Does the SCSS allow premature withdrawals?

Summary: Does the SCSS allow premature withdrawals? Absolutely. But there’s a catch. Read on to find out.

As per the new rules, can I prematurely withdraw from the Senior Citizen Saving Scheme (SCSS)? – Anonymous

Yes, you can.

Although the Senior Citizen Savings Scheme (SCSS) has a tenure of five years, you can withdraw earlier.

However, your decision to withdraw may come at a cost.

If you withdraw within a year of opening your SCSS, you'll get back your money, but the interest you received until then will be deducted.

If you withdraw after completing one year but before two years, 1.5 per cent of the principal will be deducted.

If you withdraw after completing two years, a penalty of 1 per cent is applicable.

Extension rules

The SCSS can be extended for indefinite blocks of three years now.

So, if you plan to withdraw in the sixth year, a penalty of 1 per cent is applicable. This is the new rule. Earlier, you weren't allowed to withdraw your SCSS amount in the sixth year.

Withdrawal in the seventh and eighth year carries no penalty.

Since SCSS can be extended further than eight (5+3) years, the same principles apply in your 9th, 10th and 11th year. While withdrawal in the first year of extension will have a penalty of 1 per cent, the second and third years will have no such conditions.

Also read: SCSS account can now be extended indefinitely

This article was originally published on January 31, 2024, and last updated on December 23, 2025.