Senior citizens have an opportunity to save on taxes, with a maximum exemption of ₹1.5 lakh.
Here’s a breakdown of the scheme and its benefits.
Senior Citizen Savings Scheme (SCSS): A Tax-Saving Haven
SCSS is a government scheme tailored for Indian citizens aged 60 and above.
Its primary aim is to secure regular income for senior citizens post-retirement.
Taxpayers can claim deductions up to ₹1.5 lakh annually under Section 80C of the Income Tax Act by investing in SCSS.
It’s important to note that this deduction is applicable only under the old tax regime.
Where to Invest and Key Features
SCSS accounts are available in both government and private banks as well as post offices.
The scheme offers guaranteed returns, with a maturity period of 5 years, extendable once for an additional 3 years.
Currently, the scheme offers an annual interest rate of 8.2% starting from January 1, 2024.
Interest is credited quarterly, ensuring a steady return on investment.
Tax Benefits and Savings
Investors in SCSS can enjoy tax exemptions under Section 80C.
Additionally, interest income is subject to tax as per the individual’s applicable slab.
If the interest earned exceeds ₹50,000 in a financial year, TDS will be deducted.
However, investors can avoid TDS by submitting Form 15G/15H if their interest income doesn’t surpass the specified limit.
Account Opening and Deposit Limits
The minimum deposit required for an SCSS account is ₹1,000, with a maximum cap of ₹30 lakh.
Accounts can be opened in authorized banks or Indian post offices by submitting the necessary documents, including KYC details and proof of age.
Maturity and Pre-maturity Rules
In the event of the account holder’s demise before maturity, the account will be closed, and the matured income will be transferred to the nominee/legal heir.
Nomination facilities are available during both account opening and closure. Premature closure is allowed, but early closure within the first year doesn’t accrue any interest.
Subsequent closures within 1-2 years and 2-5 years incur deductions of 1.5% and 1% respectively from the principal amount.
