SENIOR CITIZEN SAVINGS SCHEME
WHY IN NEWS?
- Recently, the government has issued a notification to make changes in the Senior citizens Savings Scheme rules.
WHAT IS SENIOR CITIZEN SAVINGS SCHEME?
- The Senior Citizen Savings Scheme (SCSS) is a government backed saving scheme where principal and interest are backed by the government.
- An account under this scheme can be opened in a post office or in a scheduled commercial bank.
ELIGIBILITY CRITERIA:
- An individual who has attained the age of 60 years and above or one who has attained the age of 55 years or more but less than 60 years and who has retired on superannuation or otherwise on the date of opening is eligible to open this account.
OTHER CHARACTERSTICS OF SCSS:
- One can open the account with a minimum amount of ₹1,000 and a maximum of ₹30 lakh.
- It can be opened as a single or joint account.
- The SCSS offers 8.2 per cent per annum interest rate.
- The rate is revised every quarter, and the final rate is decided considering factors like inflation, market scenario, etc.
BENEFITS OF SCSS:
- SCSS is an Indian government-sponsored investment scheme and hence is considered safe and most reliable.
- SCSS account includes a simple process and can be opened at any authorised bank or any post office in India.
- The account is transferable across India.
- The scheme offers a high interest rate on the deposit.
- Get an income tax deduction of up to Rs.1.5 lakh under Section 80C of the Indian Tax Act, 1961.
- The 5-year tenure of the account can be extended for another 3 years.
DISADVANTAGES OF SCSS:
- If the interest accrued in the SCSS account surpasses the threshold limit of ₹50,000 in a financial year, it will be subject to TDS.
- Each quarter, owners of SCSS accounts must report their interest earnings.
- Only seniors over 60 years old are eligible to open an SCSS account, which means that private sector employees who want to retire early cannot avail the benefit of the scheme.
LATEST CHANGES TO THE SCHEME:
In a recent notification, the Finance Ministry brought about a number of changes.
Some of the important changes are:
- A new provision has been added, which says, “the spouse of the government employee shall be allowed to open an account under this scheme, if the government employee who has attained the age of 50 years and has died in harness, subject to the fulfilment of other specified conditions.”
- Here, the government employees include all Central and State Government employees and they are eligible for retirement benefit or death compensation.
- The account can be opened within three months from the date of receipt of the retirement benefits for a living employee and admissible financial assistance to an eligible government employee who died in harness.
- Earlier, this time limit was one month and that too only for living person.
- An account holder can extend the account for a further block period of three years by making an application in Form4 within a period of one year from the date of maturity or from the date of end of each block period of three years.
- Earlier, this facility was to be used only once.
- In case of an account extended after maturity, the deposit in such account will earn interest at the rate applicable to the scheme on the date of maturity or on the date of previous extended maturity.
- Earlier, it was said that interest applicable on the date of maturity was applicable for an extended period.
- If the account is closed before expiry of one year from the date of extension, an amount equal to one per cent of the deposit will be deducted and the balance will be paid to the accountholder.
PRESENT CONDITIONS FOR PREMATURE DISCLOSURE:
- If the account is closed before one year after the date of opening of account, interest paid on the deposit in the account will be recovered from the deposit and the balance will be paid to the account holder.
- If the account is closed after the expiry of one year but before the expiry of two years from the date of its opening, an amount equal to 1½ per cent of the deposit will be deducted.
- If the account is closed on or after the expiry of two years from the date of its opening, an amount equal to one per cent of the deposit will be deducted.
SYLLABUS: MAINS, GS-2, SOCIAL JUSTICE
SOURCE: THE HINDU