The Senior Citizens Savings Scheme (SCSS) is an initiative backed by the government of India. This initiative aims to make the post-retirement life more secure for people over the age 60, or for people who have retired. 

Under this scheme, you need to open an account with the post office or with one of the eligible banks that offer this scheme. SBI is one such bank, and any eligible person can open an SCSS account with the State Bank of India.

When you open an account in the SBI Senior Citizens Savings Scheme, you need to deposit a lump sum amount in the account. Over the investment tenure, you will then earn interest on this deposit at regular intervals, at the rate of interest determined by the government. This sums up the basic workings of the scheme. 

Who can open an account under this scheme?

The following categories of people can open an account with the SBI Senior Citizens Savings Scheme.

• Individuals 60 years of age or older.
• Retired civilian employees aged over 55 years and below 60 years of age, provided they make the investment made within 1 month of receiving their retirement benefits
• Retired defence employees aged over 50 years and below 60 years of age, provided they make the investment made within 1 month of receiving their retirement benefits

Apart from these basic eligibility criteria, there are a couple of other things you should know. NRIs and HUFs cannot open an SBI Senior Citizens Savings Scheme account. And eligible individuals can open a joint account, but only with their spouses. 

What is the SBI Senior Citizens Savings Scheme interest rate?

The government of India fixes the rate of interest on the Senior Citizens Saving Scheme every quarter. Currently, as of July 2022, the SBI Senior Citizens Savings Scheme interest rate is set at 7.4 ​% per annum. 

The interest on the deposit is payable at quarterly intervals on the following dates —

• March 31 
• June 30 
• September 30
• December 31

You can use the auto credit facility to withdraw the interest credited from your SCSS account to your savings account. If you don’t claim the interest paid out during any quarter, you will not earn any additional interest on that amount. In other words, there is no compounding benefit on any unclaimed interest. 

What are the other key features of this scheme?

Apart from the SBI Senior Citizens Savings Scheme interest rate, there are some other key features that you should know about this scheme. Check out these details below.

Deposit limits:

The minimum amount you need to deposit to open your account is ₹1,000. Deposits can be higher too, in multiples of ₹1,000. The maximum amount you can deposit in your SBI SCSS account is ₹1.5 lakhs. 

Investment tenure:

Your SCSS account matures 5 years from the date of opening. So, the investment tenure is 5 years, making it an ideal medium term income benefit option for senior citizens.

Extension of your account: 

You can extend your investment by a period of 3 years after the 5-year tenure. If you choose to do this, the SBI Senior Citizens Savings Scheme interest rate will continue to be the rate prevailing on the date of maturity.

So, for example, say your SCSS account matures on March 31, 2023. If the prevailing interest rate on that date is 7.0% per annum, your investment will earn interest at that rate during the extended 3-year period. 

Premature closure:

While it is not advisable, it is still possible to close your SBI Senior Citizens Savings Scheme account before maturity. If you do close your account prematurely, however, your payouts will be subject to the following deductions or conditions.

In case you have extended your SCSS account, you can close it at any time after 1 year from the date of extension of the account. No deduction will be made in such cases.

What are the tax implications of the SBI Senior Citizens Savings Scheme?

There are two key things you should know about the tax implications of the SBI SCSS account. 

Tax benefits from the investment

The amount you invest in this scheme qualifies for the benefit of deduction under section 80C of Income Tax Act, 1961. You can claim a deduction up to ₹1.5 lakhs during the financial year in which you make your investment.

Taxability of the interest 

Interest earned per year up to ₹50,000 is eligible for deduction under section 80TTA of the Income Tax Act, 1961. If the total interest earned from your SCSS account in a financial year is greater than ₹50,000, the interest will be taxable at your regular income tax slab rate. 

Summing it up

This should give you a better idea about the SBI Senior Citizens Savings Scheme. By opting for this scheme, senior citizens can set up a source of regular income that can substitute their main income. You can use the information given above to plan your parents’ investments. Learn more about how to choose the best scheme here.

Looking for more schemes? Check out our guide to Senior Citizen Schemes in 2022.

Frequently Asked Questions

1. Which savings scheme is the best for senior citizens?

There are many different savings schemes that senior citizens can benefit from. The SBI Senior Citizens Savings Scheme is just one such option. The answer to what the best scheme is varies from one investor to another.

2. How can I open an SBI Senior Citizens Savings Scheme account?

You can open an account under the SBI Senior Citizens Savings Scheme by downloading the form online from here. Alternatively, you can directly visit an SBI branch and get this form from the bank representative. Fill out the form and submit it along with the required documents to open your account.

3.What is the interest of 15 lakh FD in SBI?

The interest rate on a 15 lakh FD in SBI is 5.85% currently.

4.What is the interest of 10 lakh FD in SBI?

The interest rate on a 10 lakh FD in SBI is 3%- 5.85% currently.