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A Senior Citizen Savings Scheme (SCSS) account has a tenure of five years and the deposited amount is paid back to the investor on maturity. While the depositor can open a new SCSS account after the maturity, however, the depositor has the option to extend the maturity by three years.
For extending the maturity of the SCSS account, the depositor needs to submit the request in the prescribed form within one year from the date of maturity. The request form can be obtained from the post office or the bank where the SCSS account is held. The extended period of three years is counted from the original date of maturity, that is, from the day when the deposit completes five years, irrespective of when the depositor actually makes the request for extension in maturity.
Further, the rate at which the SCSS deposit earns interest is also revised to the rate of interest as applicable on the day when the SCSS account was originally scheduled for maturity - five years from the day of making the deposit.
Though a pre-mature closure of the SCSS account attracts a penalty, the same is waived off if closed after one year during its extended tenure. An amount equivalent to 1.5 per cent of the deposited amount is deducted if the SCSS account is closed during the second year. And if it is closed after two years but before completing five years, a penalty equivalent to 1 per cent of the deposited amount is deducted.
If the depositor doesn't make a request for getting the account closed or extended within one year after completing the original tenure of five years, the account is deemed to be matured. And the deposit starts earning interest equivalent to a post-office savings account after five years.
SCSS is one of the highest-yielding, government-backed guaranteed return schemes for senior citizens to generate regular income. Deposits made from April to June 2022 will earn an annual interest of 7.4 per cent. And while the interest on SCSS is added to the taxable income and taxed as per the applicable slab, senior citizens can avail a deduction of up to Rs 50,000 on interest from deposits, under section 80TTB of the income tax act.
Here is what the SCSS account maturity extension form at the post office looks like:
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