The SCSS, a government scheme, lets senior citizens invest funds in or for retirement benefits and receive interest income of 7.4% from the deposit on a quarterly basis. A SCSS account can be opened individually or jointly with your spouse at any bank or post office across the country. For potential investors, the post office proposes several deposit schemes i.e. small savings schemes. The SCSS, or Senior Citizen Savings Scheme which also qualifies for income tax deduction under section 80C, is one of the prominent investment vehicles for senior citizens among the post office small savings schemes. Senior citizens, i.e. individuals aged 60 and over as indicated by the title can invest in the SCSS to receive regular interest income. Here are major features that you need to consider before opening an SCSS account individually or jointly.
The eligibility requirements for potential investors are as follows-
- An individual who has reached the age of 60 while opening a SCSS account.
- Individuals between the age of 55 to 60 who have retired on superannuation
- Retired personnel from defence services with a minimum age limit of 50, (except civilian defence employees).
- Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not allowed to invest in SCSS.
In case of joint account holders
With the spouse, SCSS accounts can be opened jointly. For the age limit, the age of the first or primary account holder is assumed. For the second individual, no age restriction is required. The SCSS account credit amount is related to the first account holder solely. With a maximum deposit of up to Rs 15 lakh in each account, both spouses (if eligible according to age standards) can maintain single and joint accounts with each other.
Minimum and maximum investment threshold
The maximum amount that can be deposited by an individual in this scheme is presently limited at Rs 15 lakh. Only through cheque deposits above Rs 1 lakh will be approved and also the amount deposited in the scheme can not surpass the retirement funds one receives. Under the scheme, one can keep more than one account. However, for all SCSS accounts, the amount of deposits must not surpass the maximum limit.
How to open an SCSS account?
By filling out the account opening form or application form and depositing a minimum of Rs 1,000 or any amount in multiples of Rs 1,000, not more than Rs 15 lakh on can open a SCSS account jointly or individually. Details such as PAN number (mandatory), address proof, age and number of accounts which have already been opened under the scheme and the amount invested in each account are required to specify in the application form. In case the individual does not have a PAN, he must apply for the same and specify the application number on the application form in order to open an account successfully.
Premature withdrawal facility
For the principal the SCSS scheme comes with a lock-in period of 5 years and further can be extended to 8 consecutive years as well. After completion of one year, premature withdrawals are authorized but some penalties are imposed for the same which are as follows:
If you make withdrawal before completion of 2 years from the date of account opening: 1.5 percent penalty will be deducted from the deposit amount.
If you make withdrawal between 2 to 5 years: 1 percent penalty will be deducted.