SCSS Premature Withdrawal and Extension Rules

The Senior Citizens Savings Scheme runs for 5 years and can be extended once for a further 3 years. You can also close it early, but the post office or bank deducts a penalty that depends on how long the account has run. This guide explains the exact slabs, the extension window, and the forms you need.

The Senior Citizens Savings Scheme (SCSS) is a government savings product for people aged 60 and above. It is opened at a post office or an authorised bank, runs for 5 years, and pays interest every quarter. The National Savings Institute lists it under the small savings schemes operated through India Post.

Per the National Savings Institute, an individual who has attained the age of 60 years or above on the date of opening can open an account. A person aged 55 or more but less than 60 who has retired under Superannuation, VRS or Special VRS can also open one, and retired Defence Services personnel may open an account from age 50, each subject to conditions. The maximum deposit across all your SCSS accounts is Rs 30 lakh.

The current interest rate is 8.2% per year for the April to June 2026 quarter, kept unchanged by the Finance Ministry. SCSS rates are revised every quarter, so check the latest notification or ask your branch before you deposit.

The account closes after 5 years from the date of opening. You may extend it for a further period of 3 years. There are three things to get right:

1. One block of 3 years. The extension is for a further 3-year block after the 5-year term ends.
2. Apply within one year of maturity. You must request the extension in Form-4 within one year from the date of maturity.
3. Extended account interest. An extended account earns interest at the rate applicable on the date of maturity.

If you do not extend and do not close the account at maturity, it keeps earning interest at the SCSS rate for a limited time, after which it stops. Do not leave a matured account idle. Decide to extend or close it.

You can close an SCSS account before the 5 years are over, but a penalty applies based on how long the account has run from the date of opening:

1. Before 1 year. No interest is payable. Any interest already credited to the account is recovered from the principal.
2. After 1 year but before 2 years. An amount equal to 1.5% of the deposit is deducted.
3. On or after 2 years (and before 5 years). An amount equal to 1% of the deposit is deducted.

For an account that has already been extended, a different rule applies. An extended account can usually be closed after one year from the date of extension without a deduction. Confirm this with your post office or bank before you act, since the exact figures and timing bands are set by the SCSS Rules and can change.

1. Decide before maturity. Mark the 5-year maturity date. For extension you have a one-year window from that date.
2. Visit the branch. Go to the post office or bank where the account is held. Both actions are done at the home branch.
3. For extension, fill Form-4. Ask for the SCSS extension form (Form-4), fill it, and submit it within one year of maturity.
4. For early closure, fill the closure form. Ask for the premature closure form, available at the post office or on the India Post website.
5. Carry your documents. Take the passbook, your identity proof, and the account holder present in person.
6. Get the penalty in writing. For early closure, ask the official to show you the exact deduction before you sign, so there are no surprises.
7. Collect the proceeds. The balance after any penalty is paid to your linked account or by the branch method you choose.

• SCSS passbook
• Identity proof (Aadhaar, PAN or other accepted proof)
• The correct form: Form-4 for extension, or the premature closure form
• Account holder present in person at the home branch

• Missing the one-year extension window. Apply in Form-4 within one year of maturity, or you lose the chance to extend that term.
• Closing just before a slab changes. Waiting a few weeks to cross the 1-year or 2-year mark can change your penalty from full interest recovery to a small percentage.
• Assuming an old rate. SCSS interest is reset every quarter. The rate on a fresh deposit is the rate notified for that quarter.
• Leaving a matured account idle. A matured account does not keep paying the SCSS rate forever. Extend it or close it.

Suppose a retired teacher in Pune deposits Rs 15,00,000 in SCSS. After 1 year and 6 months she needs the money for a medical bill. Because the account has run more than 1 year but less than 2 years, the penalty is 1.5% of the deposit, which is Rs 22,500. She receives her principal back minus that deduction, plus the interest already paid for the quarters she held the account, less any adjustment the branch makes. Always ask the branch to compute the exact figure for your account before you sign.

If a post office or bank delays your extension or closure without a clear reason, you can ask for the status in writing and, where applicable, use the Right to Information route for the public authority involved. For background on filing, see The RTI Playbook.

The National Savings Institute states the depositor may extend the account for a further period of 3 years after the 5-year term. Treat the confirmed rule as one further 3-year block applied for within one year of maturity. If you want to extend again, confirm what is currently allowed with your post office or bank, since interpretations of repeat extensions vary.

No interest is payable if you close before 1 year. Any interest already credited to the account is recovered from the principal, so you effectively get back only your deposit, adjusted for that recovery.

An amount equal to 1.5% of the deposit is deducted on premature closure after 1 year but before 2 years from the date of opening.

If you close on or after 2 years from the date of opening, an amount equal to 1% of the deposit is deducted. This is lower than the 1.5% slab for the 1-to-2-year period.

You apply for extension in Form-4 at the post office or bank, within one year from the date of maturity. Ask the branch for the current form and keep your stamped acknowledgement.

An extended SCSS account can usually be closed after one year from the date of extension without a deduction. Because exact conditions are set by the scheme rules, confirm with your post office or bank before you proceed.

The rate is 8.2% per year for the April to June 2026 quarter, kept unchanged by the Finance Ministry. Rates are revised every quarter, so check the latest notification before depositing.

Mark your maturity date now. If you want to continue, file Form-4 within one year of maturity. If you need the money sooner, ask the branch for the exact penalty in writing before you close, so you can time it past the next slab if that saves you money. Keep your passbook and acknowledgements safe.

By Dr. Shrawan Kumar Pathak