SBI Senior Citizen Savings Scheme

What is SBI Senior Citizen Savings Scheme (SCSS)?

The SBI Senior Citizen Savings Scheme (SCSS) is a savings scheme backed by the Government of India, which is specifically designed for senior citizens in India. The State Bank of India (SBI) offers this best investment option to provide senior citizens with a regular source of income and financial security during their retirement years.

Features of SBI Senior Citizen Savings Scheme (SCSS):

Some key features of the SBI Senior Citizen Savings Scheme (SCSS) are as follows:

NOTE: Non Resident Indians (NRI), Overseas Citizens of India (OCI), Persons of Indian Origin (PIOs), and Hindu Undivided Family (HUF) are not eligible to subscribe to the Senior Citizen Savings Scheme (SCSS).

Interest Rate of SBI Senior Citizen Savings Scheme

Senior Citizen Savings Scheme SBI interest rates are declared by the government of India in advance before every quarter. The applicable interest rate as of 1st April 2024 is 8.20% p.a., which was declared for the quarter from 1st April 2023 to 31st March 2024. 

The current SCSS interest rate of SBI will be applicable for the entire lock-in period of 5 years. The Senior Citizen Savings Scheme SBI interest rate is payable every quarter.

List of SCSS Interest Rates in Previous Quarters

Eligibility Criteria for Senior Citizen Saving Scheme SBI

To avail of the benefits of the SBI Senior Citizen Scheme, you have to meet the following eligibility criteria:

• Age: The minimum age limit is generally 60 years. However, there are exceptions:

  • Individuals who are 55 years or older but below 60 years and have retired under VRS (Voluntary Retirement Scheme) or superannuation are eligible.

  • Retired defence personnel can participate if they are between 50 and 60 years old.

• Residency: You must be an Indian resident citizen.

• Account Type: You can open a single account or a joint account with your spouse. Only the first account holder's age is considered for eligibility in a joint account.

• Other Restrictions: Non-Resident Indians (NRIs) and members of Hindu Undivided Families (HUFs) are not eligible.

Comparison Between

Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund

Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund

Guaranteed Return Plans

Returns Before Tax

7.5% ^(TAX-FREE)

Returns After Tax

7.5%

Guaranteed Returns

Yes

Life Cover

Yes

Tax on Profit

Tax Free*

Risk

No Risk

Still Better than FD’s and Debt Mutual Fund

Fixed Deposits

Returns Before Tax

7% ^(TAXABLE)

Returns After Tax

4.8%

Guaranteed Returns

Yes

Life Cover

No

Tax on Profit

Taxable

Risk

Low Risk

Debt Mutual Fund

Returns Before Tax

8% ^(TAXABLE)

Returns After Tax

5.5%

Guaranteed Returns

No

Life Cover

No

Tax on Profit

Taxable

Risk

High Risk

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*For annual premium upto ₹5 Lacs

Documents Required to Open an SBI SCSS Account

An account in the Senior Citizen Savings Scheme by SBI can be opened in any of the branches of the State Bank of India. One has to provide the following documents for opening an SBI SCSS account:

• Form A (Application form, which you can download from the SBI website)

• Know Your Customer (KYC) Documents:

  • Proof of Identity (POI): PAN Card/Passport/Voter ID Card/Aadhaar Card.

  • Proof of Address (POA): Aadhaar Card/Ration Card/Passport/Utility Bills (like electricity bill or telephone bill) not older than 3 months, or Bank Account Statement.

  • Proof of Age (POAge): Birth Certificate/Passport/Voter ID Card/PAN card/Driving License.

• One Passport-Sized Photograph

Taxability of SBI Senior Citizen Savings Scheme:

• You can avail of tax benefits under Section 80C of the IT Act, 1961, of up to Rs. 1.5 Lakhs under the SBI Senior Citizen Saving Scheme.

• The interest you can earn from your SCSS account is completely taxable. 

• If the interest earned through this scheme in one financial year is more than Rs. 50,000, then it will attract Tax Deduction at Source (TDS).

Rules for SBI SCSS

The SBI Senior Citizens Savings Scheme (SCSS) is a popular investment option for senior citizens due to its attractive interest rates and tax benefits. To help you manage your SCSS account effectively, here are 13 important rules:

• Age Criteria: To open an SCSS account, you must be at least 60 years old. However, if you've opted for voluntary retirement, you can invest if you're 55 years old.

• Joint Accounts: You can open multiple SCSS accounts under joint holding, but the joint account holder must be your spouse.

• Deposit Limits: Deposits can be made only once and cannot exceed Rs. 15 lakhs. The minimum deposit is Rs. 1,000 in multiples of Rs. 1,000.

• Interest Payment: Interest for the first year is paid on March 31st, September 30th, and December 31st. For subsequent years, it's paid quarterly on March 31st, June 30th, September 30th, and December 31st.

• Maturity: The SCSS account matures in 5 years. You can either claim the amount or extend it for another 3 years by submitting a specific application form.

• Payment Modes: For deposits below Rs. 1 lakh, cash payment is allowed. For amounts exceeding Rs. 1 lakh, you can pay by cheque or demand draft.

• Account Transfer: Transferring your SCSS account between post offices or banks is quick and simple.

• Nominee: You can add a nominee while opening the account or later.

• Premature Closure: You can withdraw money before maturity after one year. A penalty of 1.5% applies for closure within the first two years and 1% thereafter.

• Joint Account Ownership: In a joint account, the primary holder is considered the investor, and the secondary holder is a stakeholder.

• TDS: If annual interest income exceeds Rs. 10,000, tax deducted at source (TDS) will apply. You need to file for excess TDS.

• Interest Credit: Interest earned is auto-credited to your savings bank account with the same bank or post office.

• Tax Deduction: You can claim tax benefits on SCSS investments up to Rs. 1.5 lakhs. Any amount exceeding this limit is taxable. This rule applies to the total investment across multiple accounts.

Comparison Between Fixed Deposit and SBI Senior Citizen Savings Scheme (SCSS)

The State Bank of India has announced a special FD scheme for senior citizens. This scheme is different from the Senior Citizen Savings Scheme of SBI in many aspects, which are as follows:

*As of 15 August 2024

SBI Senior Citizen Savings Scheme Premature Closure

SBI's Senior Citizen Savings Scheme (SCSS) allows for premature closure, but there are penalties depending on how long you've held the account:

• Less than 1 year: If you close the account before one year, you'll forfeit any interest earned and it will be deducted from your principal amount.

• Between 1 and 2 years: A penalty of 1.5% of the deposit amount is charged.

• After 2 years but before 5 years: The penalty reduces to 1% of the deposit amount.

The Final Words!

The SBI Senior Citizen Savings Scheme offers a secure and beneficial avenue for senior citizens to invest their savings. With attractive interest rates and government backing, it provides financial stability and peace of mind to retirees.