SCSS- If you are a senior citizen, then this article is for you. Senior Citizen Savings Scheme (SCSS) has become one of the most preferred investment options in India. Under this scheme, senior citizens are offered guaranteed returns with better interest rates. Usually, one has to stay invested in this scheme for 5 years. But life is full of uncertainties, where financial needs can arise at any time. So in such a situation, the question arises whether money can be withdrawn prematurely under SCSS?

What is SCSS?

Senior Citizen Savings Scheme (SCSS) is a government savings scheme. Its purpose is to provide regular income to senior citizens, whose age is 60 years or more. It offers a fixed interest rate. The interest rate of the scheme for the current quarter is 8.2% per annum. Individual and joint accounts can be opened under this. This scheme also provides tax benefits. A maximum of Rs 30 lakh can be deposited in this scheme. Deduction is allowed for this scheme under Section 80C of the Income Tax Act. However, the interest received on the deposit is fully taxable.

Apart from this, if the interest earned is more than 50,000 in a business year, then TDS will be applicable. TDS will be deducted whether the deposit amount is withdrawn prematurely or not. Can money be withdrawn prematurely? The maturity period of SCSS is 5 years. However, the government allows premature withdrawal of money from the account. But for this you will have to face some penalties, which are as follows based on the time –

Within 1 year: No interest will be paid. Any interest already accrued will be deducted from your principal.

 

Between 1 to 2 years: 1.5 percent of the deposit amount is deducted as penalty.

 

Between 2 to 3 years: 1 percent of the deposit amount is deducted as penalty.

 

However, if the account holder dies prematurely, no penalty will be levied. In this case, the nominee or legal heir will be entitled to the principal and accrued interest. Apart from this, you can withdraw from your SCSS account during the extension period. After the initial 5-year period, the SCSS account can be extended for an additional 3 years. If you complete one year of this extension period, then no penalty will be levied on withdrawal after that.