Summary of this article
SCSS closure requires Form 2 for premature withdrawal and Form 3 for closure at maturity.
Accountholder needs to submit passbook, Aadhaar, PAN, and bank details.
Premature withdrawal in case of death attracts no penalty.
The Senior Citizens Savings Scheme (SCSS) offers 8.2 per cent interest and pays the interest every quarter at fixed dates. At present, banks are reducing their fixed deposit (FD) interest rates, but small savings interest rates have remained intact so far. The government also kept SCSS rates unchanged for this quarter. Compared to the banks’ FD rates that range between 6 per cent and 7.50 per cent at present, SCSS’s 8.2 per cent interest rate is undoubtedly attractive.
SCSS is a straightforward scheme for senior citizens (60 years and above) that provides them with a guaranteed income every quarter, directly in their bank account. Initially, the deposit, which can be a maximum of Rs 30 lakh, is done for five years, with an option to renew it indefinitely, in blocks of three years.
While the scheme does not offer partial withdrawal, premature full withdrawal is allowed if needed. Though there is a penalty for premature withdrawal, the option is available. The account in this case is closed, and money is transferred to the savings account of the accountholder.
Notably, the account can be closed at any time without any specific reason for premature closure. Simply put, SCSS is like an FD, in which a deposit is made in the beginning and interest is paid at regular intervals on April 1, July 1, October 1, and January 1 in every financial year.
How To Close The SCSS Account?
The account holder needs to apply for account closure on Form 2 in case of premature withdrawal and on Form 3 when the withdrawal is made at maturity.
In case of death, family members of the deceased account holder can submit Form 2 for premature withdrawal and closure of the account.
To close the account, one needs to submit the relevant form along with the other required documents, such as SCSS passbook, savings bank account details, Aadhaar card, PAN card, etc., to the post office or the bank where the account is being maintained. The account is closed within a few days, and funds are credited to the savings account.
What Is The Penalty For SCSS Premature Withdrawal And Closure?
· Premature closure before 1 year: No Interest on the deposit. If interest has been paid, it will be recovered from the final withdrawal amount.
· Premature closure after 1 year but before 2 years: Penalty of 1.5 per cent of the deposit will be deducted from the principal amount.
· Premature closure after 2 years but before 5 years: Penalty of 1 per cent of the deposit will be deducted from the principal amount.
· Premature closure in an extended period (before completion of three years’ extension): Penalty will be 1 per cent of the deposit if withdrawal is made within the first year from the date of extension. There is no deduction if the withdrawal is made after completing one year of the extension period.
In case of maturity, the full amount is returned to the account holder. In case of the death of an account holder in a joint SCSS account, the other account holder can continue the account till maturity. In case of death, premature withdrawal is not subject to penalty.
