The Senior Citizen Savings Scheme (SCSS), supported by the government, is open to individuals aged 60 and above. Alternatively, individuals who have retired through superannuation can access the scheme at the age of 55, and those who retired from the military, excluding civil defence personnel, can join at the age of 50 through a voluntary or special voluntary plan.
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Was the Senior Citizen Savings Scheme interest rate hiked for quarter January- March 2024?The interest rate for the Senior Citizen Savings Scheme (SCSS) is set by the government each quarter. There has been no increase in the interest rate for the current quarter, and account holders can earn interest at a rate of 8.2% on their deposits. The interest is paid out every quarter and is subject to full taxation.
SCSS detailsA SCSS account can be opened with a minimum deposit of Rs 1,000 or any amount in multiples of Rs 1,000, not surpassing Rs 30,00,000. The deposit has a tenure of 5 years and is extendable for an additional 3 years.
On November 7, 2023, the government released a notification that introduced several significant modifications to the widely-used Senior Citizen’s Savings Scheme (SCSS). According to the notification:
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1. Extended timeframe for investing retirement benefits: Individuals aged over 55 but below 60, who have retired, now have a three-month window to invest their retirement benefits in the SCSS. Previously, the requirement was to invest within one month of receiving retirement benefits.
2. Relaxation for spouses of deceased government employees: The government has eased eligibility criteria for spouses of deceased government employees. The revised regulations permit the spouse to invest the financial aid amount in the scheme if the deceased employee was over 50 and died while on duty. This provision is applicable to both central and state government employees entitled to retirement or death benefits.
3. Scope of retirement benefits: The scope of retirement benefits has been explicitly defined by the government. According to the notification, retirement benefits encompass any payment received due to retirement, superannuation, including provident fund dues, retirement or superannuation gratuity, commuted pension value, leave encashment, and the savings component of group savings linked insurance scheme payable by the employer upon retirement.
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4. Restrictions on premature withdrawal: New regulations impose restrictions on early withdrawals from the scheme. If the account is closed before the one-year investment period concludes, a one percent deduction from the deposit will be applied, as per the updated rules. Previously, premature closure resulted in the recovery of interest from the deposit, and the entire balance was remitted to the account holder.
5. Unlimited extension of SCSS: The government has modified the rules regarding the extension of the SCSS scheme. Account holders can now extend the account for multiple blocks of three years each, subject to submitting an application for each extension. Previously, only one extension was permitted.
6. Interest on extended scheme deposit: The government has updated the criteria for the interest that an individual will receive upon extending the scheme beyond the initial five-year maturity period. According to the new regulation, if the SCSS account is extended upon maturity, the deposit will accrue interest at the rate applicable to the scheme on either the date of maturity or the date of the extended maturity.
Under the previous regulations, the deposit in an extended account would have garnered interest at the rate applicable to the scheme on the date of maturity. Since the account was restricted to a single extension, the interest rate for the second extension was not specified. This modification serves as a clarification, given the recent allowance for multiple extensions.
7. Maximum deposit amount: The maximum deposit in the scheme must adhere to the prescribed limit. This includes the deposit made at the account opening, which can be withdrawn after five years or at the end of each subsequent three-year block if the account is extended under paragraph 8 from the opening date. According to the notification the initial deposit made during the account opening will be disbursed either after five years or at the conclusion of each successive three-year block if the account is extended under paragraph 8 from the opening date. Following the closure of existing accounts, new accounts may be opened as needed by the depositor, adhering to the maximum deposit limit. This clarification confirms the allowance for multiple extensions.
Since the account was limited to a single extension, the deposit for the second extension was not explicitly outlined. This adjustment serves as a clarifying rule, acknowledging the recent allowance for multiple extensions in the scheme.
