SENIOR CITIZEN SAVINGS SCHEME

 

Union Finance Minister Nirmala Sitharaman, in her 2023-24 budget speech announced an increase in the maximum deposit limit for senior citizen savings scheme (SCSS) from 15 lakh to 30 lakh. SCSS is a government backed savings plan that offer guaranteed regular income after retirement. Current interest rate is 8%, the interest rate is revised quarterly once one invest, the rate get locked for the tenure of the scheme.

Seniors can open the account individually or jointly with spouses, but joint accounts are attributed only to the first account holder. People above 60 years and those above 55 but less than 60 with voluntary retirement (VRS) can open SCSS account. Retired defence personnel over 50 but below 60 years are also eligible, if the investment is made within a month of receipt of benefit. It allows a minimum of Rs. 1000 and maximum of Rs. 30 lakh as lump sum. It has a five year lock-in, after which, it can be extended once for three years. Then the account earns interest at the applicable rate, from the date of maturity.

Interest amount is paid quarterly and no extra payment is made for delay in claiming it. At the end of the tenure the principal is paid back to the holder. If the account is closed before a year no interest is payable. If exited after a year but before two year 1.5% will be deducted from the principal, and if closed after two year but before five years, 1%. If the holder dies, post office savings account rate will be paid, if the spouse is a joint holder or sole nominee, it can be continued till maturity, if the spouse is eligible to open an SCSS account and does not have another one. Depositors can avail tax deduction benefit under section 80C of the income tax act 1961. But if the interest amount exceeds Rs. 50000 the entire interest amount is taxable.