Senior Citizen Savings Scheme: Know how can you extend investment period of SCSS account. Check details, interest rates

Senior citizens investment: The Senior Citizen Savings Scheme (SCSS) is a government-backed investment option favoured by retirees, offering a competitive interest rate of 8.2% per annum for investments made in the October-December quarter. Individuals aged 60 and above can invest up to Rs 30 lakh in an SCSS account. Deposits can be made in a lump sum or through multiple deposits, with a minimum deposit amount of Rs 1,000. It's important to note that the total of all deposits under the SCSS cannot exceed Rs 30 lakh at any time. Investors can utilize this scheme multiple times, within the investment limit constraint.

The interest rate on the savings scheme is determined and updated by the government on a quarterly basis. For the July-September quarter, the government has decided to maintain the interest rate at 8.2%. Interest is calculated and paid out quarterly, starting from the date of deposit until the end of each quarter: 31st March, 30th June, 30th September, and 31st December, as mentioned on the IndiaPost website.

The account opening process requires a minimum deposit of Rs 1,000 or any amount in multiples of Rs 1,000, not surpassing Rs 30,00,000. If an excess deposit is made into the SCSS account, the surplus will promptly be returned to the depositor. During the period from the date of the excess deposit to the refund date, the applicable interest rate will be that of a PO Savings Account.

In the year 2023, a new policy update was implemented regarding the Senior Citizen Savings Scheme (SCSS). The SCSS offers depositors quarterly interest payouts throughout the five-year duration of the scheme, with the principal amount being returned to the investor upon maturity.

Under the revised rules, investors can now have the flexibility to extend their SCSS account by an additional three years, marking a significant change from the previous limitation of only one extension. Under the updated policy, beneficiaries are now granted the opportunity to renew their SCSS account in increments of three years, with the option to do so an unlimited number of times.

How to extend the maturity tenure

To extend the maturity of an SCSS account, depositors must submit a request using the prescribed form within one year from the maturity date or from the end of each block period of three years, assuming the account remains open. The request form can be obtained from the post office or the bank where the SCSS account was opened. You can select to extend the tenure just once. The interest rate that was applicable on the day of SCSS maturity, will continue for the extended period.

Points to note

> The extension date for your SCSS deposit will commence from the original maturity date, which corresponds to when the deposit completed five years. This date remains unchanged, regardless of when you submit the extension request, even if it is several months after the maturity date but within one year from maturity.
> Throughout the extension period, the SCSS deposit will accrue interest at the prevailing rate effective on the original maturity date or on the date of the extended maturity.
> Extensions are typically granted exclusively on the principal amount of the original investment that has achieved a five-year term.

Premature withdrawal

SCSS allows for premature withdrawal, with applicable costs involved. If the withdrawal occurs before one year of the deposit, no interest will be paid and any interest already paid will be recovered. Should withdrawal happen after one year but before two years, a deduction of 1.50% of the deposit amount will be applied. After two years, the penalty is limited to 1% of the deposit total. It's essential to note that interest payments on prematurely withdrawn SCSS deposits cannot be reversed or recovered once one year has passed. Similar rules apply to premature withdrawals of bank fixed deposits, resulting in a reduction of the payable interest rate.