Kolkata: Senior citizens is the financially most vulnerable community in any soceity. The reason: their income has stopped but their expenses have not. With the equity market wobbling amid a rise in geo-political uncertainty, the attention of many general investors is now swivelling to guaranteed-return instruments. Many senior citizens also opt for bank FDs and corporate FDs, with the latter bearing less security than the former. The quest for safety of capital is all the more applicable in case of senior citizens, most of whom depend on interest income from a fixed pool of capital to take care of their post-retirement expenses. It is for this especially vulnerable community that the SCSS, or Senior Citizen Savings Scheme was designed. One can invest a maximum of Rs 30 lakh in such an SCSS account. The interest paid on SCSS is 8.2% now and is the highest among all instruments that carry a sovereign guarantee. One can invest anywhere between Rs 1,000 and Rs 30 lakh for a period of five years. The term can be extended to eight years.
How is SCSS interest paid
According to rules, the interest on SCSS is not paid monthly. The interest is paid once every quarter. It is paid directly to the savings account linked to the SCSS account holder on the first working day of April, July, October and January. The interest is compounded annually. In this way, the interest on SCSS generates a regular source of cash flow which can take care of a part of the retirement needs of an individual.
Documents needed to open an SCSS account
The documents needed to open an SCSS account are the same that are needed to open a small savings account in post office. These are a document to prove your address such as Aadhaar, Voter ID card, Ration Card, Passport. It has to be self-attested. Copies of passport-size latest photo and age proofs will be required too and Aadhaar, PAN Card, Voter ID or Senior Citizen Card can be furnished to the post office or bank. A form has to be filled up to open an account.
Tax benefits offered by Senior Citizen Savings Scheme
If a senior citizens is in the old tax regime, he/she can claim the amount deposited in the SCSS as deduction under section 123 of the Income Tax Act, 2025. It qualified under the Section 80C of the old Income Tax Act. However, the point to note is that if the total interest in SCSS account is more than Rs 1 lakh a year, tax will be deducted at source, which can be reconciled while filing income tax return.