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Senior Citizens Saving Scheme

This topic of “Senior Citizens Saving Scheme” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

Introduction:

Senior Citizens Saving Scheme is a retirement benefit program by the Government of India. It provides an investment avenue for senior citizens over 60 years to earn a regular income after retirement.

Ministry/Agency:

Ministry of Finance

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Objectives:

To provide senior citizens with a safe investment option for their retirement savings and to ensure hassle-free disbursement of returns.

Benefits:

  • Hassle-Free Process: Individuals can open their accounts at any post office or authorized bank in India.
  • SCSS Tax Benefits: Under Section 80C of the Income Tax Act, the principal amount invested in this scheme is eligible for deduction up to a limit of ₹1.5 lakhs in a year. Furthermore, interest earned on SCSS is taxable according to an individual’s tax slab.
  • High-Interest Rate: SCSS offers an interest rate of 7.4% per year.
  • Assured Returns: The returns on this scheme are issued as it is a government-backed instrument.
  • Maturity Duration: SCSS comes with a maturity period of 5 years, which can be extended for another 3 years.
  • Deposit Limit: Individuals can deposit a minimum of ₹1,000 and a maximum of ₹15 lakh or the amount of retirement benefit, whichever is lower.
  • Account Closure: Deductions are made against premature withdrawals. If closed before a period of 2 years, 1.5% deduction will be made as a penalty. Furthermore, if closed after 2 years, 1% is deducted.
  • Quarterly Disbursals: One can expect quarterly disbursements against the deposited amount.
  • Nomination Option: The account holder can register a nominee to the Senior Citizens Saving Scheme.

Eligibility:

  • Indian citizens above the age of 60 years
  • Retirees in the age bracket of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation*
  • Retired defense personnel above 50 years and below 60 years of age* (*Investment must be made within a month of availing the retirement benefits.)

Exclusions:

Hindu Undivided Family (HUFs) and Non-resident Indians (NRIs) are not eligible to invest in Senior Citizen Savings Scheme.

Implementation strategy:

  • Individuals can open their SCSS account at any post office or authorized bank in India by depositing a minimum of ₹1,000 within a month of receiving retirement benefits.
  • The scheme offers an assured interest rate of 7.4% per annum, with quarterly disbursements against the deposited amount.
  • The account can be extended for 3 more years after maturity, and a nominee can be registered.
  • The interest earned on SCSS is taxable as per an individual’s tax slab, and premature withdrawals are subject to a penalty.

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