Premature withdrawals and Maturity period

What is the tax treatment for premature withdrawals?

Premature withdrawals result in the addition of the principal balance and accrued interest to the person's "gross total income," which is then taxed. The primary amount removed by the nominee or legal successor is free from taxes in the event that premature withdrawals are made as a result of the depositor's passing. Taxes will, however, be paid on interest accrued on deposits after the depositor's passing.

You can get more knowledge on 80g exemption list.

What is the Maturity period and what occurs in case of premature withdrawals?

The Senior Citizen Savings Scheme has a 5-year term or maturity period. You can choose to delay the maturity of the account for an additional three years, but you must do so before the account matures. Premature withdrawals are permitted under this plan, although they are subject to restrictions like:-

(1) Premature withdrawals are only permitted one year after the account is opened.

(2) The fees assessed on the deposits will be 1.5% if you withdraw after one year but before two years of account establishment.

(3) If you make a withdrawal more than two years after your account was opened, there will be a 1% fee assessed for your deposits.

(4) No fees will be applied to deposits if the account is prematurely closed as a result of the depositor's passing.

Upon maturity, you have two options: cancel your account and collect the maturity sum, or add three additional years to the account's life. A "Closure form" and your account passbook must be submitted if you want to close your account. A properly completed "Extension form" is needed to extend the account once it reaches maturity.

After maturity, if the depositor does nothing, the interest rate set for the post office savings plan will continue to be applied to the deposits. Here, you can visit 12a.

What does the nomination facility inside SCSS entail?

In the account opening form, you can designate a nominee when creating the account. It is crucial that you name a nominee since it will be useful in an emergency case like the untimely death of the depositor. Another option is to designate a "minor" as your nominee. You must supply the birth certificate and the guardian's information if you are designating a minor as your candidate. Since the procedure is free, nominating and altering a nominee is allowed an unlimited number of times.

Do not be concerned if you forget to name a nominee when you start your savings account. Throughout the duration of your account, you also have the option of designating a nominee. All you have to do is complete the "nomination form" and turn it into the location of your savings account. The agreement of all depositors must be expressed in the form of signatures on the nomination form if a candidate is to be named for a joint account.

You can gain more knowledge on 80g income tax.