Senior Citizens’ Savings Scheme, 2019- Detailed Analysis

Government has notified new Senior Citizens’ Savings Scheme, 2019 w.e.f. 12th December, 2019 vide notification No. G.S.R. 916(E). Article explains  Opening of account under Senior Citizens’ Savings Scheme, 2019, Deposit under Senior Citizens’ Savings Scheme, 2019, Interest on deposit under Senior Citizens’ Savings Scheme, 2019, Premature closure of account under Senior Citizens’ Savings Scheme, 2019, Closure of account under Senior Citizens’ Savings Scheme, 2019, Extension after maturity under Senior Citizens’ Savings Scheme, 2019, FORM – 1 Application for opening Senior Citizens’ Savings Scheme account, FORM -2 Application for premature closure of Senior Citizens’ Savings Scheme account, FORM – 3 Application for closure of Senior Citizens’ Savings Scheme account and FORM – 4 Application for extension of Senior Citizens’ Savings Scheme account.

Details of Senior Citizens’ Savings Scheme, 2019 –

1. Opening of account under Senior Citizens’ Savings Scheme, 2019

(1) An individual fulfilling the following conditions may open an account by making an application in Form-1 to the accounts office, namely:-

(i) who has attained the age of sixty years on the date of opening of the account; or

(ii) who has attained the age of fifty-five years or more but less than sixty years, and who has retired on superannuation or

(iii) otherwise on the date of opening of an account under this Scheme, subject to the condition that the account is opened by such individual within one month of the date of receipt of the retirement benefits and proof of date of disbursal of such retirement benefit(s) along with a certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer, is attached with the application form.

Please note that the retired personnel of Defence Services (excluding Civilian Defence employees) shall be eligible to open an account under this Scheme on attaining the age of fifty years subject to the fulfilment of other specified conditions.

(2) The successor or legal heir of a deceased serving personnel shall not be eligible to deposit the terminal benefits of such deceased personnel under this Scheme.

(3) An account holder may operate more than one account under this Scheme subject to the condition that the deposits in all the accounts taken together shall not exceed the maximum limit i.e. Rs. 15 Lakhs

(4) An individual may open an account in individual capacity, or jointly with spouse.

(5) In case of a joint account, the age of the first account holder shall be considered to determine the eligibility to open the account and there shall be no age-limit for the second applicant.

(6) The whole amount of deposit in a joint account shall be attributable to the first account holder only.

(7) Both the spouses can open single account and joint accounts with each other with the maximum deposit of upto fifteen lakhs rupees in each account provided both are individually eligible to open the account.

2. Deposit under Senior Citizens’ Savings Scheme, 2019

(1) The account shall be opened with a minimum deposit of one thousand rupees or any sum in multiples of one thousand rupees not exceeding fifteen lakh rupees.

Please note that the deposits in the account shall be restricted to the retirement benefits received, or fifteen lakh rupees, whichever is lower.

Note– “retirement benefits” means any payment due to the account holder on account of retirement 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 the employer on retirement, retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme and ex-gratia payments under a voluntary or a special voluntary retirement scheme.

(2) There shall be only one deposit in the account.

(3) Where a deposit in excess to Rs. 15 Lakhs has been made, the accounts office shall, refund the excess deposit to the account holder immediately.

3. Interest on deposit under Senior Citizens’ Savings Scheme, 2019

(1) The deposit made under this Scheme shall bear interest at the rate of 8.6% per annum.

(2) Interest shall be payable from the date of deposit to 31^st March/30^th June/30^th September/31^st December on first working day of April/July/October/January, as the case may be, in the first instance and thereafter interest shall be payable on first working day of April/July/October/January as the case may be.

(3) If so authorised by the account holder, interest payable on the due dates shall be credited to the account holder’s savings account.

(4) If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.

(5) Any amount of interest in fraction of a rupee shall be rounded off to the nearest rupee and for this purpose, any amount of fifty paisa or more shall be treated as one rupee and any amount less than fifty paisa shall be ignored.

(6) The excess amount shall carry interest at the rate applicable from time to time to the Post Office Savings Account and such interest shall be payable from the date of deposit of excess amount to the date of refund.

