in Jan 2018 when the rate of interest is 8.3% that is the interest rate you will get for 5 years.
However, if you extend the account after 5 years then the prevailing rate of interest will be applicable on the extended account.
Interest on SCSS is paid quarterly and interest is calculated up to the last day of every quarter i.e. 31st March, 30th June, 30th Sept and 31st December.
Quarterly interest of SCSS accounts will be credited to the attached saving account.
If you have opened a SCSS account in a post office you should have a post office saving account where quarterly interest can be credited.
Tax treatment of SCSS
Investment under this scheme can be claimed as tax deduction under 80C with in the current permissible limit of Rs. 1.5 Lakh.
SCSS is not an EEE saving scheme though, the interest received in the year is taxable. There will also be a TDS on interest if the interest amount is more than Rs. 10,000.
SCSS nomination
You can nominate a person or more than one person, at the time of opening of the account. Nomination addition/modification/cancellation can be done at any time after the opening of the account before it matures. You have to submit an application on Form C accompanied by the passbook to the Branch.
There is no fee for any nomination related activity.
SCSS account transfer
SCSS account can be transferred from one deposit office to another. You can apply using Form G, enclosing the Pass Book for transfer of your account from one deposit office to another.
If the deposit amount is rupees one lakh or above, a transfer fee of rupees five per lakh of deposit for the first transfer and rupees ten per lakh of deposit for the second and subsequent transfers shall be payable.
Points to remember
- SCSS account can be opened by any individual who is 60 years and above.
- In case of supperannuation and VRS an individual can open SCSS account after 55 also by submitting the required documents.
- For retired defence personnel age is 50.
- Interest on SCSS is paid quarterly, so it provides a regular source of income for senior citizens.
- Deposit in SCSS can be claimed as tax deduction under 80C.
- Tax will be deducted at source if the accrued interest is more than Rs. 10,000 in a year.
- There will be only one deposit in SCSS. Minimum limit is 1000 and maximum limit is Rs. 15 lakhs.
- The maturity period of the Senior citizen saving scheme account is five years.
- SCSS account can be extended for a further period of three years after it matures.
- Pre-mature closure of the account is possible with some penalty.
That's all for this topic Senior Citizen Saving Scheme (SCSS). If you have any doubt or any suggestions to make please drop a comment. Thanks!
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