Senior Citizens Savings Scheme

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During our entire work life, we get used to getting salary cheques at the end of the month and using the funds to meet our expenses. Once we retire, the game stops. There are no salary cheques at the end of every month. Though the salary has stopped, the expenses haven’t. And it is not easy to change or shun money or expense management skills that have been developed over a long period of 35-40 years. So, you need regular income to replace your salary even after retirement.

Therefore, before retirement, you work hard to build a retirement corpus that can be used to generate regular income once you retire. Well, you have built a good retirement corpus. But, how do you use the corpus to generate regular income? The first product that comes to mind is a pension plan or an annuity product.

Under a pension plan/annuity product, you pay a lumpsum amount to an insurance company. The insurance company, in turn, provides you regular income for life (or a fixed period as per product terms). There are many variants of annuity products available. You can choose one that suits your requirements. However, annuity products have their own set of problems. For instance, the annuity rates are quite low (6%-7% p.a.). At 7%, to get annual income of Rs 2 lacs per annum for life, you will have to purchase annuity plan for Rs 28.5 lacs. Do we have other products around which can provide better returns?

In one of earlier posts, we showed you how to use PPF as a pension tool. PPF provides better returns than an annuity product. Returns are tax-free (pension income is taxable). The limitation is that there is just one withdrawal allowed per year. Additionally, such flexibility to use it as a pension tool is possible only after initial maturity of 15 years.

What if you do not have a PPF account or you opened your PPF account only five years back? In this post, we will review Senior Citizens Savings Scheme (SCSS), a savings product which has been designed specifically for senior citizens. We will discuss the eligibility criteria, maturity, deposit limits, interest rates and tax treatment. We will also discuss how SCSS account fares against other income products available in the market.

Senior Citizens Savings Scheme (SCSS)

Eligibility

Only an individual aged 60 or more can open this account. There is relaxation in age limit to 55 for those retiring on superannuation or opting for voluntary retirement subject to certain conditions. Retired defence personnel (excluding civilian defence employees) can subscribe to the scheme irrespective of the age limit.

Non-resident Indians (NRIs) and Hindu Undivided Families (HUF) are not eligible to open SCSS accounts. If a depositor becomes an NRI after opening an account, he/she may continue to hold the account till its maturity.

Where to open?

You can open this account in any post office, public sector banks and select private sector banks.

Maturity

Maturity period is 5 years. The account can be extended for further three years (only once) at the end of 5 years. In case of extension, the investor can close the account any time after one year without any penalty. This facility of extension is not available to NRIs.

Interest Rate

Interest is paid out quarterly on 1st working day of April, July, October and January. The interest rate is not fixed and is notified by Ministry of Finance every year quarter. For FY2015-2016, applicable interest rate is 9.3% p.a.  The current rate of interest is 8.3% p.a. (Jan-March 2018)

For the latest update on interest rates for various small savings schemes such as PPF, SSY and SCSS, please refer to this post.

Latest PPF, Sukanya Samriddhi, SCSS and Small Savings Scheme Interest Rate

Since the interest is paid out quarterly, there will be no compounding on interest.

Please note that the rate of interest on an investment/deposit remains unchanged for the entire duration of the investment till maturity. For instance, if you deposit Rs 2 lacs in SCSS and the prevailing interest rate is 8.6% p.a., you will earn 8.6% p.a. for the duration of such investment. Even if the government changes the interest rate offered on such scheme in the future, you will earn 8.6% during the entire term. 

Deposit Limit

There can be only one deposit in the account. You cannot make multiple deposits in the same account. Any number of accounts can be opened but the total balance in all the accounts cannot exceed Rs 15 lacs.

 An individual may open the account in individual capacity or jointly with the spouse. In case of a joint account, the age of the first applicant is considered for eligibility. There is no restriction on the age of second applicant. The entire amount is attributed to the first holder.

 If you want to contribute maximum amount to the Senior Citizens Savings Scheme, you can do either of the following:

  1. You and your spouse can open individual accounts with Rs 15 lacs in each of the accounts
  2. You can open two joint accounts. You can be the first holder in one account while your spouse can be the first holder in the other account. Deposit Rs 15 lacs in each of the accounts

This way, you can deposit/invest Rs 30 lacs in the SCSS for the family.

Tax Treatment

Investment under the scheme qualifies for tax deduction under Section 80C.

Interest earned is taxable.

There is tax deduction at source (TDS) if the interest earned for the financial year is more than Rs 10,000.  Rate of TDS is 10% (20% in case PAN has not been provided)

 If no TDS has been deducted, it does not mean you do not have any liability. You need to include the entire interest income in your income tax return and pay income tax, if required. Additionally, even if TDS has been deducted, you may still have to pay additional tax if you fall in the higher tax bracket.

For instance, if you earn interest of Rs 20,000, TDS of Rs 2,000 will be deducted. However, if you fall in 30% bracket, your tax liability will be Rs 6,000. You need to pay the remaining Rs 4,000 while filing your income tax return.

Senior Citizens Savings Scheme SCSS interest rate maturity tax benefit TDS

Submission of Form 15G/Form 15H

To avoid tax deduction at source (TDS), you can furnish Form 15G/15H with the post office/bank. Form 15G can be submitted by depositors below 60 years of age and Form 15H by depositors above 60 years.

You can file Form 15G if your estimated income tax for the financial year is Nil and your total interest income is less than minimum tax exemption limit (Rs 2.5 lacs). Please note both the conditions have to be satisfied.

There is relaxation of second condition in case of filing Form 15H. You can file for Form 15H if your estimated income tax for the financial year is Nil. So, if you are above 60, you can furnish Form 15H if your total taxable income is less than Rs 3 lacs (Rs 5 lacs for people above 80).

You are advised to check eligibility for submission of Form 15G/Form 15H before submitting Form 15G/15H to the post office/bank. A false or wrong declaration may attract penalty or imprisonment under Section 277 of the Income Tax Act. Read more about Form 15G/15H in this Business Standard article.

How to maximise tax benefits?

Since you get the benefits under 80C of Income Tax Act for investing in SCSS, you can stagger your investments in SCSS to get the maximum income tax benefit. For example, if you want to invest Rs 7.5 lacs in SCSS, you can invest Rs 1.5 lacs every year for five years to get the maximum tax benefit.

Please note this is a generic suggestion to maximize benefits under Section 80C. You must consider additional information, including but not limited to your taxable income, other committed 80C investments etc. You can also seek services of a tax consultant or a financial planner to help you plan your taxes better.

Premature Withdrawal/Closure

Premature withdrawal/exit/closure from the scheme is allowed after 1 year with penalty of 1.5% of the deposit amount. After 2 years, the penalty amount goes down to 1% of the deposit amount. Partial withdrawal is not allowed i.e. you cannot withdraw part deposit amount from the account. The account has to be closed completely if you want to access your principal amount.

 Please note that in case of premature closure of the SCSS account, tax benefits claimed under Section 80C will be reversed. Therefore, in case of closure before 5 years, the deposit amount (up to Rs 1.5 lacs), along with accrued interest, shall be added to the income of the depositor and taxed accordingly.

