While retirement often appears with financial uncertainty, some savings products are safe and ensure promised retirement income. The Senior Citizen Savings Scheme (SCSS), established in 2004, is one such deposit scheme. Introduced by the Government of India, the central objective of the SCSS is to present an assured return (paid every quarter) to senior citizens, and in doing so to generate a guaranteed regular income flow.
Capital Protection and Inflation Protection
The capital in the SCSS is entirely protected as the scheme is backed by the Government of India. It is still not inflation protected, which means whenever inflation is above the prevailing interest rate, the deposit earns no real returns. However, when the inflation rate is beneath the current interest rate, it does maintain a positive real rate of return.
Interest rates are adjusted with G-sec rates of similar maturity, with a measure of 1 percent. The government examines the SCSS rates quarterly. However, once a subscriber has registered, the rates will remain unchanged for the security. For the fourth quarter of FY20-21, the rate has remained set at 7.4 percent, compounded periodically. The payout of business is quarterly.
Premature closing of the account is allowed with a penalty.
The SCSS is liquid, notwithstanding the five-year lock-in. One can make withdrawals subject to requirements and penalties.
The sum invested in the SCSS on or after April 1, 2007, is eligible for tax deduction under Section 80C of the Income Tax Act. However, the interest earned on the deposit is fully taxable and tax is decreased at source (TDS) if the total interest in a course is above Rs 50,000. However, if the interest is not taxable, one has to provide Form 15H or Form 15G so that no tax is decreased at the source.
Where to Open an Account
The SCSS account can be presented at any head post office or general post office. Select categories of several designated nationalized banks allow the SCSS. ICICI Bank also extends the SCSS.
How to Open an Account
Once you have selected the bank to open the SCSS description, you will first need to start a savings bank account. You will require the following documents:
Points to Remember
Features at a Glance
Eligibility: You require to be a resident Indian to open an account
Minimum Investment: Rs 1,000
Maximum Investment: Rs 15 lakh (Rs 30 lakh combined with a spouse); Films ought to be in multiples of Rs 1,000
Tenure: Five years; can be increased by three more years
Nomination Facility: Available