Question: My mother had a Senior Citizens’ Saving Scheme (SCSS) account in her single name with her son as the nominee. She made one SCSS deposit on April 15, 2022 for tax benefit under Section 80C of the Income Tax Act, 1961. She passed away 15 days later on April 30. We will file her income tax return (ITR) for FY22-23 and will claim the 80C deduction for the deposit made. Should we close the SCSS deposit only after April 1, 2023, so that there is no issue with the 80C deduction? Will we have to forego interest on all SCSS deposits because we were told that interest payments stop on the date of the SCSS depositor’s death?
Answer: As per the Senior Citizen Savings Scheme, 2019, the interest earned on SCSS does not cease on the date of the death of the account holder altogether, but is paid at the rate applicable on the savings account of the post office from the date of death to the date on which the amount is actually withdrawn.