Often people start planning their retirement at the age of 40. For anyone, a retirement plan is an important part of their financial planning. And people plan very carefully for their future so that when they retire they do not have to face financial troubles. Senior Citizen Tax Savings Scheme
When we are working, we get a salary at the end of the month and we use it to meet our expenses. Once we retire, this process stops. There is no salary at the end of each month. Although salaries have stopped, expenses do not stop. Therefore, you need a regular income even after you retire.
Good thing if you get pension after retirement. But if the pension is not available or if the pension is not enough, then additional regular income may be required. Now there are many ways to earn regular income during retirement. Senior Citizen Tax Savings Scheme
In this post, we will review the Senior Citizen Savings Scheme (SCSS). It is a savings product specially designed for senior citizens. So, we will discuss the eligibility criteria, maturity, deposit limit, interest rates, and tax treatment. We will also discuss that against other income products available in the market.
What Is Senior Citizen Savings Scheme (SCSS)?
The Senior citizen savings schemes in India, offer benefits such as a higher interest rate of 0.5 percent. Also, the senior citizens, especially who have a business but do not have a business profit are let off from paying the advance taxes. Senior Citizen Tax Savings Scheme
Senior Citizen Savings Scheme (SCSS) is specially planned to benefit the senior citizens as well as it gives 8 percent interest rate and higher returns. As per rules, NRIs and Hindu Organized Families (HUF) aren’t eligible to create accounts under this scheme. The duration of this scheme is 5 years, which you can extend up to 3 years.
Benefits of Senior Citizen Tax Savings Scheme
On Senior Citizen Saving Scheme you get tax exemption under section 80C. Under this section, you can currently get a tax rebate on investments up to INR 1.5 lakh per annum (only on certain types of investments). On whatever investment above INR 1.5 lakh, you will have to pay tax according to the Tax Act.
Who Can Open Senior Citizen Saving Account?
You can open the account of Senior Citizen Savings Scheme in any bank or branch of the post office. Any Indian citizen who has completed 60 years of age can open a Senior Citizen Saving Scheme account.
Employees who are separated from service under a law, or who take voluntary retirement, can open a Senior Citizen Saving Scheme account even at the age of 55. Senior Citizen Tax Savings Scheme
If military personnel take retirement first, they can open a Senior Citizen Saving Scheme account any time after completing the age of 50 years.
You can also open the Senior Citizen Saving Scheme account jointly with your spouse only. No other relatives or acquaintances get acceptance as joint account holders under this scheme. Senior Citizen Tax Savings Scheme
You Can’t Open An Account In The Name Of An Institution or family
Accounts in the Senior Citizen Saving Scheme can only be opened at the individual level. (HUFs) An account under this scheme cannot be opened in the name of a Hindu undivided family or an institution.
Only Indian Citizens Can Open Account
Even Indians (NRIs) who have taken citizenship of another country cannot open accounts under this scheme. Even after opening an account, if a person takes citizenship of another country in the middle, then from the date on which he becomes a citizen of another country, his account will be considered closed.
The Applicant Must Submit The Notice Of Change Of Citizenship Within In A Month
In case of taking foreign citizenship, it is mandatory for the account holder to inform it within one month of his post office or wherever he has an account with the bank. After that date, you will get your interest back on your deposit according to the interest rate of the general savings account and the tax-saving rules will also apply accordingly.
Documents Required For Senior Citizen Saving Account:
First of all, you have to fill the Senior Citizen Saving Scheme account form and fill it. So, you will get this form from the post office or bank. In relation to your identity, proof of address, you have to fill the KYC form along with the application form, which you get along with the application form. Apart from this, you have to take the following documents from you, which you submit along with the application to the bank or post office.
- Two passport sizes colored photos of the applicant
- Photographs of the applicant / s
- PAN number and a photocopy of PAN card
- Permanent Account Number (PAN)
- Photocopy of Aadhaar number and Aadhar card
- Residence or Address Certificate as Address proof
- Age certificate for Age proof
- Certificate issued by the employer in the event of retirement
- In the case of retirees, a certificate from the employer
- Proof of date regarding the money received as retirement benefits
- Proof of date of disbursal of the retirement benefits
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Minimum And Maximum Deposit Account
In Senior Citizen Saving Scheme, you can open an account by depositing at least INR 1000 and Up to INR 15 lakh. You can open an account up to INR 1 lakh by depositing cash. On opening an account of more than INR 1 lakh, it will be deposited through check. Senior Citizen Tax Savings Scheme
Keep in mind that there is an exemption for depositing up to INR 15 lakh in Senior Citizen Savings Account Scheme. But in case you have got less than INR 15 lakh after your retirement, then you can’t deposit INR 15 lakh. Senior Citizen Tax Savings Scheme
The Senior Citizen Savings Scheme has to deposit a lump sum amount for at least 5 years. And thus after completion of the period of maturity, if you wish, you can extend it again for the next 3 years. But in case of an emergency, you can stop it before maturity. So, you can do this after completion of 1 year of account.
Loss in case of Prematurity withdrawal
On closing the account before maturity (5 years), and you will get less interest than the normal rate. Senior Citizen Tax Savings Scheme
If you withdraw money after 1 year and before 2 years, you will get 1.5 percent less interest than the normal interest rate. If you close the account after completion of 2 years, you will get 1 percent less money than the normal interest rate.
But, once your account has completed the initial maturity period of 5 years and will extend for the next 3 years, then there will be no loss of interest on closing the account in the middle.
FAQ Regarding the Senior Citizen Savings Scheme:
Q. Can I Open A Joint Account Under Senior Citizen Savings Scheme?
A. You can only open a joint account with your spouse. You can’t open this senior citizen tax savings scheme with any other person than your spouse.
Q. What The Age Of The Spouse Should Be In Case Of Joint Account?
A. In case of a joint account, the eligibility of investment in this senior citizen tax savings scheme gets determination only from the age of the first applicant/depositor. There is no restriction/limit on the age of the second applicant / joint holder.
Q. What Is The Share Of Joint Account Holder In The Deposit Of An Account?
A. Under this scheme, the entire amount of investment gets consideration as that of the first applicant/depositor; hence the question of the share of the second applicant / joint account holder (spouse) does not arise.
Q. Will Any Income Tax Concession / Rebate Apply?
A. No exemption on income tax / wealth tax is applicable under this scheme. The existing income tax provisions will apply.
Q. Is It Necessary To Open A New Savings Account To Deposit Interest Periodically?
A. No. There is no such requirement. So, The interest payable under the scheme can be deposited by the depositor in his current savings account (s) kept in the same deposit office. Whether it is single or joint, provided the maximum balance limit (if any, is fixed) in his savings account from the deposit of interest. ) hadn’t violated.
Q. Are Multiple Withdrawals Allowed As Per Depositor’s Requirement?
A. No, however, there is no restriction on the opening of new/multiple accounts by the depositor within the limit of Rs.15 lakhs.
Q. Is There No Restriction on Nomination And / Or Change / Cancellation?
A. No such fee had specified under this scheme. Senior Citizen Tax Savings Scheme