(7) In case of an account extended after maturity, the deposit in such account shall earn interest at the rate applicable to the Scheme on the date of maturity.

(8) Interest at the rate applicable to the Post Office Savings Account shall be payable on deposits in the account which are not extended or closed on maturity or extended maturity.

(9) The interest for any period less than a quarter shall be calculated as per the following formula:-

Number of days in the period x Interest for the quarter

Total number of days in the quarter

(10) If the interest is not claimed on the due date, it can be claimed on any date after the due date.

4. Premature closure of account under Senior Citizens’ Savings Scheme, 2019

(1) The account holder may withdraw the deposit and close the account at any time on an application in Form-2 subject to the following conditions:

(i) In case, the account is closed before one year after the date of opening of account, interest paid on the deposit in the account shall be recovered from the deposit and the balance shall be paid to the account holder.

(ii) In case 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 one and a half per cent. of the deposit shall be deducted and the balance shall be paid to the account holder.

(iii) In case 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 shall be deducted and the balance shall be paid to the account holder.

(2) The account holder availing the facility of extension of account may withdraw the deposit and close the account at any time after the expiry of one year from the date of extension of the account without any deduction.

(3) In case of premature closure, interest on the deposit shall be payable upto the date preceding the date of premature closure after deduction of penalty.

(4) Multiple withdrawals from an account shall not be permitted.

5. Closure of account under Senior Citizens’ Savings Scheme, 2019

(1) The deposit made at the time of opening of the account shall be paid on or after the expiry of five years or after the expiry of eight years where account was extended under paragraph 8 from the date of the opening of the account, on an application in Form-3.

(2) In case of death of the account holder before maturity or extended maturity, the account shall be closed and deposit refunded on an application in Form-3 along with interest as applicable to this Scheme till the date of the death of the account holder, to the nominee or the legal heirs, as the case may be.

Please note that interest on the deposits in the account shall earn interest at the rate applicable on Post Office Savings Account from the date of death of the account holder till the date of final closure of the account.

Also in case of a joint account, or where the spouse is the sole nominee, the spouse may continue the account on the same terms and conditions as specified under this Scheme, if the spouse meets eligibility conditions under the Scheme on the date of death of the account holder.

(3) Where both the spouses have opened separate account or accounts under this Scheme and either of the spouses dies during the currency of such account or accounts, then such account or accounts standing in the name of the deceased account holder shall not be continued and shall be closed.

6. Extension after maturity under Senior Citizens’ Savings Scheme, 2019

(1) The account holder may extend the account for a further period of three years by making an application in Form-4 within a period of one year from the date of maturity.

(2) The extension of the account shall be deemed to have been made from the date of maturity irrespective of the date of application.

(3) Extension of an account shall be available only once.

(4) The account holder may close the account any time after one year from the date of extension of account without any deduction.

7. Application of General Rules under Senior Citizens’ Savings Scheme, 2019

The provisions of General Rules shall, so far as may be, apply in relation to matters for which no provisions have been made in this Scheme.

8. Power to relax under Senior Citizens’ Savings Scheme, 2019

Where the Central Government is satisfied that the operation of any of the provisions in this Scheme causes undue hardship to the account holder, it may, by order, for reasons to be recorded in writing, relax the requirements of that provision in a manner not inconsistent with the provisions of the Act.

Summary of Forms under Senior Citizens’ Savings Scheme, 2019:

FORM – 1 Application for opening Senior Citizens’ Savings Scheme account

Following details need to be mentioned in this Form:

a) Photograph

b) Name of Applicant

c) Name of First account holder

d) Name of second account holder

e) Total initial deposit

f) PAN

g) Adhaar Number

h) Address

i) Contact Details

j) KYC details

k) Nominee details

FORM -2 Application for premature closure of Senior Citizens’ Savings Scheme account

Following details need to be mentioned in this Form:

a) Name of Applicant

b) Account Number

FORM – 3 Application for closure of Senior Citizens’ Savings Scheme account

Following details need to be mentioned in this Form:

a) Name of Applicant

b) Account Number

c) Date of Maturity

FORM – 4 Application for extension of Senior Citizens’ Savings Scheme account

Following details need to be mentioned in this Form:

a) Name of Applicant

b) Account Number

c) Date of Maturity