The Ministry of Finance has relaxed the time limit of investing in Senior Citizen Savings Scheme (SCSS) for individuals who retired between February and April 2020. This is good news because as per the scheme rules, if an individual aged between 55 years and 60 years retired on superannuation or otherwise are required to invest the retirement benefits within one month of retirement.
According to a finance ministry circular dated May 26, 2020, individuals aged between (55 and 60 years) who retired between February and April 2020 are now allowed to invest in the scheme till June 30, 2020. The circular stated that the decision to relax the regulatory provisions has been taken to safeguard the interest of small savings depositors in the view of the lockdown in the country due to the COVID-19 pandemic.
As per the circular, “Individual retired (within the age bracket 55-60 years) on superannuation or otherwise and got retirement benefits in February-2020, March-2020 and April 2020 are eligible to open SCSS account up to 30th June, 2020. Personnel from Defence services retired and got retirement benefits in February-2020, March-2020 and April-2020 are also eligible to open SCSS account up to 30 June, 2020 under the prescribed eligibility conditions applicable to them.”
What is Senior Citizen Savings Scheme account?
SCSS is a government of India scheme that offers retirees regular income in the form of interest. Senior citizens and early retirees can invest a maximum up to Rs 15 lakh in the scheme. The scheme currently fetches an interest rate of 7.4 per cent for the quarter of April to June 2020.
An individual can invest in the SCSS scheme if the age is 60 years or more. However, an individual aged 55 years or more but less than 60 years who retires on superannuation or under VRS can also open an account subject to the condition that the scheme account is opened within one month of receipt of retirement benefits and the amount should not exceed the amount of retirement benefits.
Similarly, retired personnel of Defence Services (excluding Civilian Defence employees) are also eligible to open an account under the scheme upon attaining the age of 50 years subject to fulfilment of other specified conditions.
SCSS offers deduction under section 80C (maximum up to Rs 1.5 lakh) in a financial year to save tax. Further, deduction under section 80TTB can be claimed on the interest earned on the scheme. Interest on the scheme is subject to TDS. Premature closure is allowed subject to penalty. After maturity, the scheme account can be further extended for three years within one year of maturity.