SCSS: How Senior Citizens Can Withdraw Money Before Maturity — All You Need to Know

Understanding the Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme (SCSS) is among India’s most trusted government-backed investment options, specifically designed for individuals aged 60 and above. Offering a fixed interest rate of 8.2% per annum for the current quarter, SCSS ensures a steady income stream for senior citizens. The scheme allows deposits of up to Rs 30 lakh and provides tax benefits under Section 80C of the Income Tax Act. However, the interest earned is fully taxable, and TDS is applicable if the annual interest exceeds Rs 50,000.

Both individual and joint accounts can be opened under SCSS, making it a flexible option for retirees seeking secure investment avenues.

Can You Withdraw Money Early from SCSS?

While SCSS typically comes with a 5-year lock-in period, the government has provisions for premature withdrawals to accommodate unforeseen financial needs. However, withdrawing funds before maturity attracts penalties depending on the time elapsed since the account opening:

• Within 1 year: No interest is paid. Any interest credited will be recovered from the principal amount.

• Between 1 to 2 years: A penalty of 1.5% of the deposit amount is deducted.

• Between 2 to 3 years: A penalty of 1% of the deposit amount is deducted.

Importantly, in the unfortunate event of the account holder’s death, no penalty is charged, and the nominee or legal heir is entitled to receive the principal along with accrued interest.

Withdrawal During SCSS Extension Period

After completing the initial 5-year tenure, SCSS account holders can extend their account for an additional 3 years. If the account holder chooses to withdraw funds during this extension period, no penalty will apply after the completion of one year from the start of the extension. This feature provides added liquidity flexibility for senior citizens during the extended phase.

Understanding these rules can help senior citizens plan their investments more efficiently and avoid unnecessary penalties during urgent financial situations.