Post office small savings schemes are considered a reliable option for safe investment across the country. Among these schemes, the Senior Citizen Savings Scheme (SCSS) is specifically designed for elderly investors. This scheme not only protects the principal amount but also provides a strong source of regular income.
What is the Senior Citizen Savings Scheme?
SCSS is a government-guaranteed savings scheme operated through post offices and some authorized banks. The biggest advantage of this scheme is that the investor only needs to deposit money once, and after that, a fixed income is received every three months as interest. Currently, this scheme offers an annual interest rate of 8.2 percent, which is higher than other post office schemes.
How much can be invested in this scheme?
Investment in the Senior Citizen Savings Scheme can be started with ₹1000. The maximum investment limit is set at ₹30 lakh. Investors can choose the amount according to their needs and capacity. The amount deposited in this scheme is eligible for tax exemption under Section 80C of the Income Tax Act, although the interest earned is taxable.
Who can open an SCSS account?
Individuals aged 60 years or older can open an account in this scheme. In addition, the government has also given age relaxation in some special cases. Civil and defense sector employees who have taken voluntary retirement are allowed to join this scheme under certain conditions. Retired employees of the civil sector can open an account between the ages of 55 and 60 within one month of receiving their retirement benefits. In the defense sector, this age limit is set at 50 to 60 years. The facility of a joint account is also available in this scheme.
Maturity and Extension Rules
The maturity period of the Senior Citizen Savings Scheme is 5 years. If investors wish, they can extend the scheme in blocks of three years after maturity. This requires filling out and submitting a prescribed form at the post office. Interest continues to accrue during the extension period, making this scheme a reliable source of income for the long term.
Premature Closure Conditions
This scheme also offers the option of closing the account prematurely if needed, but certain conditions apply. If the account is closed before one year, no interest is paid, and any interest already received is deducted from the principal amount. For accounts closed between one and two years, a 1.5 percent deduction is applied to the deposit amount. For accounts closed after two years but before five years, a 1 percent deduction is applied. Extended accounts can be closed after one year without any penalty.