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Senior Citizen Saving Scheme (Investigation.com)
If you are a senior citizen looking for ways to manage your taxes and make some savings, get yourself enrolled in this deposit scheme. The Indian government has come up with a saving scheme for senior citizens. The scheme, Senior Citizen Saving Scheme, not only gives the benefits of a higher tax bracket but also a provides a senior citizen with extra interest on government deposits.
Senior Citizen Saving Scheme: Eligibility Criteria
A senior citizen can enrol for this scheme at any post office or specified branches of nationalized and private banks. Designated for individuals above the age of 60, the Saving Scheme for senior citizen in India are effective, long-terming options and offer unmatched security and features that are usually associated with any government-sponsored savings program. These schemes are available through certified banks as well as the network post offices spread across India. A typical Senior Citizen Saving Scheme (SCSS) account extends upto 5 years and upon maturity can be subsequently extended for an additional 3 years. The depositor is allowed to make one deposit into this account, an amount that is a multiple of Rs.1,000 and not extends beyond Rs.15 lakhs. SCSS accounts are robust, safe, highly targeted and a long term savings prospect. After spending a lifetime supporting others and running in the mad rat race of life, the various Senior Citizen Saving Schemes in India offer the aged folk a medium of efficient savings for their retirement years.
The eligibility criteria is:
- Aged 60 years or above.
- Must be aged 55 years or above, but less than 60 years, provided he/she has retired from his/her employment as per VRS/superannuation and must open said SCSS account within one month of the receipt of retirement benefits. Also, the invested amount must not exceed the amount of the retirement benefits.
- In case of a joint account, the eligibility is decided per the aforementioned age requirements of the primary depositor. There is no age restrictions/requirements imposed on the second applicant.
Benefits of SCSS
As a savings and investment product for the60+-year-olds, the Senior Citizen Saving Scheme Account is heaven-sent. Boasting of one of the best interest rates for any government sponsored investment product in India, the senior citizens savings scheme is customized to suit the specific requirements of an investment minded senior citizen. The salient features and benefits of this option are as follows-
- Easily Available- Fill up a simple application form at your local bank or post office and you are set.
- Reliability- This is a Government of India sponsored investment product and comes with all the security and assurance associated with that tag.
- Multiple Accounts- A single applicant can open multiple SCSS accounts, either individually or with a joint investor (must be the spouse of the primary investor).
- High Returns- At 8.6% per annum, the returns on your SCSS accounts are very impressive.
- Flexible Tenure- The account has a tenure of 5 years but can be stretched to add another 3 years. Thus, your senior citizens savings scheme serves as either a medium range investment or a long term plan.
- Save Tax- As per the dictates of Section 80C, Income Tax Act, 1961, the TDS can be saved.
- Choose Your Investment- Only one investment is allowed per SCSS account. This amount must be a multiple of Rs.1000 and not exceed Rs.15 lakhs. Thus, the SCSS investment is immensely affordable and scalable.
- Premature Termination- In extreme financial duress, your SCSS account can be closed and the money accessed. While this option only applies after the account has existed for a minimum of one year, it still is a ready source of funds that can be called to help at a moment’s notice. However, after 1 year, a penalty of 1.5% of the funds in the SCSS account will be deducted while the same is 1% after the completion of 2 years.
- Minimum Documentation- KYC documents that prove your age. The documents that can be submitted to substantiate this are- Passport/ Birth Certificate/ Voter’s ID/ Senior Citizen Card/ PAN, etc.
Tax benefits of Senior Citizens Savings Schemes
Most of us save monies in strategic investment portfolio or other simpler instruments while adhering to two set targets- a) Savings for the rainy days in the future, and b) To save on income tax that must be paid annually and attracts an almost legendary vile reaction from anybody who is gainfully employed and is obligated to pay his/her taxes. However, the following are the ground realities when it comes to Senior Citizens Savings Schemes in India and the associated tax implications-
- If the investment churns out an interest amount in excess of Rs.10,000 per year, then Tax Deducted at Source (TDS) applies. However, an interest that amounts to less than this number is free from tax.
- All investments made per the SCSS account saves tax in accordance with the provisions laid out in Section 80C of the Income Tax Act, 1961.
Hence, aside from being a secure, scalable option with high returns, the senior citizens savings scheme is also a potent tax saver. All the elements are in alignment when it comes to your SCSS account and the prospect of tax savings.