The post office offers many deposit schemes for potential investors. These are also known as small savings schemes. One such popular scheme is the SCSS or Senior Citizen Savings Scheme. As is suggested by the name, senior citizens, i.e. individuals aged 60 and above, can invest in the SCSS to earn regular interest income.
A government scheme, the SCSS helps senior citizens accumulate funds in or for their retirement and earn quarterly interest payouts from the deposit. This account can be opened at any bank or post office, singly or jointly with your spouse. Here are important points you need to know when opening an SCSS account.
Who is eligible to invest?
Following are the eligibility conditions for potential investors-
A person who has attained age of 60 years on the date of opening of the account
A person of 55 to 60 years, who has retired on superannuation or otherwise on the date of account opening, provided SCSS account is opened within one month of receipt of retirement benefits
Retired personnel from defence services (except civilian defence employees) who have attained the age of 50 years;
Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) cannot invest in the SCSS.
What about joint account holders?
SCSS accounts can be opened jointly with the spouse. The age of the first or primary account holder is considered for the age limit. No age limit is applicable for the second applicant. The amount to the credit of the SCSS account is attributable only to the first account holder. Both spouses (if eligible as per age criteria) can hold single and joint accounts with each other with maximum deposit of up to Rs 15 lakh in each account.
How much can one invest?
Currently, the maximum that can be invested in this scheme by any individual is capped at Rs 15 lakh. The account can be opened singly or jointly with your spouse. Deposits above Rs 1 lakh will be accepted via cheque only. The amount invested in the scheme also cannot exceed the money one receives on retirement.
One can hold more than one account under the scheme. However, the sum of deposits across all SCSS accounts shall not exceed the maximum threshold.
What is the process?
Account can be opened by filling up the account opening form and depositing a minimum of Rs 1,000 or any sum in multiples of Rs 1,000, not more than Rs 15 lakh. The form requires details such as PAN, address proof, age and number of accounts already opened under the scheme and the amount deposited in each account.
PAN is mandatory to start an SCSS account. If the investor doesn’t have PAN at the time of investment, he must apply for the same and mention the application number on the account opening application form.
In case of premature withdrawal…
The scheme comes with a lock-in period of five years for the principal, this can be extended to eight years too. Premature withdrawals are allowed after the completion of one year, after paying a penalty, which levies as follows-
1.5% of deposit amount is deducted if the withdrawal occurs before completion of 2 years from the date of account opening
1% of deposit is deducted if the withdrawal occurs between 2 to 5 years.
Interest, tax break
Interest earned on deposits under this scheme is payable quarterly. The scheme qualifies for income tax deduction under section 80C.
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