Post Office Savings Scheme For Senior Citizens: Interest Rates, Tax Benefits

Senior Citizen Savings Scheme (SCSS), one among the nine small savings schemes offered by post office, serves as an investment avenue and helps in generating wealth for a successful retirement life. Post office Senior Citizen Savings Scheme has a maturity period of 5 years, which can be extended for further three years within one year of the maturity by giving application in prescribed format, said India Post on its official website- indiapost.gov.in. India Post or Department Of Posts is run by the government and has a network of more than 1.5 lakh post offices in the country.

(Also read: Post Office 15-Year Public Provident Fund Account: Returns, Tax Benefits)

Given below are few salient features of Post office Senior Citizen Savings Scheme (SCSS):

Eligibility

Post office senior citizen savings account (SCSS) can be opened by an individual of 60 years or above. An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS (Voluntary Retirement Scheme) can also open SCSS 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, noted India Post.

Interest Rates

Post office SCSS earns an interest rate of 8.7 per cent per annum, which is payable from the date of deposit on March 31/ September 30/December 31 in the first instance and thereafter, interest are payable on March 31, June 30, September 30 and December 31.

Quantum of contribution

There can be only one deposit in the SCSS account in multiple of Rs 1,000 where the maximum amount must not exceed Rs 15 lakh, noted India Post. Also, any number of SCSS accounts can be opened in any post office subject to maximum investment limit by adding balance in all accounts.

Tax benefits

Tax Deducted At Source (TDS) is deducted at source on interest if the interest amount is more than Rs. 10,000 per annum. Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from April 1, 2007.

Premature closure

Under this scheme, premature closure is allowed after one year on deduction of an amount equal to 1.5 per cent of the deposit and after 2 years on deduction of an amount equal to 1 per cent of the deposit.