All You Wanted To Know About Senior Citizen Saving Scheme 2004

All You Wanted To Know About Senior Citizen Saving Scheme 2004

Government of India introduced Senior Citizens Savings Scheme, 2004 (SCSS) with effect from 1st November 2004. As the name suggests this scheme is meant for senior citizens. This is the safest investment option and an excellent avenue of investment and return for Senior Citizens. 

What are the salient features of the Senior Citizens Savings Scheme, 2004?

Tenure of the scheme	5 years which can be extended by 3 more years
Rate of interest	9 per cent per annum. The same will be payable on 31st March, 30th June, 30th September and 31st December each year.
Frequency of computing interest	Quarterly
Taxability	Interest is fully taxable
Whether TDS is applicable	Yes, Tax will be deducted at source
Investment to be in multiples of	Rs. 1000/-
Maximum investment limit	Rs. 15 lakh
Minimum eligible age for investment	60 years (55 years for those who have retired on superannuation or under a voluntary or special voluntary scheme). The retired personnel of Defence Services (excluding Civilian Defence Employees) shall be eligible to invest irrespective of the age limits subject to the fulfillment of other specified conditions
Premature withdrawal facility	Available after one year of holding but with penalty
Transferability feature	Not transferable to others
Tradability	Not tradable
Nomination facility	Nomination facility is available
Modes of holding	Accounts can be held both in single and joint holding modes. Joint holding is allowed but only with spouse
Application forms available with	Post Offices and designated branches of 24 Nationalised banks and one private sector bank
Applicability to NRI, PIO and HUFs	Non resident Indians, Persons of Indian Origin and Hindu Undivided Family are not eligible to open an account under the scheme.
Transfer from one deposit office to another	Transfer of account from one deposit office to another in case of change of residence is permitted

Can a joint account be opened under the scheme with any person?

Joint account under the SCSS, 2004 can be opened only with the spouse.

What should be the age of the spouse in case of a joint account?

In case of a joint account, the age of the first applicant / depositor is the only factor to decide the eligibility to invest under the scheme. There is no age bar/limit for the second applicant / joint holder 

What are the withdrawal and pre-mature withdrawal conditions?

No withdrawal shall be permitted before the expiry of a period of five years from the date of opening of the account. The depositor may extend the account for a further period of 3 years.

Premature closure of account is permitted

1. After one year but before 2 years on deduction of 1 ½ % of the deposit.

2. After 2 years but before date of maturity on deduction of 1% of the deposit.

In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest.

Whether both the spouses can open separate accounts in their individual capacity with separate limit of Rs.15 lakh for each of them?

Yes. Both the spouses can open individual and / or joint accounts with each other with the maximum deposits upto Rs.15 lakh each, provided both are individually eligible to invest under relevant provisions of the Rules governing the scheme.

What happens to the accounts if both the spouses are maintaining individual accounts and not any joint account and one of them expires?

If both the spouses have opened separate accounts under the scheme and either of the spouses dies during the currency of the account(s), the account(s) standing in the name of the of the deceased depositor / spouse shall not be continued and such account(s) shall be closed 

In case of a joint account, if the first holder / depositor expires before maturity, can the account be continued?

In case of a joint account, if the first holder / depositor expires before the maturity of the account, the spouse may continue the account on the same terms and conditions as specified under the SCSS Rules. However, if the second holder i.e. spouse has his / her own individual account, the aggregate of his/her individual account and the deposit amount in the joint account of the deceased spouse should not be more than the prescribed maximum limit. In case the maximum limit is breached, then the remaining amount shall be refunded, so that the aggregate of the individual account and deceased spouse’s joint account is maintained at the maximum limit.

Whether any income tax rebate / exemption is admissible?

No income tax / wealth tax rebate is admissible under the scheme. The interest income from the scheme is fully taxable. The prevailing income tax provisions apply.

Is TDS applicable to the scheme?

Yes, TDS is applicable to the scheme as interest payments have not been exempted from deduction of tax at source.

Whether any minimum limit has been prescribed for deduction of tax at source?

Tax is to be deducted at source if the interest paid or payable exceeds Rs.5000/- during the financial year.

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