Senior Citizen Saving Scheme: Interest rate to withdrawal, all you need to know about this money-making tool

Senior Citizen Saving Scheme or SCSS is a government-backed small savings scheme for all individuals who are aged above 60.

An individual can open one or more accounts under SCSS. However, the maximum deposits allowed are Rs 15 lakh in all the accounts put together at any given point of time, say experts. Photo: Pixabay

Senior Citizen Saving Scheme or SCSS is a government-backed small savings scheme for all individuals who are aged above 60. It is one of the most lucrative savings schemes in India and offers comparatively substantial returns to its subscribers. Since, the scheme is government sponsored, the risk involved in this scheme is negligible. Individuals can apply for SCSS through post offices as well as public and private banks.

Ceiling on deposit of money under SCSS

Speaking on the Senior Citizen Saving Scheme, tax and investment expert Balwant Jain said, "An individual can open one or more accounts under SCSS. However, the maximum deposits allowed are Rs 15 lakh in all the accounts put together at any given point of time. So, one can deposit Rs 15 lakh at one go or stagger over a period of time. The ceiling of Rs 15 lakh is computed with reference to the first holder only."

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Senior Citizen Saving Scheme Interest Rate

The Mumbai-based tax and investment expert said that Senior Citizen Saving Scheme interest rate is announced by the central government on a quarterly basis. For April to June 2020 quarter, Senior Citizen Saving Scheme interest rate is 7.4. The Central Government is yet to announce small savings scheme interest rate for July to September quarter.

However, Jain said that SCSS interest rate available at the time of opening SCSS account will remain same for the first five years. This means if someone opens SCSS account in April to June 2020, interest rate applicable for the entire period will be 7.4 pct.

Tenure, withdrawal rules

Elaborating upon the tenure of the Senior Citizen Saving Scheme and rules in regard to premature withdrawal SEBI registered Tax and investment expert, Manikaran Singhal said, "The Senior Citizen Saving Scheme has an initial tenure of five years, which can be extended only once for a period of three years. During the currency of the account, you are allowed to prematurely withdraw the money but not before the completion of one year though with some penalty. In case the account is closed before the second year, a penalty of 1.5 per cent of the deposit amount is recovered. For the accounts closed after two years, the applicable penalty is 1 per cent."

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