Wednesday, 11 March 2015

Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme (SCSS) was introduced in the year 2004 for the benefit of the elderly individuals. The interest rate on the investment is almost identical to the interest paid by the banks on Fixed Deposits. But unlike Fixed Deposits, SCSS is eligible for Tax Deduction U/S 80C on Investment up to Rs 1,50,000/-.

SCSS Account can be opened in Post Offices or any designated branch of 24 Nationalised Bank and One Private Bank (ICICI Bank).

In my opinion it is good investment option for risk adverse Investors as Return on Investment is more or less fixed, as Government announces the rate of interest yearly which does not change much.

In this post we will look at the salient features and benefits of the Scheme:-


Any Individual who has attained the age of 60 years or above on the date of Investing in the Scheme.
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 or otherwise on the date of  Investing in the Scheme.
The retired personnel of Defence Services (excluding civilian Defence employees) irrespective of the above age limits subject to fulfillment of other specified conditions.

Eligibility of HUF/NRI

HUF/NRI are not eligible to participate in the scheme.

Investment Options

Minimum Investment amount is Rs 1,000/- and Maximum Investment Limit is Rs 15,00,000/-. Only one time deposit is accepted under the Scheme.

Mode of Investment

Investment below Rs 1,00,000 can be opened with Cash, but anything above that should be done through Demand Draft or Cheque.

Tenure of Investment

Deposit can be made for a period of 5 years which can be extended by 3years more at the behest of the Depositor.

Interest on Investment

The Investment earns an interest of 8.5% (Oct,'16-Dec,'16). The interest is declared by the Government on quarterly basis. The Interest is payable to the depositor at the end of each quarter of the calendar year. Compounding of Interest is not permitted.

Premature Closure/Withdrawal

Premature Closure and Withdrawal is allowed after 1 year of deposit but after deduction of amount equal 1.5% of the deposit. After 2 years withdrawal is allowed with 1% deduction of amount equal to the deposit.

Tax Liability

Investment in the Scheme is available for deduction U/S80C but the Interest earned above Rs 10,000/- is taxable. TDS is applicable on Interest earned above the limit.


Nomination facility is available for the depositor.

Number of Accounts

Any number of Accounts can be opened by an Individual but the aggregate Investment limit should not exceed Rs 15,00,000/-. Account can be singly or jointly operated with Spouse.
Both Spouses can individually open an Account as well subject to fulfillment of eligibility.

Benefits of Investment In SCSS
  • Provides Senior Citizens with regular flow of Income in form of Interest.
  • Investment is eligible for Deduction U/S 80C.
  • Vesting period is only for 5 years which is beneficial for Senior Citizens.
  • Return on Investment is decent and you won’t see much fluctuation in the Interest rate.
  • Investing in the Scheme is really easy and hassle free.

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