SCSS Interest Rate: Senior Citizen Savings Scheme 2022

Last updated – 31.01.2022

Senior Citizen Savings Scheme (SCSS) is a government-backed scheme focused on senior citizens to provide them a secure and steady income during their post-retirement period.

You can apply for the SCSS scheme at your nearest post office or any nationalized bank.

SCSS was one of the most lucrative savings schemes but from April 1, 2020, the government slashed the interest rates to an all-time low. Let’s discuss that in detail.

SCSS Current Interest Rate 2021-22

The government hasn’t revised SCSS interest rates since for the 1st quarter of the year 2020-21. The current SCSS interest rate is 7.4%. 

In the previous reduction, the government has made a big cut of 120 bps on SCSS interest rates reducing it from 8.6 to 7.4%.

SCSS Interest Rate History

Financial Year	Rate of interest (%)
2020 to 2022 (Q1- Q4)	7.4 (Remains unchanged throughout the financial year)
2019 to 2020 (Q4)	8.2
2019 to 2020 (Q1 – Q3)	8.6
2018 to 2019 (Q3 – Q4)	8.7
2018 to 2019 (Q1 – Q2)	8.3
2017 to 2018 (Q2 – Q4)	8.3
2017 to 2018 (Q1)	8.4
2016 to 2017	8.5
2015 to 2016	9.3
2013 to 2015	9.2
2012 to 2013	9.3
Till 2012	9.0

Also check out – GPF interest rates 2022

SCSS Interest Calculator

Let’s check how to calculate interest on SCSS

I = (P) *( r/4)

Where,

I = Interest earned every quarter

P = Principal Amount

r = Rate of Interest

Using the above formula, if you invest Rs 1 Lakh at 7.4% interest, the quarterly interest payout would be as below.

I = 1,00,000 * (7.4%/4)

  = 1,00,000 * (7.4/400) = 1850

Interest earned every quarter is Rs. 1,850

Minimum and Maximum SCSS Deposit Limits

You can start an SCSS account with a minimum investment of Rs. 1,000 and investment of any amount in multiples of 1000.

You can invest a maximum of Rs. 15 lakh in your SCSS account. You can open more than one SCSS account individually or jointly with your spouse. 

Despite the number of accounts you can’t invest more than Rs 15 lakh.

In case your investments exceed the retirement amount, you have to immediately withdraw extra funds by paying premature withdrawal charges.

You can open the SCSS account by cash for the amount below 1 lakh, while you need a cheque to open the SCSS account for Rs. 1 Lakh and above.

Tax Implications on SCSS or Senior Citizen Savings Schemes 

Under section 80C, you can take advantage of tax deduction up to Rs 1.5 lakh only in case you invest more than 1.5 lakh in SCSS. You can avail of this tax benefit only for the year of deposit in SCSS.

Interest earned on the SCSS account is purely taxable in the hands of the depositor. TDS is deducted if the interest amount is more than INR 10,000/- per year.

However, a senior citizen is exempted to pay tax (under section 80TTB) up to Rs. 50,000 in that financial year. 

Maturity of Senior Citizen’s Savings Scheme

SCSS investment has a maturity tenure of 5 years. 

But you can extend the scheme for 3 years by giving a simple application to the post office or concerned bank.

Premature Withdrawal

You can go for a premature withdrawal after completing one year of account opening. Premature withdrawal is allowed with 2 withdrawal charges conditions-

• If you prematurely withdraw the money after one year but before completion of 2nd year, you will have to pay 1.5% of deposit as withdrawal charges
• You have to pay 1% of deposit as fee against the premature withdrawal after completing 2 years.

You would like to check out – NSC interest rates in 2022

Eligibility For SCSS Scheme

I have categorised eligibility criteria into 2 parts – Eligible and Non-eligible. 

Who are eligible for SCSS account

• Any Indian citizen who has attained the age of 60 years or above can open an SCSS account.
• An individual of 55 years, but below 60 years of age who has retired on superannuation is also eligible.
• Any retired Defence Servant of age 50 years

Who are not eligible for SCSS account

• NRIs are not eligible to open an SCSS account.
• You can’t invest in SCSS on behalf of Hindu Undivided Families (HUFs) accounts.

Documents Required to Open SCSS Account

List of the documents required –

• Application form
• PAN Card
• Passport size photographs
• Aadhaar Card/Driving License/Voter ID (Age Proof)
• Residence proof
• Retirement certificate from employer or date proof of retirement benefits disbursal  

PAN Card is mandatory for opening an SCSS account. 

FAQs

#1. Is the Interest Earned on SCSS is Taxable or Not?

Interest earned on the SCSS account is purely taxable in the hands of the depositor. TDS is deducted if the interest amount is more than INR 10,000/- per year.

#2. SCSS Interest Rate Is Fixed Or Variable?

SCSS Interest rate is variable as the government revises the interest rates every quarter of a financial year. 

The government might decide to keep the existing interest rates as per the recommendations from the concerned department.

#3. How to Withdraw SCSS Amount?

 You can submit Form-E (available at the post office or bank) along with the SCSS passbook to withdraw the amount.

#4. Can Anyone Open a Joint SCSS Account With Any Family Member?

You can open an SCSS account with a spouse only. You can invest a maximum of Rs.15 lakh (in the multiples of Rs.1000).

#5. Can I Transfer the SCSS Account From One Post office to Another?

Yes. You can use Form G, to transfer your account to a post office branch other than the deposit branch.

Conclusion 

SCSS is an ideal investment option for middle age people who want to get good returns without taking any risk.  

Though the government has reduced the interest rate to 120 bps, still SCSS is a better alternative for senior citizens as compared to other secure instruments like fixed deposits and NSCs.