Senior Citizen Savings Scheme: To whom do the new Senior Citizen Savings Scheme (SCSS), PPF rules apply? Govt clarifies

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A few weeks ago, the Department of Posts came out with a detailed notification that laid out certain amended guidelines regarding the Senior Citizen’s Savings Scheme (SCSS), Public Provident Fund (PPF) and National Savings Time Deposit.

On November 29, 2023 the Department of Posts issued a clarification as to whom the new SCSS and PPF rules would apply.

Also read: Post office schemes rules changed: Govt makes changes to PPF, Senior Citizen Savings Scheme (SCSS), 5-year time deposit

SCSS and PPF clarifications

“This office was in receipt of many references regarding applicability of rules amended in connection with the premature closure of 5-year TD accounts which have already been opened before issue of notification G.S.R.830(E) dated 07.11.2023. Hence, clarifications were sought from Department of Economic Affairs (DEA), Ministry of Finance (MoF) regarding applicability of amended rules. DEA, MoF in OM No. 11412023-NS(PI.) dated 28.11.2023 clarified that the amendments related to SCSS and PPF will be applicable to both existing account holders and new account holders, whereas, the amendments in National Savings Time Deposit Scheme will be applicable only to new account holders. Accordingly, it is clarified that all the existing SCSS accounts can be extended in accordance with the provisions in the amendment issued vide notification G.S.R.829(E) dated 07.11.2023 and the existing 5-year TD accounts which have been opened before 10.11.2023 can be prematurely closed after six months in accordance with the rules under which they have been opened. However, S-year TD accounts opened on or after 10.11.2023 can be prematurely closed in accordance with the amendments issued vide notification G.S.R.830(E) dated 07.11.2023,” said the Department of Post in a notification circular dated November 29, 2023.

Amendments made to SCSS

According to the amended rules of SCSS, a penalty of one percent of the deposit would be deducted if the SCSS account is closed before the expiry of one year of the investment. Also read: What is the new SCSS premature withdrawal ruleAmong the many amendments in SCSS, one was about extending the scope of retirement benefits. As per the notification circular by Department of Posts dated November 14, 2023, retirement benefits means any payment received by the individual due to retirement or superannuation. It was also clarified that this also includes provident fund dues, retirement or superannuation or death gratuity, commuted value of pension, leave encashment, savings element of group savings linked insurance payable by the employer on retirement, retirement-cum-withdrawal benefit under Employees Pension Scheme (EPS) and ex gratia payments under a voluntary or special voluntary retirement scheme. For investment in this scheme, the definition of employee’s retirement benefits will also include the government employee who died on the job.Also read: Can you open multiple SCSS accounts?

PPF amendments

The Department of Posts’s circular dated November 14, 2023 said “On such premature closure, interest in the account shall be allowed at a rate which shall be lower by one per cent than the rate at which interest has been credited in the account from time to time since the date of opening of the account, or from the date of commencement of the current block period of five years, as the case may be.”

The Department of Posts in the circular cited above said that in the Public Provident Fund Scheme, 2019, in paragraph 13, in the second proviso, for the words “or the date of extension of the account”, the words “or from the date of commencement of the current block period of five years” shall be substituted.

This amendment means that the interest in PPF account would be allowed at a rate that would be 1% less than the interest rate that has been periodically credited to the said PPF account from the date of commencement of the current block of five years.

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