Question: My mother had a Senior Citizens’ Saving Scheme (SCSS) account in her single name with her son as the nominee. She made one SCSS deposit on April 15, 2022 for tax benefit under Section 80C of the Income Tax Act, 1961. She passed away 15 days later on April 30. We will file her income tax return (ITR) for FY22-23 and will claim the 80C deduction for the deposit made. Should we close the SCSS deposit only after April 1, 2023, so that there is no issue with the 80C deduction? Will we have to forego interest on all SCSS deposits because we were told that interest payments stop on the date of the SCSS depositor’s death?
Answer: As per the Senior Citizen Savings Scheme, 2019, the interest earned on SCSS does not cease on the date of the death of the account holder altogether, but is paid at the rate applicable on the savings account of the post office from the date of death to the date on which the amount is actually withdrawn.
According to Section 80C, the claim for a deduction under the section can only be reversed if the person who deposited the money withdraws the same before the end of the five-year period. However, there is no provision for reversal of tax benefits available on the basis of deposits to the taxpayer if the account is closed due to the death of the account holder. In my opinion, there is no need for you to keep the money in the SCSS account to claim the deduction as long as you preserve the proof of your mother's having deposited the money in the SCSS account.
Question: My grandfather had a Hindu Undivided Family (HUF) account at Syndicate Bank and filed an HUF income tax return (ITR) every year. He was the karta. He passed away, leaving behind two grandsons, two daughters (my aunts), and a widowed wife (my grandmother). His only son, i.e., my father, passed away five years ago. My question is, who can now become the karta? What is the procedure to be followed with the bank in this case?
Answer: After the death of the karta of an HUF, the senior-most coparcener becomes the new karta. So, any of his daughters, i.e., your aunts can become karta of the HUF. If the senior coparcener is not willing to act as karta, any other coparcener can be appointed as karta. No major formalities are required to be complied with for this purpose.
Though the next senior-most coparcener automatically becomes the new karta of the HUF, at times, statutory authorities may require a declaration from the members of the HUF declaring the eldest coparcener as the new karta of the HUF. Further, a declaration from the members of the HUF along with the death certificate of the previous karta may be mandated by banks in order to give effect to the change of name of the karta in the HUF’s bank account. No succession certificate is needed in the case of an HUF.
Balwant Jain is a tax and investment expert.
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