Operation of account in contravention of SCSS Rules

If found that the account has been opened in contravention of the SCSS account rules (e.g. investment more than Rs 15 lacs across accounts), the account shall be closed immediately. The deposit in the account shall be refunded to the depositor after deducting any interest already paid.

Let’s compare SCSS with other regular income products available in the markets.

Senior Citizens Savings Scheme vs. Pension plans

Prevailing annuity rates are around 6-7%. Hence, in comparison, SCSS offers a much higher interest. Income from both pension plans and SCSS is taxable. Given that the tax treatment is same, SCSS offers much higher income as compared to any annuity/pension plan. The only limitation is the maximum investment limit of Rs 15 lacs. Therefore, the maximum income from SCSS can be Rs 1.39 lacs (at 9.3% per annum) Rs 1.29 lacs (at 8,6% p.a.). You can double the amount if your spouse opens SCSS account and deposits the maximum amount. You need to see if this amount is going to be enough.

Additionally, by purchasing a pension plan, you lock in interest rate for the entire tenor of the pension plan (may be your entire life). However, under SCSS, you can lock in the interest rate for only 5 years (8 years if you opt for extension).

Senior Citizens Savings Scheme vs. Bank Fixed Deposits

Every bank offers special rates to senior citizens. For any tenor, senior citizens are offered 0.25% to 0.5% more. SBI FD (for 5 years) offers 8.0% to senior citizens currently. You can opt for monthly or quarterly payout in a fixed deposit. SCSS offers only quarterly payout. Though interest rates for bank FDs keep changing, these are likely to be lower than SCSS interest rate. Additionally, not all bank FDs will give you benefit under Section 80C. However, there is a maximum investment limit in SCSS.

Senior Citizens Savings Scheme vs. Public Provident Fund (PPF)

These are not exactly comparable. PPF is primarily a wealth accumulation tool. SCSS, on the other hand, is an income generation instrument. We did discuss a way to use PPF as a pension instrument in one of our earlier posts. But, you can do that only after initial maturity of 15 years. Additionally, only one withdrawal is permitted every year. So, that requires a lot of planning. With SCSS, you can simply go to a bank/post office, open an account and start getting regular income.

PPF currently offers 8.7% p.a. 8.1% p.a. while SCSS offers 9.3% p.a 8.6% p.a. PPF interest rate changes every year. Interest rate for SCSS is notified every year. Both the interest rates are subject to revision eery quarter. However, your investment earns the same interest rate (as at the time of deposit) for the entire duration of the deposit. PPF interest income and withdrawals are tax free while SCSS interest is taxable. So, if you have planned well and have a sizeable corpus in your PPF, PPF will give better results than SCSS ( for those whose taxable income is more than tax exemption limit).

PersonalFinancePlan Take

Senior Citizens Saving Scheme (SCSS) is a good product for senior citizens. It offers high interest rates and gets them tax deduction under Section 80C. You can stagger your investment across different years to get maximum benefit under Section 80C. Those who seek regular income from their investments can opt for this scheme. It is not suitable for those looking for growth as there is no element of compounding (Interest is paid out quarterly).

We have compared SCSS with other products which can be used to generate regular income in retirement. There is no clear cut best product. Choice will depend on an individual’s requirements and financial situation. SCSS offers better interest rates than all the products discussed. However, you can only deposit a maximum of Rs 15 lacs in SCSS account (Rs 30 lacs if your spouse also contributes maximum amount). This limits the regular income from SCSS deposits. Hence, you may have to use other income products, along with SCSS, to generate regular income you need during retirement.

We have put emphasis on regular income products after retirement. However, with the increase in life-expectancy, over reliance on income products may cause problems. Your income from these products will stay constant while your expenses will increase with inflation. You need a good mix of income and growth assets (that give benefit of compounding such as mutual funds, stocks, real estate etc) in your retirement portfolio. Growth assets will help you counter inflation. Exact allocation between your income and growth assets will depend on your financial risk profile. You may seek services of fee-only financial planner or a SEBI registered investment adviser to advise you in this matter.

Image Credit: TaxCredits[dot]net. Original image and information about usage rights can be downloaded from Flickr

223 thoughts on “Senior Citizens Savings Scheme”

  1. Sir, My friend 58 yrs old recently got retired from a PSU Mumbai .Within one month of retirement he deposited 15 L in SCSS with canara Bank. and he opened another SCSS a/c in post office with the knowledge of the Post Master of the particular post office . I pointed him the mistake committed and my friend immediately contacted post office to cancel the scheme.post master advised nothing will happen he can continue the scheme.post master clearly said that if you cancell it will attract 1.5% as penalty. we are looking for a professional advice in this regard

    1. Muraleedharan,
      With many post office schemes including PPF, this is a common issue. Due to lack of clarity of rules, people end up investing more. Even the post office staff is not well informed.
      For Senior Citizen savings schemes, the rules are quite clear. You can not deposit more than Rs 15 lacs. It is quite possible that you may never get caught. But if you get caught, there is no recourse. You will be returned principal amount after deducting any interest paid. Earlier, these things could go on due to lack of technology. Think that’s explains post master’s advice.
      However, with technology advancements, such loopholes can be easily plugged.
      I would advise to stay on the right side of law. Cancel the second deposit (and pay penalty).

      1. Sharat Deshpande

        There seems to be a lot of misconception about Post Office SCSS. Husband and wife can each invest 15 lacs, either individually or jointly with spouse. The first name in the case of joint account will be the account holder. A total of 30 lacs can be invested, with Husband being first name for 15 lacs, and wife being first name for the next 15 lacs

        1. Can husband n wife ( below 60 years)jointly open SCSC for another 15 lacs beside one already opened in the husband name ?

          1. Dear Sir,
            Minimum age for opening SCSS deposit is 60 years (barring a few exceptions).
            First holder is the investor. Therefore, age of first applicant is considered for maturity.

      2. Sir my wife is 59 years old now. She took VRS when she was 56 years old. As we were not aware of SCSS, she invested in FD. Can she now apply for SCSS as the retirement age for state govt is 58 years and she is already 59 years. I spoke to Bank officials and they say that she is eligible for opening SCSS account. But on going through the official website of govt , it states that those above 55 and who have taken vrs or retired on superannuation should open the SCSS account within one month of the receipt of retirement benefits.Kindly advise

    2. Biswanath Dawn, Kolkata,WB.

      Most of the post office employee as also Agents are not aware of the rules and policy of Post Office Products and as such public are getting trouble. Agents are not getting commission on SCSS and as such list interest to help for opening. So Post Office employee should inform the customer at the time of opening SCSS A/c. about its norms in details. But sorry they are not dong the same as result customers are getting trouble and being harassed. The concern person should not be penalized by way of fine which is quite good amount. Considering situation he may be excused.At this time after retirement it will be difficult to digest.

      1. Deepesh Raghaw

        Yes sir.
        Many of them are ill-trained or simply not concerned about the investor.
        And this issue is not just with SCSS schemes.
        Same can be said about most financial products.
        Unfortunately, what is very good for the agent is typically very bad for the investors (and vice-versa).
        So, investor beware.

