Senior Citizen Savings Account Might Be A Good Gift For Your Parents This Festive Season

This festive season, if you are looking for a gift for your parents, you should make them more self-reliant. For this purpose, investing in a financial plan or savings scheme that offers them security might be a good idea. The government runs several schemes, some of which are especially for a secured retired life. The Senior Citizen Savings Scheme (SCSS) is one among them. The scheme, meant for people above the age of 60, offers an interest of 8.7 per cent per annum with effect from September 1, 2018. Investment under SCSS also qualifies for deduction from income tax.

Here is everything you want to know about the Senior Citizen Savings Scheme:

Where to open the SCSS account? Post offices and banks allow you to open a senior citizen savings account.

Age limit: An individual of the age of 60 years or more may open the senior citizen savings account. An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under Voluntary retirement scheme can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits, according to the website of India Post indiapost.gov.in.

Minimum, maximum amount: There shall be only one deposit in the account in multiple of Rs 1,000/. The maximum amount should not exceed Rs 15 lakh in a senior citizen savings account.

Interest rate on senior citizen savings scheme: The interest rate of 8.7 per cent per annum is payable from the date of deposit of 31st March/30th September/31st December in the first instance and thereafter, interest is payable on 31st March, 30th June, 30th September and 31st December. Interest is payable on a quarterly basis on the first working day of April, July, October and January.

Maturity period: The senior citizen savings account matures in five years. After maturity, the account can be extended for three more years within one year of maturity by giving application in prescribed format. In such cases, the account can be closed at any time after expiry of one year of extension without any deduction.

Income tax: If the interest earned is more than Rs 10,000 per annum, tax is deducted at source. Investment under this scheme qualifies for benefit under Section 80C of the Income Tax Act, 1961.

Premature closure: Premature closure of SCSS accounts is allowed after one year on deduction of an amount equal to 1.5 per cent of the deposit and after two years, on deduction of 1 per cent of the deposit.