The main aim of Senior Citizens Savings Scheme is to provide safe regular income to individuals aged above 60 years in India. This scheme is backed by Indian government hence it offers capital protection, tax saving, along with quarterly interest payment.
- The deposit scheme is available in all public sector banks and some selected private sector banks
- The tenure of the deposit is upto five years. On maturity, the scheme can be further extended upto three years
- The minimum deposit amount is INR 1,000
- The maximum amount that can be invested under the scheme is INR fifteen lakhs per depositor
- The deposit can be made in the form of cash upto an amount of one lakh. In the case of deposits more than Rupees one lakhs, the deposit should be made through cheque/online transfer of money etc.
1. Senior citizens aged 60 years and above are eligible to open this deposit. However, persons aged 55 years and above can also open the deposit only if the retirement is VRS/Superannuation. That VRS amount should be invested within one month from the date of receipt of maturity benefits from the employer
2. An individual can open any number of Senior Citizens’ Savings Scheme and the maximum investment under a single deposit or multiple deposits should not exceed Rupees fifteen lakhs. However, only one single investment is permitted per deposit
3. The account can also be opened in joint names along with the spouse of the senior citizen. The joint depositor should be the spouse of the senior citizen and not anybody else.
4. Interest is paid during the first instance on 31st March, 30th September and 31st December. For the subsequent years, interest is paid on 31st March, 30th June, 30th September and 31st December.
5. As at present the interest is paid at 8.6 % p.a.
Tax benefits of Senior Citizens’ Savings Scheme in India
Interest payable is subject to income tax rules as at present. When the interest amount exceeds Rs. 10,000, TDS will be collected and remitted to income tax authorities.
In the case of savings account within the same bank, interest will be credited through auto credit facility. When the savings account with any other bank, interest will be credited by means of ECS facility or by 4 Post Dated Cheques every year. For the deposits with post offices, interest will be credited to the savings account with the same post office through auto credit facility or through money order or PDC, when the savings accounts are maintained with other post offices.
Normally the tenure of the deposit is upto five years. In case of urgent requirements, the depositor can close the deposit before maturity. However, the deposit cannot be closed within a period of one year
It can be closed after completion of the minimum period of one year. When it is closed between one year and two years, a penalty of 1.5 percent will be deducted. A penalty of 1.0 percent will be deducted after 2 years. No charges in case of premature closure due to the depositor’s death.
1. Apart from joint deposit, individual deposit accounts can also be opened in the name of the same senior citizen. However, the maximum investment per depositor in all individual investments and joint investments is restricted to INR fifteen lakhs only.
2. Nomination facility is available for the scheme. Nomination can be changed any number of times and this facility is free of charge.
3. Loans are not permitted against the deposits
4. NRI and PIO are not eligible to invest under this scheme, but an Indian moving abroad can continue to maintain the existing deposit.
5. The interest earned is fully taxable and 10 percent TDS will be applicable if the interest for the whole year is more than Rs 10,000.
6. The investor can transfer this account to another bank or post office. A nominal fee will be charged in transferring the deposit.
7. Senior citizen can also claim deduction of up to Rs 1.50 lakh each year under Section 80C.