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Interest Paid Is Recovered From Deposit If SCSS Account Is Closed Within A Year

If an SCSS account is closed after a year but before two years, 1.50 per cent of the deposit is deducted; likewise, banks may reverse the interest credited to a matured account but not closed

Interest Paid Is Recovered From Deposit If SCSS Account Is Closed Within A Year
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My mother passed away on February 6, 2022. Can we allow her PPF account to earn interest for more years and then remove the amount? How many years can we keep her account active and get interest even if she is no more? Is there a possibility that when we go to claim that amount as a nominee, the bank will not grant the interest, which is now granted and updated in the passbook for 2022-23?

As per the PPF rules 2019, in the event of the account holder's death, the account has to be closed, and the nominee or the legal heir is not allowed to continue the account. The balance in the account of the deceased account holder earns interest until the end of the month before the balance is paid to the nominee/ legal heir. So you cannot continue the account after the death of your mother. As per the government saving promotion rules 2018, for an account which has matured but not closed, the eligible balance in the account earns interest at the rate applicable to the Post Office Savings Account till the closure of the account. Since you have not closed the account, which matured on the date of death of your mother, the bank may reverse the interest already credited and pay you interest on the rates applicable to the post office saving bank account.

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The interest earned on deposits under Senior Citizen Saving Scheme (SCSS) is taxable. If they are closed prematurely, a deduction as a percentage of the deposit is made from the principal amount. Can the amount deducted be subtracted from income in the year of closure?

If the account under SCSS is closed within one year after the account opening date, the total interest paid is recovered from the deposit. But if the account is closed after one year but before the expiry of two years, 1.50% of the deposit is deducted. Please note that if the account is closed after two years, 1 per cent of the deposit is deducted from the deposit amount. Under income tax laws, there is no express provision for setting off the deduction amount against your interest income. However, if the account is closed during the same financial year, the interest recovered can be reduced from the amount received during the year.

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I am not an Indian citizen but a person of Indian origin. Can I inherit agricultural property in India as an NRI? If the answer is yes, then what are the legal and tax implications? What is the recommended exit strategy and/or creating a will for such agricultural property upon my death?

A person of Indian origin treated as a non-resident Indian (NRI) for FEMA purposes cannot purchase any agricultural land or plantation property in India without obtaining permission from the Reserve Bank of India (RBI). However, an NRI can inherit any immovable property, including agricultural land in India, from a resident or another NRI. If the farmland is inherited from an NRI, the deceased NRI should have acquired the same under the permitted rules as were in force when he had acquired it. There are no tax or legal implications at the time of inheriting. Please note you may have to pay capital gains tax as and when you sell the same, depending on where the agricultural land is situated. You can sell it to a resident or bequeath it to anyone, including an NRI under a Will. 

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