Senior Citizens Savings Scheme (SCSS) is a Government of India Product. Since the product is offered by Govt of India, this product is one of the most Safest Investment Option. 9% interest offered to depositors.Premature closure of account is possible after one year from the date of opening the account.(Charges applicable).
The salient features of the Senior Citizens Savings Scheme, 2004 are :
The age eligibility
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
***Single or Joint account (with spouse only) can be opened.
Tenure/maturity of the scheme:5 years which can be extended by 3 more years
Maximum investment limit
Deposit in multiples of Rs. 1000 subject to a maximum of Rs. 15 Lakh
Rate of interest
The Deposits will carry an interest of 9% p.a. (taxable)
Premature withdrawal facility After one year of holding but with penalty
Nomination facility Nomination facility is available
Modes of holdingAccounts can be held both in single and joint holding modes. Joint holding is allowed but only with spouse
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.
Whether any income tax rebate / exemption is admissible ?
Senior Citizens Savings Scheme is added under section 80C in 2009
that is in march 2009 (CIRCULAR NO. 1/2009, F.NO. 142/09/2009-TPL, dated 27.03.2009) EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2008
80C (xxiii) & (xxiv) which is related to Enlargement of the scope of eligible saving instruments under section 80C. 17.1-17.6
17. Enlargement of the scope of eligible saving instruments under section 80C
17.1 Section 80C of the Income-tax Act provides for a deduction of upto rupees one lakh to an individual or a Hindu undivided family (HUF) for,-
(i) making investments in certain saving instruments; or
(ii) incurring expenditure on tuition fee and repayment of housing loan.
17.2 With a view to encourage small savings, the scope of eligible saving instruments has been enlarged by inserting two new clauses in sub-section (2) of section 80C. The following investments made by the assessee, during the previous year, shall also be eligible for deduction under section 80C within the overall ceiling of rupees one lakh:-
(i) five year time deposit in an account under Post Office Time Deposit Rules,1981; and
(ii) deposit in an account under the Senior Citizens Savings Scheme Rules, 2004.
17.3 Further, it has also been provided that where any amount is withdrawn by the assessee from such account before the expiry of a period of 5 years from the date of its deposit, the amount so withdrawn shall be deemed to be income of the assessee of
the previous year in which the amount is withdrawn (sub-section (6A) of section 80C). The amount so withdrawn, accordingly, shall be chargeable to tax in the assessment year relevant to such previous year. The amount chargeable to tax shall also include that part of the amount withdrawn which represents interest accrued on
the deposit. However if any part of the interest has suffered taxation in any of the earlier years, such amount shall not be taxed again.
17.4 It has also been provided that the in case the amount is received by the nominee or legal heir of the assessee, on the death of such assessee, the amount so received shall not be taxed in the hand of the nominee or the legal heir. However, if such amount includes any amount of interest which has not been included in the total income of the assessee for the previous year or years preceding such previous year, such interest shall be taxable.
17.5 It is hereby clarified that if no deduction under section 80C was claimed for investment of an amount in the above mentioned two schemes by an assessee, the withdrawl of such amount ( principal only) will not attract the provision of subsection(6) of section 80C and such amount ( principal only) will not be taxable.
17.6 Applicability - The amendment shall apply to investments, as above, made during the financial year 2007-08 and subsequent years and the deduction under this section would be available from assessment year 2008-09 and subsequent years.
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. The facility of furnishing a declaration in Form No. 15H (prescribed under the Income Tax Rules, 1962) is available to a person (payee) resident in India and who is of the age of 65 years or more at any time during the previous year (since a person who has attained 65 years or more at any time during the previous year only is treated as a Senior Citizen under the provisions of Income Tax Act, 1961). A declaration in Form 15 G can be furnished by a depositor of less than 65 years of age. In cases where a certificate under Section 197(1) of the Income Tax Act, 1961 from the Assessing Officer is furnished, the agency banks / post offices shall not deduct tax at source or, as the case may be, deduct at a lower rate as specified in the certificate. (GOI letter F. No.2/8/2004/NS-II dated March 28, 2006)
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. (GOI letter F. No.2/8/2004/NS-II dated June 06, 2006)
What is the rate at which TDS is to be deducted from the account holder ?
The rate for TDS for a financial year is specified in Part II of Schedule I of the Finance Act for that year. The prescribed rate for the financial year 2006-2007 are as under :
In the case of a person other than a company ;
(a) Person resident in India – 10 %
(b) Others – 20 %
The amount so deductible shall be enhanced by surcharge calculated as per the following rate :
In the case of Individual, HUF, Association of Person and Body of Individuals – 10% if the interest paid / payable exceeds Rs.1000000/-
The amount of "TDS+Surcharge" shall be further enhanced by 2 % of "TDS+Surcharge" on account of education cess (GOI letter F. No.2/8/2004/NS-II dated June 06, 2006).
Can an account be transferred from one deposit office to another ? A depositor may apply in Form G, enclosing the Pass book thereto, for transfer of his account from one deposit office to another, in case of change of residence. If the deposit amount is rupees one lakh or above, a transfer fee of rupees five per lakh of deposit for the first transfer and rupees ten per lakh of deposit for the second and subsequent transfers shall be payable [Rule 11 and GOI Notification GSR..(E) dated March 23, 2006)
Application forms available withPost Offices and designated branches of 24 Nationalised banks and one private sector bank
- State Bank of India
- State Bank of Hyderabad
- State Bank of Indore
- State Bank of Bikaner and Jaipur
- State Bank of Patiala
- State Bank of Saurashtra
- State Bank of Mysore
- State Bank of Travancore
- Allahabad Bank
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- Syndicate Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
- ICICI Bank Ltd.
- Age proof - Self attested copy of either of the following documents
- Senior Citizen Card
- Birth certificate issued by MC/Gram Panchayat/District office of registrar of births and death
- Voter ID card
- PAN card
- Ration card
- Date of birth certificate from the school
- Driving license
- Copy of PAN Card, or
- Copy of receipted application form for allotment of PAN, if PAN is not allotted.
- Form 60 with address proof
Who has attained the age of 55 years or more but less than 60 years, and who has retired on superannuation or otherwise on the date of opening of an account under these rules, subject to the condition that the account is opened by such individual within one month of the date of receipt of the retirement benefits and proof of date of disbursal of such retirement benefit(s) alongwith a certificate from the employer indicating the fact of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer is attached with the application form in Form-A :
Provided that the persons who have retired at any time before the commencement of these rules and attained the age of 55 years or more on the date of opening of an account under these rules, shall also be eligible to subscribe under the scheme within a period of one month of the date of this notification, subject to the fulfilment of other specified conditions.
Provided further that the retired personnel of Defence Services (excluding Civilian Defence Employees) shall be eligible to subscribe under the scheme irrespective of the above age limits subject to the fulfilment of other specified conditions.