Senior Citizen Savings Scheme Know Eligibility, Interest Rate and Tax Benefits
March 17, 2021
Senior citizens aspiring to earn a regular stream of income can invest in the Senior Citizen Tax Saving scheme or SCSS. Let’s get to know more about the scheme in detail, pertaining to its eligibility criteria, interest and tax benefits.
Once you retire, you put a full stop to your professional life as well as your regular income. To lead a happy and peaceful life post retirement, you need to have enough funds or corpus that will sustain you for your lifetime. Often, this is the age when health issues crop up. You need money not only to manage your medical needs but also to meet home expenditures, travel, lifestyle and other needs. One way you can ensure the continuity in income is by investing in the Senior Citizen Savings Scheme or SCSS.
The scheme is for 5 years; however, you can seek an extension of 3 years to stay invested. For an extension request, you are required to submit Form B. You are only allowed one extension. SCSS Government-backed investment plan is available through Post Offices, as well as Public/Private Sector banks. Whether you invest through a Public or Private Sector bank or Post Office, you will be bound by the same interest rate, benefits, features and terms. Under the SCSS scheme, you can deposit a minimum lump sum of Rs 1,000 and a maximum of up to Rs 15 lakh in an account.
To apply for the scheme, you need to meet the following SCSS eligibility criteria:
- Only senior Indian residents above the age of 60 years are eligible for the scheme
- The scheme is available to individuals who are 55 years of age or more but less than 60 years and have retired under the applicable superannuation or Voluntary Retirement Scheme (VRS) rules
- Retired Defence Personnel can also apply for the scheme on attaining 50 years of age, subject to specific conditions
- Hindu Undivided Family, Non-Resident Indians (NRI), Person of Indian Origin (PIO) are not entitled to apply for the SCSS
- Nomination facility is available, provided the person is an Indian citizen
SCSS Interest Rate:
The rate of interest changes every quarter, and it is reviewed by the Ministry of Finance. The current SCSS interest rate stands at 7.4% p.a. for the first quarter (April to June) of the financial year 2020-2021. The existing rate is lower than 8.6% p.a. that was offered in the previous financial year 2019-2020. The interest gets compounded annually. The interest payments are credited to your SCSS account every year.
SCSS Tax Benefits:
As a senior citizen, you are qualified to get a tax exemption of up to Rs 1.5 lakh in a year under Section 80C of the Income Tax Act, 1961. The interest payments are taxable. Tax Deducted at Source or TDS is applicable, if the interest-earning is more than Rs 50,000 in a year.
The new reform proposed for the financial year 2021-2022 states that senior citizens are exempted from filing ITR, as they have their monthly pension and interest as their only source of annual income.
As a senior citizen, if you still want to save for your retirement, SCSS is the best investment option. You can apply for the scheme through ICICI Bank. All you need to do is produce important documents like ID proof, PAN Card and additional documents such as, the Employer Certificate or Proof of Date of Disbursal of the retirement benefits, if you are less than 60 years.