    3. विजय कुमार सिंघल

      सर आप लिख कर दे कि आपके द्वारा जानकारी के अभाव दोनों जगह एक ही तरह के खाते खोले गये है| जो कि नियमनुसार गलत है| इसलिये आप एक अकाउंट बन्द करने कि कृपा करे| बैंक अकाउंट कि कॉपी साथ लगाये|इस प्रकार आप को केवल आप डिपाजिट धन आपको बिना किसी कटोती किए वापस मिलेगा| इसके लिये सबकुछ लिखित मे करना होगा| तभी यह सब संभव होगा| परन्तु हो जायेगा| ये एकदम निश्चित है|

    1. Dear Joseph,
      The tax benefit for SCSS is only for investment and not on interest income. Interest income is taxed as per your income tax slab.
      Extension does not count as fresh investment and hence there will be no tax benefit under Section 80C

        1. Deepesh Raghaw

          Dear Mr. Ghosh,
          This is my interpretation under Section 80C. No fresh deposit is being made.
          If you need better clarity, suggest you talk to a Chartered Accountant.

  2. Hi sir please tell me…if I want to invest in SCSS scheme…what will be the max amount to be deposit to not fall…under tax deduction…it’s saying interest not more than 10000 so please elaborate by such example…I have to invest 5 lacs so…it will come under tax deduction or not….

    1. Deepesh Raghaw

      It depends on whether you have any additional source of income and if you are availing any income tax benefits. For TDS deductions, you can always claim back while filing returns. You can also avoid by submitting Form 15G/H.
      You will get deduction for investment in SCSS under Section 80C.
      If you want to invest only Rs 5 lacs, then you don’t need to worry. There will be no tax implication.
      I assume you have no other source of income.

  3. If I want to invest upto 4.5 lacs in India post (MIS) Monthly income scheme ; should I fill up 15 G form in post office ! I know income is taxable under this scheme! ……. But will there be TDS ? if 15 G not filled up!

      1. But sir, I belong to Below 2.5 lacs income slab!………If TDS is Deducted in (MIS )monthly income scheme it won’t be a Good Option for me! ……as Banks FD rates are down ….I wanted to put money in MIS!……thanks

  4. Hi Sir, My Father has invested Rs. 15.00 Lacs in SCSS and Rs. 15.00 Lacs in FD for 3 years. After 3 years, Total Interest earned will be more than taxable income of Rs. 3.00 Lacs for him. Kindly guide if it will be beneficial to invest in products available under section 80C and others. Please also suggest the options of investment under Sec 80C, if possible.

    1. Hi Jitin,
      Do overdo saving taxes part.Do not invest merely to save taxes.
      You need to look at his financial requirements and take a call accordingly. Invest to meet his financial requirements and not just to save taxes. I don’t mind paying some extra income tax but I don’t want to invest in products I don’t need.
      Btw, there is a rebate of Rs 5,000 under Section 87A. So, essentially, he won’t pay any tax up to a total income of Rs 3.5 lacs.
      There will be TDS on his interest income but you will be able to claim it back while filing returns.
      There are many products under Section 80C.
      http://www.personalfinanceplan.in/taxes/how-to-save-income-tax-part-i-section-80c/

  5. T R CHANDRASEKARAN

    Today I understand that the Finance Minister has announced reduction of interest rate on SCSS from 9.35 to 8.6% wef 01.04.2016. From your write up I understand that for accounts opened already during 2015-2016 before 31.03.2016 the rate of 9.3% will be kept frozen till maturity. It is great relief to note your write up. Kindly confirm that for existing accounts the rate as existing on the date of opening will remain frozen till maturity

    1. Deepesh Raghaw

      Yes sir.
      It won’t change for existing SCSS deposits. You will continue to earn 9.3% on your deposits.
      SCSS deposits are like fixed deposits. You lock in the interest for the entire tenor of deposit.

        1. You can try 5 year tax-saving bank fixed deposit. SCSS is one of a kind though.
          Any specific requirements you have?

  6. Sir, in Post office saving schemes Govt says rates are market linked!……from 1 April 2016…… If I invest money Now in MIS monthly income before 31 March 2016 ……will I get 8.4% rate for the whole 5 year period? ……..or floating like PPF?

  7. Ashish Agrawal

    Yes, I am senior citizen age 62 years needs regular income approx Rs.25000/- minimum.I have invested in scss with full limit.Now need any other instrument like scss.

    1. Deepesh Raghaw

      Sir, no other instrument offers as high, guaranteed and risk-free interest rate as SCSS does.
      There are certain corporate fixed deposits which might claim to offer more.However, there is am element of risk involved.
      You can invest in Post office monthly income scheme (POMIS) before April 1, 2016. You will get good interest rate.8.4% pa.
      You can also consider investing in tax-free bonds if and when the next issue comes.
      Do note the frequency of interest payment is monthly only in POMIS. In SCSS, it is quarterly.
      It is typically annual or semi-annual in tax-free bonds.
      So, you need to consider this aspect too when you make the choice.
      If you have a PPF account, you can also use the PPF account as a pension tool.
      http://www.personalfinanceplan.in/opinion/how-to-use-ppf-account-as-a-pension-tool/

  8. Respected sir,I am sr citizen and have scss in post office with 3 lakh(extended for further 3 yr.till 2018) am I eligible to open another scss a/csingly in p.o/banks with each a/c limit of15 lakh or the total limit on my all bank/p.o scss a/c should not be more than 15lakh pls clear my doubt, since my spouse is no more.also can I open multiple scss a/c in p.o/banks with each limit of 15lakh

    1. Dear Abhijeet,
      The SCSS deposits cannot exceed Rs 15 lacs across the system.
      Please SCSS deposits are different from Senior Citizen fixed deposits.

  9. Dear Sir,

    I am a Senior citizen and need some clarifications regarding Senior citizen saving scheme as:

    1.Recently govt has reduced interest rates from 9.3 to 8.6 with effective from 01-April-16, please suggest if I made deposits before 31-March-16, what rates will be applicable for total 5 years tenure?

    2.If I submit 15-H, then no TDS shall deduct by bank?

      1. Thanks Sr,

        But as per RBI site Form 15 -H will be submitted by senior citizen ( above 65 age) only.

        Is it true?

  10. Sir, I have just now Extended PPF a/c for 5 years ; so during the fresh Financial year …..How many times can I Contribute in PPF? ….. 12 times a Year OR …..only Once a year ?

    1. You can contribute more than once. Maximum number of deposits per financial year is 12.
      Only single withdrawal can be made.

  11. Dear sir,(a) as there is no upper limit For investment in kvp,what should be the maximum amount one should invest in KVP to avoid 10% TDs(if applicable in future) on earned interest at the end of maturity of kvp.(b) how to invest 11lakh in KVP so that there will not be any TDs deductions on earned interest at the end of maturity of KVP so that we can get 22 lakh and not a single penny less(without any deductions) on maturity of KVP.(c) can scss scheme be continued till 5 yrs if sr.citizen in scss scheme (single a/c holder) dies in between, will his nominee get quarterly interest on his behalf.

