A Senior Citizen Savings Scheme (SCSS) is a retirement benefits scheme backed by the government. A senior citizen can invest in the scheme in a lump sum, individually or jointly, and get access to regular income along with tax breaks.
Here are the following three criteria which can help an Indian resident invest in the scheme:
1. An Indian senior citizen, 60 years or above.
2. While attaining the age of 55-60 years, if you have opted for the voluntary retirement scheme (VRS), you can invest in SCSS.
3. Any retired defence personnel who has attained the age of 50 years and is below 60 years of age can also make investments in the scheme.
HUFs and NRIs are not allowed to invest in SCS Scheme. You can open an SCSS account at any authorised bank or any post office in India. While opening an account you can make a minimum deposit of Rs1,000 up to ₹15 lakh in a single instalment.
The SCSS account is transferable across the country. The account is initially opened for a period of five years which can be extended by three years. It is among the safest investment options for senior citizens.
While investing, a senior citizen can avail of an income tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act. Currently, the interest rate applicable on SCSS is 7.4% per annum.
Under the scheme, interest payouts are quarterly and get credited on the first day of April, July, October, and January every financial year. A premature withdrawal from the account attracts a penalty. Withdrawals are permissible after the completion of one year, with the penalty varying between 1% and 1.5% of the deposited amount.