What Are Premature Withdrawal Rules For Senior Citizen Savings Scheme (SCSS)?
The senior citizen savings scheme (SCSS) is a secured investment tool for senior citizens offering an 8.2 per cent interest rate on deposits.
The senior citizen savings scheme (SCSS) is a secured investment tool for senior citizens offering an 8.2 per cent interest rate on deposits.
Withdrawal Rules For senior citizen savings scheme (SCSS)
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Any individual aged 60 and above can apply for the Senior Citizen Savings Scheme (SCSS). The scheme offers a fixed 8.2 per cent interest on deposits by post offices and designated banks. However, SCSS returns beyond the limit of Rs 1.5 lakh under section 80C of income tax are taxable. An individual can open multiple accounts but the maximum deposit limit is Rs 30 lakh.
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One can invest in the scheme individually or jointly with spouses. The interest is paid on fixed dates—April 1, July 1, October 1, and January 1 in every financial year. The interest is transferred directly to the accountholder’s bank or post office savings account.
Also Read: Continue Servicing Your Home Loan If There’s No Strong Non-Financial Reason To Prepay It
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The SCSS scheme has a lock in of five years. However, it allows premature withdrawals and closure under certain conditions for a penalty, depending on the holding period.
If the account is closed within a year from the date of account opening, the accountholder will not receive any interest. If it has been already paid, it will be recovered. Therefore, if you open an SCSS account, stay invested in it for at least one year to earn interest.
Withdrawals made after a year but before two years, an amount equal to 1.5 per cent of the deposit will be deducted from the principal amount.
In case of withdrawal after two years but before five years, an amount equal to 1 per cent of the deposit will be deducted before transferring the balance amount to the accountholder.
Also Read: Withdrawal Rules For NPS Tier I Account: All You Need To Know
On November 14, 2023, the Department of Posts announced changes in the SCSS scheme. As per the notification, the account can be extended unlimited times in blocks of three years. Earlier, only one extension was allowed, and premature closure was permitted only after a year from the date of extension. SCSS now allows extension indefinitely till the accountholder’s death.
In the case of an extended period, premature withdrawal is permitted before a year. In that case, the penalty will be 1 per cent of the deposit if withdrawal is done before a year from the date of extension. The penalty will be deducted from the principal, and the balance amount will be transferred to the accountholder. After a year, there is no deduction on withdrawal.
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Fixed deposits are a secure investment option with attractive interest rates for senior citizens. Explore the highest FD rates across government banks, private banks, small finance banks, and corporate FDs to maximise your savings. However, also consider factors, such as tenure, credibility, premature withdrawal, senior citizen premium, and tax implications for an informed decision.
Axis Bank has revised its fixed deposit rates effective July 26, 2023. The maximum rate of interest offered to senior citizens is 7.85 per cent
Five banks have revised their fixed deposit (FD) rates this week, close in the heels of the Reserve Bank of India’s (RBI) monetary policy committee (MPC) meeting that concluded on Friday.
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