Premature closure clause won’t trigger on account of death of holder of ‘Senior Citizens Savings Scheme’: FinMin
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- Last Updated on 1 October, 2022
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Press Release, dated 29-09-2022
The Senior Citizen Saving Scheme (SCSS) is a Central Government sponsored program for senior citizens and retired persons. The amount deposited under the scheme is considered for tax deduction under Section 80C. The deposit under this scheme earns interest at the rate of 7.4% (7.6% with effect from 01-10-2022).
The deposit under this scheme shall be made for a period of 5 years. However, the account holder may extend the account for a further period of 3 years by making an application.
Account holders also have the option to close the account prematurely at any time by making an application in Form-2. If the account is closed within one year, interest paid on the deposit is recovered from the sum payable to the account holder. However, if it is closed after 1 year, a recovery of 1% to 1.5% of the deposit shall be made from the account holder.
The Ministry of Finance (FinMin) has noticed that in a few cases of the death of the account holder, operating agencies are closing the SCSS account by treating it as premature closure.
Thus FinMin has clarified that the premature closure clause of the Senior Citizens Savings Scheme does not trigger on account of the demise of its account holder. The premature closure of the account is applicable only when the SCSS account holder requests for closure of his account before the maturity period. Accordingly, the penalty of premature closure shall be applicable.
Further, in case of the death of the account holder and the account is being closed on request of the nominee/legal heir, the rate of interest as applicable on the 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.
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