    1. Deepesh Raghaw

      Dear Sanket,
      Interest on KVP is taxable. So, you have to pay tax on it.
      I am not too sure about whether TDS is applicable on KVP.
      Even if excess tax has been deducted, you can always claim it back at the time of filing returns.
      SCSS can’t be continued in the event of death of account holder.

  12. Dear Sir,

    I had 2 queries:
    1.I did investment in SCSS scheme on 28 March-16, shall I get quarterly interest paid on 31-March-2016 for 3 days or it will give me on next quarter 30-June including for 3 days.

    2.I did investment through Punjab national bank but they did not provide any certificate showing I invested in SCSS, please suggest what kind of proof shall I ask bank so I can claim I had invested in SCSS

    1. Deepesh Raghaw

      Dear Sir,
      1. Don’t worry you will get full interest. I am not aware of the exact operational procedure but you will get the interest amount. You can check this with the bank too.
      2. Ask them for deposit certificate. They will provide just like they do for fixed deposits.

  13. I have open a joint account under Scss of 15 lacs,now I want to open a joint account in name of my spouse for 15 lacs, do I get a benefit. As in my spouse joint account I am depositing the amount.

    Let me know that do I get benefit of 30 lacs in family account.

    Our age is 60 years

    1. Dear Sir,
      Under SCSS, the entire amount even in case of joint account is attributed to first holder only.
      As per Section 80C “(xxiii) in an account under the Senior Citizens Savings Scheme Rules, 2004;”
      I am not sure.
      However, as I understand, even contribution to joint account in SCSS (where spouse is the first holder) should be eligible for tax benefit under Section 80C.
      Request you to verify this with a tax expert.

      Btw, tax benefit for investment in SCSS comes under Section 80C. So, in any case, the maximum benefit is capped at Rs 1.5 lacs per financial year. You can put Rs 1.5 lacs in SCSS deposits every year.

  14. This is just to appreciate Deepesh for his clear understanding on fixed for entire tenure interest on scss rather than floating rate of interest mentioned by experts on many other forums. Thanks Deepesh for correctly guiding the senior citizens. Those who opened their scss accounts before 31 March 2016 stand to gain significantly for next 5 years. Extensions beyond 5 years would carry the then prevailing interest rates.

  15. Sir,
    My question is that if husband & wife is open an account joint with each other. Husband’s age is 60 years and wife’s age less than 60 years. Whether they can be eligible for 15 lakhs each in senior citizens scheme or not ?

    1. Deepesh Raghaw

      Dear Sir,
      Age of the first applicant is considered. Age of the second holder (spouse) is immaterial.
      Hence, you can open SCSS account with yourself as first holder and wife as second holder.
      Since your wife is not a senior citizen, you cannot open joint account with her as first holder.
      So, at the moment, only Rs 15 lacs for you.

  16. Dear Sir
    I have earned interest of Rs. 68465/- from IDBI bank thru SCSS and other instrument during fy 2015-16.

    I have earned interest on saving bank account from SBI bank 2388/-.

    I got pension is 674763/- in fy 2015-16.

    I want to know how income tax would be computed on Interest earned. will it be computed on amount ((68465-10000)+2388) or 68465/- only.

    Pl. guide.

    1. Dear Sir,
      Interest from SCSS is taxable. Pension is taxable.
      Savings bank interest is exempt upto Rs 10,000 under Section 80TTA.
      So, your taxable income is RS 68,465 + Rs 674,673 = Rs 7.43 lacs.

  17. I have deposits under SCSS and I am liable to pay tax. The interest credited to my Post Office savings a/c is after deduction of TDS. However, the amount of TDS is not reflected in my Post Office Savings account. How do I know how much TDS has been deducted. Please advise.

  18. Hello Sir,

    Is there any way by which I can track my SCSS account online, i had invested in scss through punjab national bank, but scss declaration is not reflecting in my net banking account.

    1. Deepesh Raghaw

      Talk to your bank about this. You should be able to access your SCSS account through net banking. It is just like a fixed deposit.

      1. I am seeing conflicting answers here on Question – Can I claim tax benefit under 80C if I extend for another 3 years? Here you are saying that tax benefit can be claimed, but on Joseph Bernard Vaz’s question above you said that it cannot be. Could you Please clarify.

        1. That is a mistake. As I understand, there is no tax benefit for extension of SCSS account.
          Only fresh investment is eligible for deduction under Section 80C.

    1. Deepesh Raghaw

      Yes, madam.
      You can open new SCSS deposit once your existing deposit matures.
      The limitation is that you cannot have more than Rs 15 lacs at any point of time.
      You can always close and open new deposits.

  19. Sir,
    I retired from defence. Can I invest my retirement benefit in post office under sinior citizen scheme. I retired on 31 Mar but got benefit on 15 Jul. Post master is telling that u would have invested withing 3 months after retirement.

    1. Deepesh Raghaw

      Dea Manish Sir,
      What is your age?
      As I understand, the restriction is 1 month from the date of receipt of benefit (and not retirement).

  20. Hello, My father retired on 29.02.16

    He is getting rs 14000 monthly as pension, invested rs 9 lacs(Joint account) in POMIS and receiving rs 5850(7.8%) monthly, Now he wants to invest another rs 16 lacs. How to invest this amount without crossing rs 3 lacs limit. He is considering to invest rs 7 lacs in SCSS and rest rs 9 lacs in LIC jeevan akshay vi plan for monthly/quarterly income. What is section 80C benefits. He gives 50000 as LIC premium annually. Please answer in simplest words because we are dumb in income tax matters.
    Thank you.

    1. Dear Abhishek,
      I assume he has invested RS 9 lacs in joint account in POMIS. He cannot invest more than Rs 4.5 lacs in individual accounts.
      http://www.personalfinanceplan.in/opinion/nothing-special-about-post-office-monthly-income-scheme/

      If you consider rebate of Rs 5,000 under Section 87A, he won’t have to pay any tax until his taxable income does not cross Rs 3.5 lacs (assuming total income does not exceed Rs 5 lacs).
      Since he is paying LIC premium of Rs 50,000, you can make it Rs 4 lacs. Hence, he does not have to pay tax unless he earns more than Rs 4 lacs per financial year.
      Even if you invest the maximum Rs 15 lacs in SCSS, the resulting total income (pension, POMIS interest and SCSS) won’t breach Rs 4 lacs.
      Investment in SCSS also gets you tax benefit under Section 80C.
      Both SCSS and Jeevan Akshay provide regular income. You need to see if your father needs any additional regular. He is already earning Rs ~ 20,000 per month.
      There are ways to design a better tax efficient structure through debt mutual funds if he does not need regular income. You can get additional tax benefits too. However, your father has to be comfortable investing in mutual funds.
      Suggest you start reading up a few personal finance blogs, personal finance sections in newspapers on a regular basis.Your comfort with investment planning will improve.

      1. Thank you for the clarification. But SBI branch manager said that investing in SCSS or Jeevan Akshay will give us benefit under section 80c for only 1 year not upto maturity. Also manager said that to get benefit under 87A we have to invest in National Pension Scheme. Please reply.

