Jigar M. Patel
International Tax Attorney
Eligibility for Investment in SCSS
Senior Citizen Savings Scheme (SCSS) permits investment for all individuals who have attained the age of 60 years or above. Moreover, as a special case, individuals in the age group 55 to 60 years, who have retired under a Voluntary Retirement Scheme (VRS), have also been permitted to invest in SCSS, subject to the condition that the deposit account is opened by them within a month of the date of their retirement and a certificate from their employer is attached in this regard.
Deposits under this scheme are required to be made with any Post Office in India or authorized Banks or Institutions. An eligible depositor can open one or more account, subject to the condition that the deposits in all the accounts taken together shall not exceed Rs.30 lakhs.
Effective Investment upto Rs.60 lakhs
A depositor can open this account either in his/her individual capacity or jointly with spouse. It is important to note that if the spouse of an individual is also a senior citizen, he/she can separately invest in his/her name within the maximum limit of Rs.30 lakhs. Thus, a senior citizen couple can effectively invest upto Rs.60 lakhs between both of them. The facility of nomination is available and the same can be changed or cancelled from time to time.
Interest on Deposit
SCSS currently yields interest at 8.20% per annum, payable every quarter ending June, September, December and March. This interest rate is reviewed and revised at the beginning of each quarter of the Financial Year and the applicable rate of interest at the time the deposit is placed can be effectively enjoyed during the tenure of the deposit.
Tenure and Premature Closure
The minimum tenure of the deposit is 5 years and the same can be extended for a further period of 3 years. While no withdrawal is permitted before the expiry of 5 years, however, premature closure of the account is allowed subject to specified conditions. In case of death of the depositor before maturity, the account can be closed, but if the spouse is a joint holder or nominee, he/she would have the option to continue the account until maturity.
Benefit of Deduction under Section 80C
Investment under this scheme within the overall limit of Rs.1.5 lakhs is treated as eligible for deduction from gross total income for taxpayers opting for the Old Tax Regime. However, where the benefit of deduction under Section 80C has been availed of, any premature withdrawal of the relevant amount of investment before the maturity period of 5 years, will attract tax in the year of withdrawal.
SCSS Interest eligible for Deduction under Section 80TTB
The interest received under SCSS is taxable. However, such interest being in the nature of interest on bank deposits, deduction of upto Rs. 50,000 can be claimed under Section 80TTB.
Form 15H for Non-Deduction of TDS
Deduction of tax at source at 10% is attracted in case of interest paid exceeding Rs.50,000. However, senior citizens not being required to pay any tax on their Total Income, even upto Rs.7 lakhs, considering the benefit of tax rebate under section 87A, can avail the benefit of non-deduction by timely submission of Form 15H to the concerned bank or post office.
