Senior citizen saving scheme (SCSS) is best interest paying scheme for eligible senior citizens - 60 years.
Investment in this scheme is also eligible for deduction under the income tax (IT) act section 80 C. Interest in this scheme is 9.3 % per year,which is quarterly compounding.
** 21. What is the meaning of ‘retirement benefits’ for the purpose of SCSS, 2004?
"Retirement benefits" for the purpose of SCSS Rules have been defined as 'any payment due to the depositor on account of retirement whether on superannuation or / otherwise and includes Provident Fund dues, retirement / or superannuation gratuity, commuted value of pension, cash equivalent of leave, savings element of Group Savings linked Insurance scheme payable by employer to the employee on retirement, retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme and ex-gratia payments under a voluntary retirement scheme'. (Rule 2 (a) of the Senior Citizens Savings Scheme (Amendment) Rules, 2004 notified on October 27, 2004)
** 22. Can deposits under the SCSS scheme be made only from amounts received as retirements benefits?
In case an investor has attained the age of 60 years and above, the source of amount being invested is immaterial [Rule 2 (d) (i)].
However, if the investor is 55 years or / above but below 60 years and has retired under a voluntary retirement scheme (VRS) or a special voluntary scheme or has retired from the Defence services, only the retirement benefits can be invested in the SCSS. [Rule 2(d) (ii)].
** 23. Is there a period prescribed for opening deposit account under the SCSS scheme, by the senior citizen, from the retirement benefits?
If the investor is 60 years and above, there is no time period prescribed for opening the SCSS account(s). However for those below 60 years, following time limits have been prescribed.
(a) The persons who have attained the age of 55 years or more but less than 60 years and who retired under a voluntary retirement scheme (VRS) or a special voluntary retirement scheme on the date of opening of an account under these rules, subject to the condition that the account is opened by such individual within three months of the date of retirement.
(b) The persons who have retired at any time before the commencement of these rules and attained the age of 55 years or more on the date of opening of an account under these rules, will also be eligible to subscribe under the scheme within a period of one month of the date of the notification of the SCSS, 2004 that is 27th October 2004, subject to fulfillment of other conditions. [Rule 2 of the Senior Citizens Savings Scheme (Amendment) Rules, 2004]
(c) The retired personnel of Defence Services (excluding Civilian Defence Employees) will be eligible to subscribe under the scheme irrespective of the above age limits subject to the fulfillment of other specified conditions. [Rule 2 of the Senior Citizens Savings Scheme (Amendment ) Rules, 2004]
** 24. Can an account holder obtain loan by pledging the deposit / or account under the SCSS, 2004?
The facility of pledging the deposit / account under the SCSS, 2004 for obtaining loans, is not permitted since the account holder will not be able to withdraw the interest amount periodically, defeating the very purpose of the scheme. (GOI letter F. No.2/8/2004/NS-II dated May 31, 2005)
** 25. Is premature withdrawal of the deposits from the accounts under the SCSS, 2004 permitted?
Premature withdrawal / or closure of the deposits from the accounts under the SCSS, 2004 has been permitted after completion of one year from the date of opening of the account after deducting the penalty amount as given below.
( i ) If the account is closed after one year but before expiry of two (2) years from the date of opening of the account, an amount equal to one and half (0.5) per cent of the deposit shall be deducted.
( ii ) If the account is closed on or after the expiry of two (2) years from the date of opening of the account, an amount equal to one (1) per cent of the deposit shall be deducted.
However, if the depositor is availing the facility of extension of account under Rule 4 (3), then he / she can withdraw the deposit and close the account at any time after the expiry of one (1) year from the date of extension of the account without any deduction. [Rule 9 (1) (a) (b) and (2)]
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