        1. Deepesh Raghaw

          Benefit under Section 80C or 80CCC is only in the year of investment.If you want benefit in the coming years, you will have to stagger your investment.
          The manager is not correct about NPS. Benefit for NPS is defined under Section 80CCD. Section 87A is different.
          You don’t have to do anything to get benefit under Section 87A.

  21. I’m 28 year old, I’m planning to open. Scss account for my father who crossed 60 years, will I get tax benifit under 80c for saving under dependent name?
    Thanks in advance!!

    1. Hi Sunil,
      Tax benefit for SCSS is only for investment in own SCSS account.
      You can’t take tax benefit by investing in SCSS account of your parents.

  22. sir i got retired from.defence on 31 jul 16. i got terminal benefits 16 lakhs on 04 aug 16 & rest 11 lakhs on 01 sep 16. can i invest 15 lakhs in SCSS Scheme. as i think we had to deposit amount after 01 month of retirement. plz clarify my doubt

    1. Dear Pardeep sir,
      I assume you are less than 60.
      As I understand, it should be within 1 month of receipt of funds.
      Hence, you must be able to invest Rs 11 lacs.
      SCSS rules state the following “within one month of the date of receipt of the retirement benefits and proof of date of disbursal of such retirement benefit(s) alongwith a certificate from the employer indicating the fact of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer is attached with the application form in Form-A
      Hence, you shouldn’t be able to invest anything out of Rs 16 lacs.
      Why don’t you check this with the bank/post office?

    1. Dear Rohit,
      Interest income on SCSS is NOT eligible for tax benefit under Section 80TTA. Only interest on savings account qualifies for it.
      Interest is paid out to you and is not reinvested.Hence SCSS interest is not eligible for tax benefit under Section 80C either.

  23. SCSS 2nd account of Rs.15 lakhs. Is this permitted to open second account in the name of once wife for Rs.15 lakhs out of once’s retirement proceeds when first SCSS account is already available in once own(Husband’s) name for Rs.15 lakhs.

    If above is permitted than who will be liable to pay tax from the income so received/file tax return.

    Please advice.

    Thanks and Regards

    1. Dear Sir,
      As I understand, you have already invested Rs 15 lacs in SCSS in your name.
      If your wife is above 60, you can invest in her name too.
      You will have to pay tax on the interest income from your wife’s account.

  24. Thanks for your quick & pointed response on SCSS account. In continuation to the above question, I would like to state that my first account is with my wife as a joint holder of the account and I intend to open second account in the her name with me as joint holder. I think in this situation also answer remains unchanged.

    Further I may convey both of us are Senior Citizens.

    Thanks & Regards

    V.K.Narang

    1. Dear Sir,
      Fortunately, the answer does not change.
      The entire amount is attributed to the first holder.

      If you liked the post, please do share with friends and family and on your social media pages.

  25. Hello Deepeshji,
    I wish to invest in the SCSS for my wife (housewife) who will be turning 60 this month.I contacted Bank of Maharashtra in Aliganj and was advised to find a “Designated Branch” of the bank. Can you please advise any Bank branch in Alinganj have this facility??
    Thanks & regards
    Sunil Prasad

  26. Dear Deepeshji,
    I made one time investment of Rs 15 lakh in SCSS in 2016-17 , whether I can claim tax benefit under 80 c for the next 5 years . Please clarify.

  27. Dear Deepeshji,
    Thank you very much for your instant reply. You may please suggest since I have deposited Rs 15 lakh in one go under SCSS ,what are the possible ways to avail tax benefits by modifying the deposit which is already made.

    1. Dear Sir,
      You can’t modify the deposit once you have made.
      You can only close it prematurely. Premature closure will entail penalty.
      Please refer to Premature Closure/Withdrawal section in the post.

  28. Thank you very for your valuable advice. Please suggest whether I can opt additionally banks 5 year FD to avail 80c for the remaining years.

  29. My father retires in sep and invested 12 lakh in scss in nov.quarterly ist interest will be credited in January..
    So if he deposits 15 H form then his others income (salary/pension) calculate from April 2016 to March 2017? Also in 15H form interest income will be showed for how many months… (e.g-interest 25000 quarterly but in 15H declaration should he declared for only one month or for 25000*4=100000?

  30. I have been looking for the link as I got it from my officer in Army.
    I retired on 31 May 2016 and wanted to apply for the scheme but my my post office has no knowledge about the scheme…how I can go for it .
    With regards
    COL R K SHARMA

    1. Surprising. Try with the some other post office or head post office. You can also visit bank branches for the same. Do note many smaller branches may not be aware.

  31. I have opened 2 SCSS deposits with SBI ,with the same CIF NO .I submitted Form 15 H while opening the First deposit,and when I opened the second deposit subsequently I did not submit the Form 15 H,assuming that the Form 15H submitted previously will cover this deposit also,as is the case with Bank fd’s.Now the bank says you have to submit Form 15 H for each and every deposit separately,and asking me to claim refund for the TDS deducted with respect to the second deposit.Please clarify

    1. Dear Sir,
      As I understand, you need to submit just once per bank (and not per deposit). Please check with your bank. You can also talk to a CA.

  32. SIR,
    tHE WORDING OF INTERST OF 8.6% COMPOUNDED ANNUALLY IS NOT VERY CLEAR INVESTMENT SPREAD OVER 5 YEARS SHOUL EARN MORE THAN1.29 LAKHS INDICATED.PERIODICAL PAYMENT ON QUATERLY BASIS NEED NOT AFFECT COMPOUNDING.COULD U PLAESE CLARIFY

  33. Sir,

    I have visited ICICI bank branch for opening scss for my mother, over there the BM told that interest rate on scss are on floating basis, means if u deposit today and after march if interest rate reduces, you will be paid by the reduced interest rate.

    Please clarify..

    Also is it good to open scss with private bank (ICICI) or should I go with government banks?

    1. Dear Dev,
      SCSS rates are not floating. You get the same rate (as at the time of opening SCSS deposit) for five years.
      You will get the same rate everywhere. Hence, does not make much difference.

  34. My wife retired from service in november end. Out of her retiral benefits Invested Rs.15 lacs in SCSS with Post office in joint name .in her name first and mine second name. Again invested Rs.15 lacs in joint account as my Name first and her name second .(under same CIF ID) as suggested by post office .Kindly advice who should give the form 15H
    -by my wife for both the Investments- or separately by each one.How the interest income is treated for 30 lacks investment.Can she file the Tax return for all the interest earned on 30 lacs as the investment is from her retrial benefit or separatly by each one.( But Rs.15lacs is not my earned income ) Kindly advice.

    1. I will give an opinion but suggest consult a Chartered Accountant before taking any decision.
      Suggest you both deposit Form 15H. Clubbing of income should apply (since your wife is the source of money).

  35. i have invested 500000 plus 500000 in my father name who is a senior citizen in the same financial year.

    i believe all the amount is eligible for tax deduction
    mean to say i do not have to worry abt tax treatment of this all amount

      1. SIR PLEASE GO THROUGH MY POSE AGAIN

        I WANT TO SAY HOW DO WILL I SHOW THE 1000000 IN THE INCOME TAX RETURN OF MY FATHER AS I HAVE MADE ALL 1000000 AT ONCE

        1. Rs 10 lacs in not your income. If you have gifted to your father, show it as a gift. There is no income tax for gift from kids to parents.
          Suggest you contact a Chartered Accountant for filing returns. He/she will guide you better.

