Allahabad Bank Senior Citizen Savings Scheme

Allahabad Bank was the oldest joint stock bank in the country having been established in the year 1865 in the city of Allahabad. Before its merger with Indian Bank on April 1st, 2020, Allahabad Bank had about 3245 branches with employee strength of around 22,557. The market capitalisation of this Bank till June 2018 amounted to USD 573 million.

The Senior Citizen Scheme in Allahabad Bank is a government-sponsored investment instrument for individuals above 60 years of age to park the corpus received post-retirement. Since retired individuals are more likely to be risk-averse and look for such options that would hedge the risks that may be posed to the invested fund. The primary benefit of SCSS is to eliminate such risks and at the same time minimise the tax outgo of retired individuals.

Features of the Senior Citizen Scheme in Allahabad Bank

Here are a few major features of the Senior Citizen Savings Scheme –

• Minimum amount to be deposited is Rs.1000, and the investment can be made in multiples of Rs.1000 only. The maximum amount to be deposited is Rs.15 lakh.
• Tenure is 5 years which can be extended by another 3 years.
• Account-holders can opt for more than 1 nominee.

Rate of Interest for Allahabad Bank Senior Citizen Savings Scheme

The rate of interest of Senior Citizen Scheme in Allahabad Bank is announced by the Ministry of Finance every quarter. The present interest rate is 7.4%, and for the deposits made under this quarter, 7.4% will remain as the applicable interest rate for the entire tenure of 5 years.

Here is a list that indicates the interest rates in the previous few quarters –

Eligibility to Invest into SCSS Allahabad Bank

Generally, retired individuals having reached 60 years are eligible to open an account under this scheme. However, there are a few exceptions –

• Individuals who are 55 years or more but less than 60 years can start an account under Senior Citizen Scheme in Allahabad Bank. However, the deposit will have to be made within 1 month of receiving the retirement benefits.
• Retired Defence Services personnel on reaching 50 years or more can open an account under this scheme.

NRIs and members of the HUF are not eligible to apply under the Senior Citizen Savings Scheme.

Taxability of Senior Citizen Saving Scheme

Investments made under the Senior Citizen Savings Scheme qualify for deduction pursuant to Section 80C under the Income Tax Act, 1961. However, this benefit is subject to the existing ceiling of Rs.1.5 lakh in a financial year for all investments made under the mentioned section.

The interest earned under Allahabad Bank Senior Citizen Scheme 2021 is taxable at the end of the depositor. Tax will be deducted at source (TDS) if the interest generated exceeds Rs.50,000 in a financial year.

Comparison between Senior Citizen Saving Scheme and Fixed Deposit

Documents Required to Invest in Senior Citizen Scheme for Allahabad Bank

Opening an account under Senior Citizen Scheme in Allahabad Bank is fairly simple. Form A will have to be filled up duly and submitted with supporting documents. The documents required are –

• Passport size photographs of the applicant

• Age proof

• Address proof

• Permanent Account Number (PAN)

• Employer certificate indicating whether retirement was on account of superannuation, the designation held, the corpus of retirement benefits and employment period among others.

• Proof of disbursal date of retirement benefits

Form A that will have to be submitted can be obtained online or offline, and the supporting documents will have to be self-attested.

Furnishing a PAN number is compulsory for opening an SCSS account, and if any of the furnished information is found to be false, then the opened account stands to be closed with immediate effect. If any interest has been paid already, it will be deducted before refunding the invested amount.

Thus, even though the process of opening an account under this scheme is simple, these are a few aspects that will have to be kept in mind by the applicant.

Note: Allahabad Bank is now merged with Indian Bank.