Canara Bank Senior Citizen Saving Scheme

Canara Bank, one of the largest public sector banks in India, extends a number of financial products and services to its customers. This bank, established in 1906, has always been in the forefront when it comes to offering the best of services to the masses. In 2019, it became the fourth largest bank in the country, post its merger with Syndicate Bank.

Of its several financial products, the Senior Citizen Saving Scheme Canara Bank has gained rapid prominence owing to its promise of substantial returns. Individuals aged 60 years and above have opted for this savings scheme in large numbers, to avail the benefits of high-interest rates and assured remittances.

Features of Canara Bank Senior Citizen Savings Scheme

Senior Citizens Savings Scheme (SCSS) is a government-sponsored investment instrument offered by both public and private sector banks as well as post offices.

Some of the primary features of this savings scheme are as follows –

• The scheme mandates a minimum deposit amount of Rs.1000, while the maximum limit is set at Rs.15 lakh.
• One can invest in the scheme for a tenure of 5 years. Post completion of this tenure, it can be further extended by another 3 years.
• Matured amount in a joint account can be received only by the first account holder.
• The interest under this scheme is compounded each year, while it is paid out every quarter.

Present SCSS Rate of Interest Offered by Canara Bank 

The interest rate is announced by the Ministry of Finance for every quarter, in advance. The present interest rate has been notified on July 1st, 2020. The SCSS interest rate in Canara bank, at present, stands at 7.4%.

Here is the rate of interest applicable in previous quarters –

The rates applicable while making a deposit in the scheme is considered for interest accrual during the first 5 years of its tenure. If the tenure is extended by another 3 years, the applicable interest rate will be the one which is prevalent at that time.

As the SCSS interest rate in Canara Bank on September 14th, 2020, is 7.4%, the investments made now will be subject to a 7.4% interest rate till September 2025. If the tenure is extended from September 2025, the applicable interest rate will be the one prevalent at that point of time.

Under Senior Citizen Saving Scheme Canara Bank, the accrued interest is payable on a quarterly basis.

Eligibility to Avail the Benefits of SCSS

Here are the broad eligibility parameters for opening an account under Canara Bank’s Senior Citizen Savings Scheme –

• Applicants must be aged 60 years or above.
• Individuals aged 55 years or more (however, less than 60 years) and opting for superannuation or voluntary retirement service (VRS).
• Defence Services personnel retirees can opt for this scheme upon reaching the age of 50 years (civilian personnel of defence services excluded).

However, members of the Hindu Undivided Family, NRIs and POIs cannot open an account under Senior Citizen Saving Scheme Canara Bank.

Taxability of Senior Citizen Saving Scheme

Individuals holding a Senior Citizen Saving Scheme Canara Bank account enjoy the option of availing tax benefits under Section 80C of the Income Tax Act, 1961. As per the provisions put forth under this section of the ITA, individuals can enjoy an exemption of up to Rs.1.5 lakh on the investment made through SCSS.

The interest earned under this scheme is, however, entirely taxable. In the event that the accrued interest over the deposit made under the scheme is more than Rs.50,000 in a financial year, the tax will be deducted from source.

Comparison between Canara Bank SCSS and Fixed Deposit 

Fixed deposits in Canara Bank can be made with a minimum amount of Rs.1000, without any upper limits. The table mentioned below includes a comparison between Senior Citizen Deposit Scheme in Canara Bank and the Fixed Deposits offered by it.

Required for the Canara Bank SCSS

Eligible individuals can apply for the Senior Citizen Saving Scheme in Canara Bank through any of its branches. For this, Form A will have to be filled up and submitted alongside supporting documents like –

1. Identity proof (such as passport, PAN card etc.)
2. Address proof (such as telephone bill, Aadhar card)
3. Age proof like (such as birth certificate, voter ID etc.)
4. Two passport-sized photographs

The process to avail the benefits of SCSS is extremely streamlined and required minimal documentation. Nonetheless, one must ensure that they are aware of such pertinent information regarding this savings scheme at length to make the most of this investment proposition.