  36. pratik sengupta

    Respected Sir,
    i have four queries to you.
    1)I opened a SCSS a/c with SBI for my recently retired father(60)of 15 lakh.my question is that after 8 years (with 3 years extension)of completion of period is he able to reinvest once more for next 5 years or it must be once in life?
    2)as per SCSS a/c with SBI,they issued a separate passbook with regards.they said quarterly interest credit to my passbook on time.So,my question is that they are not given any certificates similar like FD but given a scss a/c passbook,so it there any problem ?
    3)on particular which date given interest of scss a/c is it like 31st march or 1st april?
    4)my maternal aunt opened a jeevan akshay 6 plan with nominees with my mother & me.Therefore,my question is in which way LICI giving purchase price to two nominees ?

    3)

  37. Pratik sengupta

    Is SCSS a/c 15 lakh growth interest maximum upto 8 years for life for once or it can be renewal same as after end of the scheme ???

      1. sir, after 8 years can we invest 15 lakhs in a fresh account(not extend) for 5 years as the post office incharge said it is possible.but you say it it cant be done. can we again invest 15 lakhs in a fresh scss account after 8years is completed.if clarity is provided,it will be much appreciated,thanks-amrita

        1. After 8 years, SCSS deposit (I assume you had one deposit of 15 lacs) will automatically be closed (as it can’t be extended further).
          Subsequently, you can open a new SCSS deposit.

  38. shashank srivastava

    Dear Sir,

    Can I have multiple SCSS accounts and adjust 15 lacs in it.For example 7.5 lacs in SBI’s SCSS and 7.5 lacs in BOB Scss

  39. Sir

    I have fathers account in Senior Citizen Saving Scheme since 2015

    Made deposit in that account on 1/4/2015 for 50000
    1/5/15 for 50000
    1/6/15 for 50000
    Total Balance = 150000
    Can I withdraw Rs 50000 from the account??
    Please advise sir as I am in urgent need of money

  40. Sir

    I have fathers account in Senior Citizen Saving Scheme since 2015

    Made deposit in that account on 1/4/2015 for 50000
    1/5/15 for 50000
    1/6/15 for 50000
    Total Balance = 150000
    Can I withdraw Rs 50000 from the account?? Is part withdral permitted
    Please advise sir as I am in urgent need of money
    What would be penal interest?
    Is there any kind of restrictions on withdrawal like in PPF you can withdraw only once a year.
    Could I withdraw balance 100000 in coming months if required

    1. Part withdrawal is NOT permitted. You have to withdraw full amount.
      However , as far as I understood from the article, you cannot make multiple deposits in the same account. So, your separate deposits must have created separate SCSS accounts.
      So you can close one of these accounts prematurely for the 50000 you need. Penalty @ 1% would be payable if you close the 1/4/2015 account AFTER 1/4/2017. Before 2 years, penalty would be @ 1.5%.
      Also “Please note that in case of premature closure of the SCSS account, tax benefits claimed under Section 80C will be reversed. Therefore, in case of closure before 5 years, the deposit amount (up to Rs 1.5 lacs), along with accrued interest, shall be added to the income of the depositor and taxed accordingly.”

    2. Deepesh Raghaw

      Dear Kunal,
      Partial withdrawal is not permitted.
      Details about penal interest are provided in the post.
      Please note every SCSS deposit is a different account (just like a fixed deposit).
      So, you can break just one for your requirement. No need to break all three.

  41. I have a question regarding my mother’s tax for the Assessment year 2016-17 which closing on March 31, 2017.
    My mother’s income for AY2016-17 is over 3L, which indicates she may owe taxes when she files her return for AY 2016-17. She is a Senior citizen, 78 years old. She has never filed a tax return, as her income was always under the taxable limit. Her main source of income is family pension, she has been receiving this since Sept 2015 after my father’s death. This year she received pension arrears (7th pay commission pension hike for pre-2016 reirees paid by Central Govt) of about 1.2L which essentially put her over the limit. In addition to this due to lack of documentation her 2 months worth of pension that was to be paid in AY2015-2016 got credited in AY 2016-17, which also resulted in higher income in AY 2016-17. I have a couple of questions:
    1. If she has to avoid paying tax over the 3L, what options does she have? I came across Senior Citizen Savings Scheme, where she could deposit some amount to bring her income under 3L. If she chooses this option, when does she have to open the Senior Citizen Savings Scheme account ? Does it have to be done before March 31, 2017 with the amount in excess of 3L deposited in it to reduce any tax liability?
    2. I read that she may not have to pay tax on the arrears she received by filing Form 10E. Is this true? Basically had my dad been alive, he would have gotten the arrears. Instead she is getting it, so I am assuming she will get the benefit of tax exemption for the arrears by filing 10E.
    3. Any other good options considering her age. I am sure she will never come under the tax bracket considering she will soon move to super senior citizen category. We are looking at this situation only for this assessment year.

    Thanks a lot for all your help.

    1. SCSS account has to be opened in the financial year in which you want to get tax relief.
      Difficult for me to comment without knowing financial requirements.
      As I understand, Form 10E has to be filed. Please contact a good CA for the same.

  42. Hi,

    I would like to know how can the tax be saved if I am sending (lets say 25000) monthly to my parents. Please suggest.

    1. Deepesh Raghaw

      Hi Saurabh,
      Gifts to parents are not taxed. Your parents do not have to pay any tax on the amount received from you.

  43. Dear Sir,
    My age is 60years. If I deposit Rs1000000 in SCSS now after five year how much money I will get return back and us 80c how much money is tax free. I am getting pension Rs.19000 pm.
    Thanking You,
    Ajit Kar.

    1. Deepesh Raghaw

      Dear Sir,
      SCSS provides quarterly interest income. The interest income is taxable at your slab rate.
      At maturity, you will get principal amount back.

  44. Gopaldas.g.shsh

    During current month i have deposited rs.15lacs under scss for 5yrs.How much incomtax deduction can i claim every year. Iam retired central govt. Pensioner. pl.clarify.

  45. Hemant Dujari

    Hello Sir

    My father has invested 30 lakhs in Senior Citizen Savings Scheme due to incorrect advice by Canara Bank. Now he has asked them to close the account and not revert the interest payments. However bank asserts that interest payments would be revoked.

    Can we file a case against them in consumer court since the amount was invested based on their advice and they showed us incorrect circular.

    Regards

    1. Deepesh Raghaw

      Hi Hemant,
      How much interest do you have to forgo?
      I think you can do that.
      There is no way you can get interest for the excess amount under SCSS.
      However, you can ask for Canara Bank to reimburse the loss of interest due to their employee’s mistake.

      Before that, you can also escalate to CMD, Canara. Mark an e-mail to him/her. Do mention that a senior citizen has suffered because of the incorrect advice from concerned official.

