Investments in Senior Citizens’ Savings Scheme

Investments in Senior Citizens’ Savings Scheme

For Senior Citizens it is one of the best Tax Saving schemes. Investment up to Rs.150000/- under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Tax rule: (ETE):Investment in SCSS is eligible for tax exemption u/s 80C IT act.The income is subjected to tax deduction at source (TDS) if it exceeds Rs 10,000 in a financial year. The depositor who may not have a taxable income but still have to file their tax returns to get back the excess TDS.Redemption proceeds are not added to the income.


An individual of the Age of 60 years or more may open the account. Also, an individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and the amount should not exceed the amounts of retirement benefits. The retired personnel of Defence Services (excluding Civilian Defence Employees) will be eligible to invest irrespective of the age limits subject to the fulfillment of other specified conditions.

Investment limit

The maximum investment limit under the scheme is restricted to Rs.15 lakh.  A depositor may operate more than one account in the individual capacity or jointly with the spouse (husband/wife). Any number of accounts can be opened in any nationalized banks or post office subject to maximum investment limit by adding balance in all accounts shall not exceed Rs.15 lakhs.Investments to be made in multiples of Rs.1000.

Return on investments

The interest rate on small savings schemes being notified on the quarterly basis instead of the earlier system of announcing for every year.The Government has announced interest at 8.50% p.a for the quarter January 2017 to March 2017. The interest on SCSS accounts payable on the quarterly basis that is on 1st working day of April, July, October and January.

Renewal of SCSS

The maturity period of SCSS is 5 years. The maturity period of senior citizen’s scheme is 5 years which can be renewed for further period of 3 years.

Premature closure:  If the account is closed before two years, the penalty is 1.5%. After two years, the penalty is 1%.There is no penalty if the account is closed during the extended period of 3 years.

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