What changed
RBI issued clarifications on SCSS 2004 following queries from Department of Posts and senior citizens. Key clarifications include: joint accounts are restricted to spouse only, with no age limit for the spouse; the entire deposit is attributed to the first applicant; post-maturity interest is paid at the Post Office Savings Account rate if not extended within one year; no income or wealth tax exemption is available; both spouses can open individual or joint accounts up to ₹15 lakh each if eligible.
What it means for you
Banks must ensure that SCSS accounts are opened only with a spouse as joint holder, and the first applicant's age determines eligibility. Post-maturity, if the account is not closed or extended, interest drops to the savings account rate, and any excess interest paid must be deducted. No tax benefits apply, so banks should not advise customers otherwise. Both spouses can independently invest up to ₹15 lakh, provided each meets eligibility criteria.
What you must do
- Update branch staff on SCSS rules: joint accounts only with spouse, age eligibility based on first applicant.
- Ensure post-maturity interest is calculated at Post Office Savings Account rate if account not closed or extended within one year.
- Inform depositors that no income/wealth tax rebate is available under SCSS.
- Display the clarification notice on branch notice boards for agents and investors.
- Verify that both spouses can open separate accounts up to ₹15 lakh each if individually eligible.
Who it affects
Public sector banks designated for SCSS, Branch managers and staff handling SCSS accounts, Senior citizen depositors and their spouses, Agents facilitating SCSS investments
Can I open a joint SCSS account with my sibling or friend?
No. Joint accounts under SCSS 2004 are allowed only with the spouse, as per Rule-3(3).
What happens if I don't close or extend my SCSS account after maturity?
The account is treated as matured, and post-maturity interest is paid at the Post Office Savings Account rate. Any excess interest already paid at the SCSS rate will be deducted.
Is the SCSS deposit exempt from income tax?
No. There is no income or wealth tax rebate or exemption under the scheme. Existing income tax provisions apply.