SBI Senior Citizen Savings Scheme:- One of the biggest financial statutory bodies in India, the State Bank of India, or SBI, has been in existence since 1955. It provides a wide range of financial goods and services to its clients; in recent years, its senior citizen savings program has become quite well-liked. For those sixty years of age or older, the government-approved Senior Citizens Savings Scheme (SCSS) provides a way to save money. Although it has a set maturity period, the account holder may choose to prolong it further. Here’s a look at the SBI Senior Citizen Savings Plan and the important details you should know before making an investment.
Contents
Features of the SBI Senior Citizen Savings Scheme
This initiative is available to State Bank of India customers, who can also take advantage of an enticing Senior Citizen Saving Initiative SBI interest rate.
The SBI Senior Citizen Savings Plan has the following features:
For this scheme, a deposit of no more than Rs. 15 lakh can be made, with a minimum of Rs. 1000.
The account may be extended beyond the initial five-year maturity period by an extra three years.
Only the primary account holder is eligible to receive the full deposit placed into a joint account.
The depositor may designate more than one nominee.
An account cannot have multiple withdrawals made from it.
All holders of SBI accounts need to be aware of the 13 SCSS guidelines. They’ll be able to better handle their account thanks to this.
First of all, in order to register an account under the SBI Senior Citizens Savings Scheme, you must be a senior citizen (at least 60 years old). If they are 55 years old or older and have chosen voluntary retirement, they are eligible to invest.
Rule 2: It is possible to open multiple SBI Senior Citizens Savings Scheme accounts at the same time. His or her spouse ought to be the joint account holder.
Rule 3 states that a member of the SBI Senior Citizens Savings Scheme may only make one deposit. Make deposits in multiples of Rs. 1,000, with a maximum of Rs. 15 lakhs.
Regulation 4: Interest accrued during the first year will be paid on March 31st, September 30th, and December 31st. The following years’ March 31st, June 30th, September 30th, and December 31st are when the interest is due.
Five years will pass before an account under the SBI Senior Citizens Savings Scheme matures. The account holder has the option to renew the account for an additional three years or claim the sum at maturity. It takes a particular application to renew the account.
Rule 6: If the deposit is less than Rs. 1 lakh, people should make their payment in cash. He or she may choose to pay by demand draft or cheque if the deposit exceeds Rs. 1 lakh.
Rule 7: You can move your SBI Senior Citizens Savings Scheme account virtually instantaneously between post offices and banks. It takes less time and is easy to do.
Present Rate of Interest Against SBI Senior Citizen Scheme
The Government sets the interest rate for this scheme ahead of time, before each quarter. The interest rate for the current quarter was revealed on July 1st, 2020. As of right now, it is 7.4%.
The interest rate on the savings account will remain the same as it was at the time of the deposit for the first five years. Subsequently, the interest rate published will be the one that is in force at the time of the scheme’s tenure extension.
Put otherwise, deposits made under the scheme now will be subject to a 7.4% interest rate until September 2025, irrespective of any changes to the interest rate in the next quarter. This is because the SBI SCSS interest rate as of September 11th, 2020, is 7.4%. That interest rate will be disclosed for each quarter after September 2025.
The SBI Senior Citizen Savings Scheme does not include the option of cumulative interest payments. Interest is due on a quarterly basis. The first installment of interest is paid starting on the day of the deposit and continuing through the end of the quarter.
Here is an indicative list of the rate of interest in previous quarters –
In order to get benefits from the SBI Senior Citizens Saving Scheme, a person must make sure they match the following requirements:
The person must be at least sixty years old.
If a person has retired with VRS or superannuation and is over 55 but under 60, they may be entitled to receive payments from the SBI SCSS.
If they are 50 years of age or older, retired members of the Defence Services may choose to participate in this program.
The program does not allow members of the Hindu Undivided Family (HUF), Persons of Indian Origin (PIOs), or Non-Resident Indians (NRIs) to register an account.
Taxability of Senior Citizen Saving Scheme
Section 80C of the Income Tax Act, 1961 allows holders of SCSS SBI accounts to take advantage of tax savings on income up to Rs. 1.5 lakh.
Any interest received on this account is subject to full taxation. TDS (Tax Deducted at Source) would be applied if the interest earned under this savings plan exceeds Rs. 50,000 in a given fiscal year.
Advantages of SBI SCSS
For people who choose to retire voluntarily, the entrance age is now 55 instead of 60. On the other hand, VRS participants must apply for this program within a month after starting to receive retirement payments. The interest rate is locked in by the account holder and stays that way until the plan matures. By doing this, the account holders are shielded from falling interest rates.
The SBI Senior Savings Scheme, which is advantageous for retirees and others who require fixed income to fulfil their expenses, pays out on a quarterly basis.
After the account has been open for five years, there is a chance to renew it.
After a year of opening the account, the holder may also choose to foreclose.
After a year of opening the account, the holder may also choose to foreclose.
If the account holder shuts the account after renewing it after five years, there is no penalty.
By choosing to register joint accounts with their spouse, people can open several SBI Senior Citizens Savings Scheme accounts.
Disadvantages of SBI SCSS
The SBI Senior Citizens Savings Scheme has a cap on how much can be invested. The maximum amount that an account holder may deposit into the account is Rs. 15 lakhs. Furthermore, deposits are only accepted in multiples of Rs. 1,000.
There is risk associated with the investment since if the bond yield drops as a result of underperformance, the returns could also drop.
For those who are not seeking a fixed income, quarterly payouts might not be essential.
A 1.5% penalty will be applied if the account is closed for any reason within the first two years after it was opened, including emergencies.
A 1% penalty will be applied if, due to an emergency, the account is closed after the first two years from the date of inception.
The SBI Senior Citizens Savings Scheme allows for tax exemption on investments made, however there is taxation on the interest earned. If an account holder makes more than Rs. 10,000 in a fiscal year, tax will be withheld from this income at the source. This is highly inconvenient since, even if they do not have taxable income, senior folks must file tax returns in order to get the excess TDS.
How to Open an SBI SCSS Account?
The process of opening a Senior Citizens Savings Scheme Account with SBI Bank requires the depositor to go to any deposit office and fill out Form A. In addition, he or she must deposit the money in multiples of thousands and present evidence of age. An individual might choose to open a joint account with their spouse or an individual account.
Finance Minister Nirmala Sitharaman announced during her address introducing the Union Budget 2023 that the SCSS’s maximum deposit limit will rise from Rs. 15 lakh to Rs. 30 lakh.
Documents Required to Open an SBI SCSS Account
Any of its branches is the place to open an account under the SBI Senior Citizen Scheme. To open the account, the following self-attested documents must be submitted:
Ans- There isn’t presently an online application process for SCSS. A person must go to the post office or bank branch and finish the process in order to open a SCSS account.
Q. Does a senior citizen program at SBI?
Ans- ‘SBI WeCare’ is a unique fixed deposit program that SBI provides to senior folks.