Does SCSS allow premature withdrawals?

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