Is partial withdrawal from SCSS permitted?

After completing five years fixed deposit in SCSS scheme, I wanted to withdraw some amount and continue with the rest of the amount for another three years. But the concerned officer told me that if you withdraw some amount then you have to make fresh FD for another five years. Please guide me. - Anonymous

In short, no.

According to Senior Citizen Savings Scheme Rules 2019, multiple partial withdrawals from an SCSS account is not permitted. But an individual can prematurely withdraw from an account and close it, which entails a penalty.

Note that SCSS deposit matures after five years from the date of account opening. But SCSS account-holders may choose to prolong such maturity by another three years. However, such extension facility is available only once.

Since your circumstance is that of post-maturity and partial withdrawals are not permitted, you might have to withdraw the entire amount and close the SCSS account. Thereafter, keep aside the desired amount and reinvest the remaining.

You can go with any of the three reinvestment options available as per your requirement:

• Open a new SCSS account for five years with prevailing fixed interest rate of 2023 Q1 at 8 per cent p.a. But remember that since a new account will be opened, the tenure will be of five years and not three years.
• If you are specifically seeking guaranteed returns and absolute safety of capital, then you can also consider investing in a bank fixed deposit for three years.
• If you are ready to assume a bit of risk, then you can opt for a high-quality short duration fund. They have the potential to give higher returns and are more tax-efficient.

Further, if your main objective is to generate regular income from this money, then you must allocate a small portion of it to equities. You can also check our portfolio planner for the same.