The Senior Citizen Savings Scheme (SCSS) is a government-backed saving scheme meant to provide a low-risk, steady stream of income along with tax benefits to the elderly. Retirees can invest up to Rs 15 lakh in lump sum individually or jointly. It is available across all banks and postal offices in India.
An interest rate of 7.4% is payable for the April-June quarter in the scheme. The scheme is open to those aged 60 or above.
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Those who retired under the Voluntary Retirement Scheme (VRS) or superannuation in the age bracket of 55 to 60 years can open an SCSS account within one month of retirement. Such persons can open SCSS account only when the source of investment is retirement benefits within one month of receiving the retirement benefits. However, Finance Ministry in a circular dated May 26, 2020, did away with the one-month clause for those who retired during the lockdown period in 2020. The circular stated that the decision was taken to safeguard the small investors from the effect of the nationwide lockdown due to the Covid-19 pandemic.
The scheme matures in 5 years and after maturity, the account can be extended for a further three years by giving an application in the prescribed format within one year of the maturity. In such cases, the account can be closed at any time after the expiry of one year of extension without any deduction.
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The maximum amount that can be deposited in this scheme is Rs 15 lakh. An individual can open more than one account in his name or jointly along with his/her spouse in any post office subject to the maximum investment limit of Rs 15 lakh by adding balance in all accounts.
If a senior citizen invests a sum of Rs 15 lakh for a period of 5 years at the current rate of interest, the quarterly interest would amount to Rs 27,750, amounting to an annual interest of Rs 111,000. At the time of maturity, the total interest earned on the investment would be Rs 5,55,000 lakh. The total amount received at maturity will be Rs 20,55,000 (principal plus interest of 5 years).
Now, the interest earned can be doubled using joint deposits with a spouse. In case of a joint account, the permissible maximum investment limit also doubles to Rs 30 lakh and so does the interest rate earned in 5 years. Thus, the annual interest earned by the elderly couple comes to Rs 2.2 lakh per annum.
