Senior Citizens Savings Scheme (SCSS) provides guaranteed interest income, currently 8.2 per cent, to individuals aged 60 and above, for their financial security. The scheme was amended in November to enhance the benefits for account holders.

Let’s explore the benefits of the scheme for account holders:

High-Interest Rate: 

SCSS currently offers an 8.2 per cent interest rate, the highest among all other small savings schemes. It carries zero risk since the government backs it. Compared to SCSS, the Public Provident Fund (PPF) offers 7.1 per cent, the National Savings Certificate (NSC) gives 7.7 per cent, and Kisan Vikas Patra (KVP) provides 7.5 per cent. The rates are locked at the time of account opening, providing a guaranteed income for the entire five-year tenure.

Tax Benefits: 

The scheme offers investors tax benefits up to Rs 1.5 lakh in a financial year under section 80C of the Income-tax Act, 1961. However, the interest paid quarterly is taxable in the hands of the account holder at the applicable tax slab rate.

Guaranteed Cash Flow: 

It provides seniors with a regular cash flow after retirement, as it makes guaranteed quarterly interest payments. So, instead of a traditional bank fixed deposit (FD), an investor can choose SCSS to generate higher interest income.

Premature Withdrawal: 

The subscriber can prematurely withdraw or close the account during a financial crisis. However, a penalty will be levied for premature withdrawal or account closure. If the account is closed within a year of opening, there will be a deduction of 1 per cent.

Unlimited Extension: 

The SCSS account is initially opened for five years; after that, it can be extended in blocks of three years. Thus, this guaranteed income scheme provides seniors with eight years of tension-free regular income. However, as per the recent changes in rules, the account can now be extended unlimited times. Each extension is for a block of three years.

Opening and Maintaining The Account:

The account can be opened with a minimum of Rs 1,000 and a maximum of Rs 30 lakh. One can open a single or joint account with a spouse. According to the latest changes, the spouse of a government employee can invest in the scheme if the dead employee is 50 years or older. SCSS can be opened with post offices and banks and is transferrable within their branches.