The Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme specifically designed to provide financial security to Indian senior citizens. As the population of senior citizens in India is projected to reach 300 million by 2050, schemes like SCSS play a vital role in ensuring their financial independence and stability during retirement. The SCSS allows individuals to invest a lump sum and receive a regular income stream through quarterly interest payments. With the current economic landscape and rising healthcare costs, the SCSS offers a reliable and secure investment option for retirees.

Key Features of SCSS

• Eligibility: The SCSS is available to Indian citizens aged 60 years and above. Individuals between 55 and 60 years who have retired under a Voluntary Retirement Scheme (VRS) or superannuation can also invest within one month of receiving their retirement benefits. Retired defense personnel have a further relaxed age limit of 50 years and above.
• Interest Rate: The SCSS interest rate is revised quarterly by the government. For the first quarter of the financial year 2025-26 (April-June), the interest rate is set at 8.2% per annum. The interest is paid out quarterly, providing a regular income to the investors.
• Investment Limits: The minimum investment required to open an SCSS account is Rs. 1,000, while the maximum investment limit is Rs. 30 lakh. Deposits above Rs. 1 lakh must be made through a cheque or demand draft. An individual can operate multiple SCSS accounts, provided the total investment across all accounts does not exceed Rs. 30 lakh.
• Tenure: The SCSS has a fixed tenure of 5 years, which can be extended for an additional 3 years by submitting Form B to the relevant post office or bank.
• Nomination Facility: Investors can nominate beneficiaries for their SCSS account, ensuring a seamless transfer of investments in case of unforeseen circumstances.
• Premature Withdrawal: Premature withdrawal is allowed after one year of opening the account, but it attracts a penalty. A 1.5% charge is deducted from the principal amount if the account is closed after one year but before two years. A 1% charge is deducted if the account is closed after two years.

Tax Benefits and Implications

• Section 80C Deduction: Investments in the SCSS are eligible for tax deductions under Section 80C of the Income Tax Act, 1961, up to a maximum of Rs. 1.5 lakh per financial year.
• Taxability of Interest Income: The interest earned on SCSS deposits is taxable as per the individual's income tax slab.
• TDS: Tax Deducted at Source (TDS) is applicable if the total interest earned from all SCSS accounts exceeds Rs. 50,000 in a financial year. Budget 2025 increased the TDS threshold to Rs. 1 lakh for senior citizens, effective from April 1, 2025. To avoid TDS, eligible individuals can submit Form 15G (for those below 60 years) or Form 15H (for senior citizens) if their total income is below the taxable limit.

How SCSS Can Help Your Retired Mother

If you wish to support your retired mother financially, gifting her Rs. 30 lakh to invest in the SCSS can be a beneficial strategy. Here's how it works:

• Gift is Tax-Free: As per Indian tax laws, gifts to close relatives, including parents, are exempt from tax in the hands of both the giver and the receiver. Therefore, the Rs. 30 lakh you gift to your mother will not be taxable.
• SCSS Investment: Your mother can invest the gifted amount in the SCSS, ensuring a regular quarterly income through interest payments. At the current interest rate of 8.2%, an investment of Rs. 30 lakh would yield an annual interest income of Rs. 246,000, translating to Rs. 61,500 per quarter.
• Taxation in your Mother’s Hand: The interest income earned from the SCSS investment will be taxable in your mother's hands, and is added to her total income and taxed according to her applicable income tax slab. However, she can claim a deduction of up to Rs 50,000 on interest income under Section 80TTB.
• Tax Planning: If your mother's total income, including the SCSS interest, falls within the basic exemption limit (Rs 3 lakh for senior citizens), she may not have to pay any tax. If her income exceeds this limit, the interest income will be taxed as per the applicable tax slabs.

Where to Open an SCSS Account

An SCSS account can be opened at any authorized bank or post office in India. The process is simple and involves filling out an application form (Form A) and submitting the required documents, including:

• Two passport-size photographs
• Identity proof (PAN card, Aadhaar card, Voter ID, or passport)
• Address proof (Aadhaar card, telephone bill, or bank statement)
• Age proof (PAN card, Voter ID, birth certificate, or senior citizen card)

The SCSS is a secure, reliable, and beneficial investment option for senior citizens. By gifting Rs. 30 lakh to your retired mother for investment in the SCSS, you can provide her with a steady income stream and financial security during her retirement years.