  46. Hi

    I am having joint account with my father , planing to invest my father money from his joint account to SCSS , can I sign cheque and open this account . He will be only getting interest in same joint account

    Or his sign cheque can only open account

  47. In scsc what is the age for a female to qualify. Is 60 or 58 yes?
    My friend is a senior citizen. His income is much below 3 lac. He does not pay any income tax. However he has some mutual fund of debt funds. After he has the liability of tax after indexation. But still his income is beyond 3 lac. Will he have to pay tax?

  48. If husband and wife,both above 60 years invest Rs 15 lakh each under SCSS.What would happen to interest after death of one of them Will it continue or limit of 15 lakh will apply now

    1. Deepesh Raghaw

      Hmmm…As I understand, the account will have to be closed in such a case. This is based on my understanding of Section 8(3) of SCSS Rules.

  49. I opened SCSS account in post office for 10 lakhs and now opened another SCSS account in BOI for 15 lakhs…
    As I was not aware of 15 lakhs ceiling limit in SCSS … kindly advice me to what to do for the this current dilemma …

      1. Sir, actually as per the rules I can only close my account only after completion of 1 year with penalty.

        Can I inform the bank to take the action from there side as per the Rule no 12: of SCSS rules 2004 ( i.e. Account opened in contravention of rules)

        1. Deepesh Raghaw

          That’s the problem.
          A bigger problem is that bank officials won’t know anything about these rules.
          They will most likely ask you to wait for 1 year and then exit.
          You can take this approach. Nothing wrong in trying though.

          1. I APPROACHED TO THE BANK AND REQUESTED THEM TO TRANSFER THE EXCESS DEPOSIT FROM THE SCSS ACCOUNT…. AS PER RULE NO. 4,(4) ON DATED 20-07-2017. BUT TILL DATE THEY HAVE NOT TAKEN ANY ACTION.

            FOR THE ABOVE DELAY IN TRANSFER OF EXCESS DEPOSIT, CAN I CLAIM FOR THE INTEREST FOR THIS PERIOD?

          2. Dear Sir,
            In my opinion, Better to get money out than focus on getting interest income.
            I am not sure if you will earn additional interest. The excess amount is not supposed to earn any interest.

          3. Sir,
            Will i get interest @ applicable to Saving account or FD on excess deposit? Ref: sub rule (7) of rule 7. Because bank will not give any extra interest on SCSS excess deposit. Are they going to do calculation as per normal rate?

          4. Dear Sir,
            Yes, as per 7(7) of SCSS rule, you will get savings account interest on the excess amount.
            Just a point to note, any excess interest paid to you will be adjusted against this amount.

  50. Hello Sir
    Can u pls clarify the foll?
    1. ‘To get max benefit from SCSS one can invest 1.5 l every year for 5 year’. If we invest 1.5 l can we claim a rebate of 1.5 l when we file the returns?

  51. Hello again

    That is if we invest 1.5lakhs we can claim a deduction of 1.5l . If we invest 2 l we can still only claim 1.5l is that correct?

  52. What SCSS rule 2004 says….? Serial no. 4 (4)

    4. Deposits and withdrawals :-
    (4) A deposit office shall, as soon as it comes to the notice that a deposit exceeds the ceiling prescribed
    under sub-rule (1), request the depositor in writing, to withdraw the excess deposit immediately.

    Will this apply for the reason to close the account opened within one year or will the deposit office withdraw the excess deposit ….. ? Kindly clarify

    1. Thanks for pointing out, Abhisek.
      It will apply. Guess that is a simple way out.
      However, it is not easy to convince bank branch officials.

  53. Dear Raghaw,
    I got retired at the age of 60 on 31st,Dec2009. Opened SCSS a/c for 15 Lakh just after retirement and closed it prematurely after 2 years after paying penalty and invested money in Bank FD.
    Can now i invest in SCSS at the age of 67-68.I got retired from Central PUC. and do not have regular income from pension. Please advise.

    1. Deepesh Raghaw

      Dear Sir,
      You can open a new SCSS deposit. There is no problem.
      I assume you do not have other SCSS deposits (at present).

  54. i opened scss with post office for 10 lacs in jan 2017. due to miscommunication, i again opened scss for rs. 1500000. now, i informed to sbi staff to cancel my account . they are not respond ing and telling that it can not be closed before 1 yr. pl. advise what action should be taken.

    1. Dear Sir,
      Please refer to Mr. Patra comments in this post.
      He has tried to invoke clause 4(4)of SCSS rules to get his excess out.
      No success yet but something worth trying.

  55. dear sir,

    request you to please give me SCSS department contact details.
    Which regulatory body is governing SCSS?
    And to whom we can register complains. Post office is not listening to my complains

    thanks.

  56. Hi Deepesh,

    I am Sridhar. My father is 69 years and he wants to open SCSS in post office. Please clarify, whether the SCSS account can be opened in any post office?? If yes, please let me know the documents requried for opening the SCSS account in the post office.

    1. I think you can open in any post office.
      The documents should be same as required to open a bank account.

  57. Mr Deepesh,
    Myself and my wife are opting for VRS. As per SCSS, a VRS optee above the age of 55 yrs can open an account. under that I am eligible, and my wife is not yet 55. Under the circumstances, can I open two joint accounts like as below
    one has me as the primary holder and my wife is joint for Rs 15,00,000
    the other with my wife as the primary holder and me as the joint for Rs 15,00,000

    1. Dear Sir,
      As I understand, even under VRS, the age has to be 55. The limit does not apply to defence personnel.
      To open SCSS account, the age of the first applicant is considered.
      So, you can open joint account with your wife as the second holder (not the other way round).
      Additionally, you need to meet a few more conditions before you can open the account.
      For instance, the account needs to be opened with 1 month of receipt of retiral benefits.
      Please go through the following document.
      http://dea.gov.in/sites/default/files/SeniorCSavingSch.pdf

      1. Thanks for your reply.
        I will go through the document suggested.
        that means, I can’t avail the full 30 lacs that was possible till she turns 60….

  58. V .A.. Bhagawat.

    After 8years can we continue scss 2004 accounts, further like ppf accounts asking for extentions at proper time?

    1. Dear Sir,
      You cannot extend the account beyond 8 years.
      However, you can open a new SCSS account for 5 years.

  59. Sir, i have invested 15 lakhs in SCSS 2004 scheme. one year is completed. I am having financial problem and need to do the premature closure. I had submitted 15H for no TDS. pls advise me how much money will be deducted and procedure for doing premature closure.
    Also please advise how much time it takes for money to get credited to my account.

    1. Dear Sir,
      Penalty is 1.5% of the principal amount. That will come to about Rs. 22,500.
      I am not sure but you should get the money quite soon, perhaps in a day or two.

    2. Sir, i have invested 15 lakhs in SCSS 2004 scheme. one year is completed. I am having financial problem and need to do the premature closure. I had submitted 15H for no TDS. pls advise me how much money will be deducted and procedure for doing premature closure.
      Also please advise how much time it takes for money to get credited to my account.

  60. Dear Sir,

    “SCSS rules state the following :

    “within one month of the date of receipt of the retirement benefits and proof of date of disbursal of such retirement benefit(s) alongwith a certificate from the employer indicating the fact of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer is attached with the application form in Form-A”

    1. My doubt is: If my retirement benefit is only 10 Lakh rupees, Can I open a SCSS account for 15 Lakh or I will be allowed only 10 Lakh deposit ?

