Senior Citizen Saving Scheme in 10 points

1. Senior Citizen Saving Scheme as the name suggest is a saving scheme for senior citizen by the government. You can avail this scheme from Post office or any Bank. The goal of this scheme is to give quarterly interests on the 1 time lump-sum initial investment.

2. Eligibility : A person above 60 years of age, retired civil employee above 55 and below 60 years of age, retired defense employee above 50 and below 60 years.

3. A minimum amount of Rs. 1000 is required to open the account. As it is a one time investment, one can invest up to a maximum of Rs. 15 lakhs.

4. Investment in SCSS can be claimed for tax deductions under section 80C. Also, the interest earned is not taxable provided it is below Rs. 50,000. Interest earned above Rs. 50,000 will be taxable and TDS will be cut automatically.

5. This is a more of a dividends style scheme rather than a compound interest scheme. The interest earned will be deposited to the account every quarter and shall not get additional interest on it.

6. The maturity of SCSS is 5 years and the interest rate is fixed till maturity. Interest rate is decided by government for every quarter and is in range of ~7-9%. The scheme can be extended for 3 years after maturity and the interest rate will be the rate decided for that quarter.

7. For example, Dhananjay after his retirement invested Rs. 10 lakh in SCSS scheme which had a interest rate of 8%. He will receive interest of ~20k every quarter. (~80k annually).

8. If you want to quit this scheme before the maturity, then the penalty is 1% if closed after 2 years, 1.5% if closed after 1 year and 0 interest if closed before 1 year.

9. Documents : Date of Birth Proof (Birth certificate, Aadhar, PAN), Address Proof (Aadhar, PAN, passport, driving license), Identity proof (Aadhar, PAN, passport), KYC Form, SCSS Form.

10.Opinion : If one has requirement for money on quarterly basis, this is a good scheme as principal amount will be preserved and interest earned will be used for spending. Should also compare with lifetime annuity available at the time of investment as a alternative.

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