Senior Citizens’ Savings Scheme: Centre issues ‘BIG’ clarification for investors; check details

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Recently, the government came across some malpractices in the pre-closure of the Senior Citizens’ Savings Scheme accounts by the operating agencies.

Senior Citizens’ Savings Scheme (SCSS ) offered by the government of India is one of the key saving schemes that attract citizens aged over 60 years. The SCSS offers a handsome interest of 7.4% for the quarter ending 31 March 2022. The SCSS account can be opened with a minimum deposit of Rs 1,000. It comes with a maximum deposit amount of Rs 15 lakhs. The interests in the Senior Citizens’ Savings Scheme are paid on 31 March, 30 June, 30 September and 31 December every year. The investors of the SCSS can also claim a tax benefit Under Section 80C of the Income Tax Act, 1961.

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However, recently, the government came across some malpractices in the pre-closure of the Senior Citizens’ Savings Scheme accounts by the operating agencies. Now the Ministry of Finance has come out with clarification with regards to the pre-closure of the SCSC.

“In the operation of Senior Citizens’ Savings Scheme (SCSS), it has been noticed in a few cases of the death of the account holder, operating agencies are closing the SCSS account by treating it as premature closure,” said the finance ministry.

It issued the clarification citing Rule 7(2) of the SCSS.

“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,” said the ministry.

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The ministry further said that the premature closure clause does not trigger on account of the demise of the SCSS account holder. “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 rule 6 of the SCSS,” it added.

This comes as a relief for the nominee/legal heir of the SCSS account holders as they will get full payment with interest as per the law and not as per the pre-closure rule.