      Thanks

  61. Hi Deep, I am an NRI and I am planning to setup a monthly income for my parents. FYI, They both are senior citizens and live in India.

    I am inclined more towards SCSS and PMVVY(3rd option being POMIS). Here are my questions

    Lets say we had invested max amount(30L) SCSS and 7.5L under PMVVY. I know that the interest part is taxable. What happens to the invested principal amount from SCSS? Will that be taxable at the time of maturity? (be it 5 years or 8years)?
    I am assuming that the invested amount under PMVVY is not taxable at the time of maturity? Please confirm
    Please also shed some light on POMIS invested amount.

    BTW, I am thinking of setting up a monthly income of around 20K for my parents for rest of their life.
    Do you think these options are good? Any other good alternate at this moment?

    Thank you so much and I appreciate all the work you do!! Quite helpful

    Regards
    Nagesh

    1. Hi Nagesh,
      You are welcome.
      These are good options.
      However, there are many aspects you must consider.
      1. SCSS is a 5 year product, PMVVY 10 years, POMIS 5 years, govt. bonds 7 years. Therefore, you are not locking in the interest rate for life. After 5-10 years, you will be subject to reinvestment risk i.e. the interest rate at the time may be much lower.
      For info about POMIS, please go through the following post.
      https://www.personalfinanceplan.in/opinion/nothing-special-about-post-office-monthly-income-scheme/
      2. Rs 20,000 may be enough today. Inflation will decrease its value.
      3. Expect for Govt. bonds, there is a cap on how much you can invest. SCSS: 15 lacs (30 lacs if you include your mother too), PMVVY (7.5 lacs) and POMIS 4.5 lacs (9 lacs if you include mother too).
      You can consider FDs for senior citizens too.
      If the parents are quite old, some portion may go to annuities too.
      https://www.personalfinanceplan.in/opinion/best-ways-to-generate-regular-income-during-retirement/

      1. OK Thank you! I am planning to build house(s) and start using the rental income as the major monthly income source (just to beat the inflation). I am hoping to complete this in 2-3 Years which is why i was looking for some short term MIPs.
        Would you mind shedding some light on principal amount that will go into my parents SCSS or PMVVY or POMIS?

        How will it be treated while filing the taxes? They do not have much income right now. Merely 50K.

        Do they have to show income proof in PO at the time of enrolling? Will they accept if they say “we got it from our son’? Can I issue a Cheque for the principal amount?

        I am not sure if the amount would become taxable for my parents if I transfer them.

        Please clarify.

        1. Hi Nagesh,
          The principal amount is not taxed in SCSS or PMVVY or POMIS.
          Only the interest income is taxed.
          Post office will not ask for proof. Income Tax assessing officer may ask for income proof from parents in case the case comes up for scrutiny.
          To avoid any confusion, you can gift the money to them (money gets into their savings bank account) and then they can open SCSS deposit.
          Better to have a gift deed since the amount involved is big. Do not issue cheque from your account directly.
          Gift (or any transfer) from son to parents is not taxable. So, don’t worry about it.

          About the house (since you are funding the construction) and they may own the house, it is better to have proper documentation. Otherwise, it may attract provisions of Benami Property Transactions Act. Better if you are a joint owner in the property.

  62. Can the FD in Joint nominee be transformed in the name of the Joint holder if the 1st Nominee person expires before maturity

  63. Can the FD in Joint name be transferred in the name of 2nd joint holder if the 1st name person expires before maturity of FD.

  64. DEAR SIR, TO Sridharan”s question you have said that once his wife attains age of 60 , he can open two SCSS accounts for 15 lakhs each from his own retirement benefits, one account jointly with his name first and the other with his wife name as first. In this case will he not exceed the ceiling of 15 lakhs ?

    1. Dear Sir,
      In case of SCSS, the investment is counted against the first holder.
      Therefore, if the investment is made with the wife as the first holder, it will be counted against her name.
      Hence, the limit of Rs 15 lacs will not be breached.

  65. Also , after I have opened a SCSS IN POST OFFICE FOR 15 LAKHS , can I make a further deposit in Tamil nadu power finance for 5 lakhs for senior citizens ? Will i exceed the 15 lakhs limit ?

  66. In case of a joint account opened under the Rules of SCSS , if the first holder expires before maturity , can the spouse who is not a senior citizen at the time of death , continue to hold the account under SCSS? As per the proviso to Rule 8 , the spouse can continue the account under the same terms and conditions as specified in the Rules . Please clarify.

    1. Deepesh Raghaw

      Dear Sir,
      I went through the said rules and provisions.
      My understanding is that if the spouse is not a senior citizen, he/she wouldn’t be allowed to continue the SCSS account.

  67. K Raghunatha Reddy

    Dear Sir,
    I have opened SCSS Account for 5 Lakh in Jan 2018 and balance 10 Lakh another account in April 2018 on my name . Now my age is 74 years. Nominee is my wife aged 68 years and she is a house wife.
    Now kindly clarify me weather I can open another account on jointly with first name as my wise (house wife ) for RS 15 Lakh during next Financial year. Will it be in order wrt. SCSS or any violation
    Kind regards
    K Raghunathareddy

    1. Deepesh Raghaw

      Dear Sir,
      In SCSS, the entire amount is attributed to the first holder.
      So, you can open SCSS deposits jointly (your wife must be the first holder).

  68. Of late I have been reading Finance websites and blogs and none is as clearly written and well explained as yours. Kudos and thanks!!
    My SCSS has just completed 5 years. I feel it would be better to close it and start afresh for 5 years ( thus blocking my interest rate at that rate ) rather than extend for 3 years. I am assuming that going forward the interest rate is going to go down so why not lock for 3 years at present rate rather than just 3 years.. Is my thinking correct?
    Thanks and regards,
    Madhu

    1. Thank you Madhu ma’am!!!
      If your premise is correct, then your thinking is correct too.
      Just that it is not very easy to predict how the rates will move in the coming years.

  69. Tushar Kanti Karmakar

    Dear Sir,
    I have already opened scss in my name,now can I joint my spouse.Please let me know.

    With regards.
    T K Karmakar

  70. I opened account in bank scss scheme. In 2015,i have not taken benefit of 80c in that year .in 2018 i am very need of money threrfore withdraw amount prematurily. Can principle amount is taxable.

  71. Sir
    Recent I retired from my service attending 60 years of age. Now I want to invest in Senior Citizens Saving Scheme in yearly manner I.e. Rs. 1,50,000 per year so that I can take benefit of 80c yearly. Is it possible?

    1. Deepesh Raghaw

      Yes sir. You can invest Rs 1.5 lacs per annum.
      Please understand you can put only Rs 15 lacs in SCSS and the account matures in 5 years.
      if you plan to do Section 80C planning only through SCSS, you can put Rs 9 lacs in the first year and Rs 1.5 lacs in the subsequent 4 years.
      After 5th year, once deposit will mature every year. You can use the money to make fresh investment.

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