Senior Citizen Savings Scheme (SCSS) is an investment instrument for people aged 60 and older. The minimum investment in the scheme is Rs 1,000 and the maximum is Rs. 30 lakh. SCSS offers an annual interest of 8.2 per cent, with a 5-year lock-in. However, the scheme allows premature exits, although the investors will have to pay a penalty depending on the duration of the account. Here are some rules for premature exit from the SCSS scheme.

Premature Closure

The SCSS account can be closed at any time after opening it; however, the investor will have to pay a penalty for premature exit. If the account is closed before completing a year, the principal amount will be returned while the interest accrued during the period will be held back. If the account is closed two years after opening it, a 1.5 per cent will be deducted from the principal. If the maturity is 2 years away, one per cent will be deducted from the principal amount.

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Maturity Closure

The account can be closed at maturity, which is 5 years, upon submitting a prescribed application form with passbook details at the concerned Post Office. In case of death of the accountholder, the account will earn interest from the date of the death at the rate of the Post Office savings account. If the spouse is a co-holder of the account or is the sole nominee for the account, the spouse may continue till maturity if the spouse is eligible and does not have another account.

Key Features Of SCSS

SCSS investments attract tax benefits. SCSS allows its accountholder to claim deduction under the section 80C of the Income Tax Act 1961. SCSS can be used as a short-term investment vehicle if the senior has a surplus of money and does not need immediate cash. It can also be used as an emergency fund to provide a financial cushion for any unpredictable events in the future.  SCSS provides seniors significant returns on their investments. Retired civilian employees can open an account at the age of 55, while the retired defense employees can open the account at the age of 50. The interest is paid quarterly. However, it cannot earn any additional interest if it is not collected by the accountholder. The amount in the account is attributable to the principle accountholder only.

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