The government recently added Section 194P in the Income Tax Act. It’s been recommended that senior citizens, who receive pension and interest income, should not be required to file taxes, as their only source of annual income is pension and interest income. Banks are obliged to withhold tax on elderly citizens over 75 years old, who receive a pension and interest income from the bank.
The SCSS is a long-term tax saving plan that allows you to earn interest on your investments and provides an assured return with the safety of capital. It is an excellent option for senior citizens, who seek a steady stream of income while enjoying the full benefits of tax savings.
What is SCSS?
The SCSS is a unique retirement benefits programme. It offers senior citizens resident in India the opportunity to invest a lump sum in the scheme, individually or jointly, and receive regular income with tax benefits.
The Senior Citizens’ Saving Scheme (SCSS) is a post office saving scheme that provides tax benefits to senior citizens. The Indian government launched this scheme in 2009 to encourage senior citizens to save for their old age. You can open an SCSS account in any branch of any authorized bank or any branch of the postal department. Like other post office saving schemes, you can visit the eligible branches and apply for the SCSS accounts. Check details before opening the account as many such schemes offer better benefits than this scheme.
Senior Citizens’ Saving Scheme (SCSS) is a special retirement account that offers senior citizens residing in India an opportunity to save money regularly from their monthly income and invest it at their convenience. The account provides access to regular income post-retirement along with income tax benefits
No. of accounts that can be opened under SCSS
You can deposit your money in a single payment. You can operate the account from any number of accounts under that scheme, subject to the condition that the deposits in all accounts together do not exceed the ceiling limit of Rs.15 lakh. More than one account can be opened with our bank in a month, provided it is done in different branches.
How does SCSS work?
- You can deposit up to Rs.15 lakh in a single installment ― Rs 1,000 is the minimum amount — to open an SCSS account.
- At the beginning of every month, you will be able to deposit retirement benefits received from your PRS scheme in the SCSS account. Although, the amount you can deposit is restricted to the retirement benefits you receive. You must also deposit the amount in the SCSS account within a month from receiving the PRS benefits.
- Retirement benefits include payments to the account holder for retirement on superannuation or otherwise. It also contains provident fund dues, retirement or superannuation gratuity, commuted value of pension, leave encashment, savings part of Group Savings Linked Insurance Scheme payable by the employer on retirement and ex-gratia payments based on a voluntary or a special voluntary retirement scheme.
- If the deposit exceeds the maximum amount, the excess will be immediately reimbursed to the account holder.
- Once a quarter, the interest on the account will be paid.
- Interest can be withdrawn via ECS or auto credit into a savings account at the same Postal Service branch.
- After the account is opened, it can be prematurely terminated.
- From the day of maturity, the account can be prolonged for another three years.
- The extension might be completed within one year of the maturity date.
Which financial institutions provide SCSS?
- Bank of Maharashtra
- Bank of Baroda
- Andhra bank
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Vijaya Bank
- Dena Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- State Bank of India
- Syndicate Bank
- UCO Bank
- Union Bank of India
- ICICI Bank
The Post Office also offers SCSS.
Who can invest in SCSS?
- India’s senior citizens (those aged 60 and up)
- Citizens in the 55-60 year age group were chosen for the Volunteer Retirement Plan (VRS) or Superannuation.
- HUFs and NRIs are not permitted to invest in this programme if they are retired military personnel over 50 and under the age of 60.
- Within a month of obtaining the retirement benefits, the investment must be made.
SCSS: Why is it necessary?
- Because the SCSS is a government-sponsored investment scheme in India, it is regarded as the safest and most reputable option.
- SCSS accounts are easy to set up and can be obtained from any recognised bank or post office in India.
- You can transfer the account to another branch in any part of India.The scheme pays a high rate of interest on the deposit.
- Section 80C of the Indian Tax Act, 1961 allows you to deduct up to Rs.1.5 lakh in income tax.
- The account’s 5-year term can be prolonged for additional three years.
Maximum amount that can be deposited in SCSS
The SCSS account is a great investment opportunity. The potential returns are high, and the maximum amount you can invest in the SCSS account is up to Rs.15 lakh.
Current interest rate
The SCSS interest rate applicable to Standard Chartered Savings Saver is 7.4% p.a.
SCSS account opening
To open an SCSS account, you can either present yourself at the branch of an authorized bank or a Post Office. You will need to submit a form that contains your details, bank details and signature. If your bank allows it, you can open the SCSS account online on the bank’s internet banking portal or its mobile banking app.
SCSS account opening: Online
The SCSS website is currently not configured to allow you to open an account online. You will have to open your account in person at a bank or Post Office. The steps are provided below.
Opening an SCSS account with SBI
- Go to the SBI branch closest to you or the SBI office where you hold a savings account.
- Request an application form and fill out all of the required information.
- Include any supporting documentation with the application form, such as a letter from your employer confirming your retirement benefits.
- Hand over the paperwork and the amount paid to the SBI employee.
- SBI officials will review your request and the money you have made. The SCSS account is created once the payment has been processed.
Opening an SCSS account at the post office
The SCSS application form is available at any Post Office branch or on the Post Office’s official website. Filling out the application form entails the following steps:
- Fill out the form’s top left corner with the name of the Post Office branch.
- Enter the bank details if you have a Post Office savings account.
- Enter the Post Office’s branch address in the ‘To’ column.
- Copy and paste the account holder’s photo.
- Fill in the account holder’s name in the first blank space, selecting the ‘SCSS’ option from the drop-down menu.
- You do not need to choose any of the ‘Additional Facilities Available’ choices unless you are applying for a savings account.
- Choose an account holder type, such as self, minor with caretaker, or individual of unsound mind with guardian.
- Choose between solo, either or victim, or all or surviving member accounts.
- Move on to field #2, where you must input the security deposit in figures and words. If you’re handing over a check, note the number and date.
- Fill in the account holder’s personal information (s).
- After the table, check the cells where you’ve provided the needed document proofs.
- All account holders’ signatures must be placed at the bottom of pages 1 and 2 of the form.
- Mention the account’s nominee and any pertinent information about the nominee you’ve picked. To verify this information, add the signature of all account holders.
Opening an SCSS account with ICICI BANK
- Go to the ICICI Bank branch closest to you or the ICICI Local bank where you have a bank account.
- Request an application form and complete it with your personal information.
- Hand over the application form, and any supporting documents, to the bank officials, along with the initial deposit in cash or check.
- An ICICI Bank representative will process your request and the money you have made. The SCSS account will be created once the payment has been processed.