Tuesday, Nov 29, 2022
Outlook Money

Death Won’t Trigger Automatic Closure of Senior Citizen Savings Scheme Account: Finance Ministry

Senior Citizen Savings Scheme (SCSS) provides a continuous flow of income to account holders during their retirement.

The Finance Ministry has clarified that the passing away of a Senior Citizen Savings Scheme (SCSS) account holder does not automatically trigger an account closure. A premature closure should be considered only when the account holder personally requests closure before the maturity period.

In a press release on September 29, 2022, the ministry noted that operating agencies prematurely close the account when the individual passes away.

“The premature closure of the account is applicable only when the SCSS account holder requests for closure of own SCSS account before the maturity period. In such cases of premature closure of the account, a penalty shall be levied as mentioned in the rule 6 of the SCSS,” it said.

It further clarified that “In cases where the SCSS account holder/s passes away, and the account is being closed on request of the nominee/legal heir, the rate of interest as applicable on SCSS scheme shall be paid till the date of demise of the account holder. Thereafter, the interest rate applicable on Post Office Savings Account shall be paid from the date of demise of the account holder till the date of final closure of the account.”

Any individual above the age of 60 can avail of the Senior Citizens Savings Scheme (SCSS), an effective savings option for the long-term, with attractive features and robust security.

SCSS provides senior citizens tax benefits, a safe investment option, and a premature withdrawal facility.

Under section 80C of the Income Tax Act, 1961, individuals are eligible for tax deductions on investments up to Rs 1.5 lakh. The tax will be deducted at the source if the interest generated is more than Rs 10,000 per annum.

Eligibility Criteria For SCSS

  • An individual who has attained the age of 60 years or above at the time of opening an SCSS account.
  • Individuals who have attained the age of 55 but below the age of 60 and have retired on superannuation are eligible to open an SCSS account.
  • Individuals who have attained the age of 55 years old and have retired before the implementation of the SCSS rules are eligible under the scheme.
  • Non-Resident Indians (NRIs) are not eligible to open an SCSS account.
  • Hindu Undivided Families (HUF) are also not eligible to open an SCSS account.

SCSS Interest Rate

At present, the SCSS interest rate is 7.6 per cent per annum. The returns of the SCSS are high when compared to savings and Fixed Deposit (FD) accounts. In the first instance, the interest is payable on the deposit date of March 31, September 30, and December 31; after that, interest is payable on March 31, June 30, September 30, and December 31.

Quarterly interest is paid on the initial working day of April, July, October, and January. However, quarterly interest payments are available only at core banking-enabled post offices.