Complete understanding about Senior Citizen Savings Scheme (SCSS)
In 2004 the government announced the Senior Citizens Savings Scheme to ensure a guaranteed return to senior income, thereby creating a guaranteed regular income flow. Investing in the Senior Citizen Pension Fund is a successful way for senior citizens aged 60 years of age to earn a decent salary. It is a long-term savings option that offers security and also some added features that are usually associated with any government-sponsored savings or investment scheme. These schemes are available via approved banks and post offices in India. In this article, we will discuss the different features of the Savings Scheme for Senior Citizens.
Characteristic of SCSS Investment
1. Minimum entry restrictions: The applicant must be over 60 years of age and may use the scheme in any of the nearest authorized banks. The applicant may enter a scheme with a minimum deposit of Rs. 1000 or any multiple amounts of Rs. 1000 not exceeding Rs. 15 lakhs. It is also transferable to India
1A. Eligibility for Saving Schemes for Senior Citizens: Resident Indians must meet the following key conditions in order to make use of this saving scheme for senior citizens:
- The scheme is available to any individual resident of 60 years of age and above.
- In addition, individuals who have reached 55 years of age but are less than 60 years of age are also eligible to apply for a retirement savings scheme for senior citizens provided that they have retired under the applicable superannuation or VRS rules. In such cases, the account should be opened within 1 month of receipt of the pension benefit.
- The scheme is also available to retired defense personnel, irrespective of the age limits mentioned above, subject to the fulfillment of other terms and conditions.
- Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) are not required to contribute to open an account under the Senior Citizens Savings Scheme.
- In addition, members of the Hindu Undivided Family are not entitled to open an account under these rules.
2. Secure and Trustworthy: the Senior Citizen Savings Scheme is a safe and reliable investment as it is a government-sponsored investment scheme that is considered to be one of the safest and most reliable investment options.
3. Interest rate: In 2019-20, the scheme offered an interest rate of 8.6 percent. Currently, in 2020-21, the interest rate for Q1 is 7.4 percent. The rate of return is much better than the savings or FD account, which ranges from 5% to 6%. The scheme also calls for an ECS allocation of interest to the savings account.
4. Nomination system: Nomination service shall be made available by the claimant at the time of the opening of the account by making an application as part of Form C. This request shall also be followed by a passbook to the Division.
5. Tax benefits: the Senior Citizen Savings Plan allows for a tax exemption gain of up to Rs.1.5 lakh under Section 80C of the Indian Tax Act, 1961.
6. Holding: Investment under the Senior Citizens' Savings Scheme is subject to a 5-year lock-up. This means that the applicant can not withdraw the amount of the investment until the end of 5 years from the date of the opening of the account. The manager of the account has the option of extending the term to another 3 years. The early closing of the deposit is subject to a penalty.
7. Capital safety: capital investment in the scheme is highly secured as it is backed by the Government of India. But the scheme is not inflation-protected, which means that whenever inflation is above the current interest rate, the deposit does not make any real rates of return. However, if the rate of inflation is below the current interest rate, the positive real rate of return is managed.
8. How and where to open an SCSS account: the SCSS account is opened in any authorized bank or post office across India with the following documents:
- Form A must be filled in to open the SCSS account.
- Identity evidence as a PAN card, Aadhaar to be shown.
- Address proof such as phone bill, Aadhar card is mandatory.
- The evidence of age document is required. This could be in the form of the Passport, the Senior Citizen Card, the Birth Certificate issued by the Corporation or the Registrar of Births and Deaths, the Voters ID card.
9. Banks related to the SCSS account: Here are the banks where the SCSS account can be opened:
- Punjab National Bank
- State Bank of India
- Bank of Baroda
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Bank of India
- Corporation Bank
- Canara Bank
- Central Bank of India
- Dena Bank
- IDBI Bank
- UCO Bank
- Indian Bank
- Bank of Maharashtra
- Indian Overseas Bank
- Syndicate Bank
- Union Bank of India
- Vijaya Bank
- ICICI Bank
- Allahabad Bank
- Andhra bank
- State Bank of India
- Vijaya Bank
- ICICI Bank
Finally conclude, SCSS is a nice scheme for old age People who want a Good risk free return to a corpus fund. At an interest rate of 7.4% and an investment amount of 15 lakhs, the monthly income for each investor is Rs 9.250 per month. There is no family constraint, both husband and wife may open a separate account.
10. Early Withdrawal of SCSS Account Deposit
The early withdrawing of the Senior Citizen's Savings Scheme is permitted, but fines are applied in these situations on the grounds of the period elapsed between the opening and withdrawing of the account. The sanctions for early departure from SCSS are as follows:
- 1.5 per cent of the amount of the deposit deducted as a penalty if the withdrawal from the scheme takes place before the end of 2 years from the date of opening of the account.
- 1 percent of the SCSS deposit deducted as a penalty if the exit from the scheme occurs between 2 years and less than 5 years from the date of opening of the account.
11. Closed of SCSS Account prior to life experience
In the case of the death of the main account holder before the real maturity of the account, the account will be closed and all the funds of maturity will be transferred to the legal heir/nominee. In the case of deceased claims, the nominee or legal heir will have to complete a written application in the prescribed format along with the Death Certificate to facilitate the closure of the account.
Benefits of investing in the Senior Citizens Pension Program
• As a government-backed scheme, SCSS comes with all the protection and assertion associated with all government schemes, i.e. sovereign debt.
• Good Returns – the plan has a high-interest rate of 7.4% a year. This is higher than the majority of tax savings instruments in Sector 80C.
• Medium Term Investment – The account has an initial maturity of 5 years but can be extended to another 3 years. This encourages senior citizens to have this savings scheme in their financial kitty as a medium or long-term investment product.
• Contributions made under this scheme are tax-deductible under Section 80C of the Income Tax Act, 1961 to Rs. 1.5 lakh per year.
• Versatility in the amount of investment – each amount that is spent in multiples of Rs. 1,000 up to a limit of Rs . 15 lakhs. However, only one lump sum investment is allowed.
• The possibility of early withdrawal in the event of financial emergencies (with applicable penalties).
• Easy availability – the scheme may be made available through India Post Offices or designated bank branches located across the country.
