What is Senior Citizen Savings Scheme (SCSS)?
Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme specifically designed for Indian citizens aged 60 years and above. It offers the highest interest rate (8.2%) among all small savings schemes, making it an ideal investment for retirees seeking regular income with sovereign guarantee.
The scheme provides quarterly interest payouts, ensuring a steady income stream for senior citizens. It combines safety, attractive returns, and tax benefits, making it the most popular retirement investment in India.
Key Features of SCSS
- Interest Rate: 8.2% p.a. (highest among small savings), payable quarterly.
- Tenure: 5 years, extendable by 3 years.
- Minimum Investment: ₹1,000 in multiples of ₹1,000.
- Maximum Investment: ₹30 Lakh per individual.
- Interest Payout: Quarterly (1st Apr, Jul, Oct, Jan).
- Tax Benefits: Principal qualifies for Section 80C (up to ₹1.5 Lakh).
- TDS: Deducted if yearly interest exceeds ₹50,000.
- Premature Closure: Allowed with penalty after 1 year.
SCSS Eligibility Criteria
- Age 60+: Any Indian citizen aged 60 years or above.
- Retired Civilians (55-60): Must invest within 1 month of receiving retirement benefits.
- Retired Defense Personnel (50-60): Must invest within 1 month of retirement.
- Joint Account: Allowed with spouse (first holder must meet age criteria).
- Not Eligible: NRIs and HUFs cannot invest in SCSS.
How is SCSS Interest Calculated?
SCSS interest is calculated on the deposit amount at 8.2% per annum, paid quarterly. The formula for quarterly interest is:
Or simply:
Example: For ₹30 Lakh (maximum) investment:
- Quarterly Interest = 30,00,000 × 2.05% = ₹61,500
- Yearly Interest = ₹61,500 × 4 = ₹2,46,000
- Total Interest (5 years) = ₹2,46,000 × 5 = ₹12,30,000
SCSS Tax Implications
| Aspect | Tax Treatment |
|---|---|
| Principal Investment | Eligible for 80C deduction (up to ₹1.5 Lakh) |
| Interest Earned | Fully taxable as per income slab |
| TDS on Interest | 10% if yearly interest > ₹50,000 |
| Form 15H | Submit to avoid TDS if total income is below taxable limit |
Premature Withdrawal Rules
- Before 1 Year: Not allowed (except on death of depositor).
- After 1 Year but before 2 Years: 1.5% of deposit deducted as penalty.
- After 2 Years but before 5 Years: 1% of deposit deducted as penalty.
- After Maturity (5 Years): Full amount without penalty.
SCSS vs Other Senior Citizen Investment Options
| Feature | SCSS | Post Office MIS | Bank FD (Sr. Citizen) |
|---|---|---|---|
| Interest Rate | 8.2% | 7.4% | 7.0-7.5% |
| Payout Frequency | Quarterly | Monthly | Flexible |
| Max Investment | ₹30 Lakh | ₹9 Lakh | No Limit |
| 80C Benefit | Yes | No | Yes (5-yr FD) |
Frequently Asked Questions (FAQs)
What is the SCSS interest rate for January 2026?
The SCSS interest rate for Q4 FY 2025-26 (January to March 2026) is 8.2% per annum, paid quarterly. This is the highest rate among all government small savings schemes.
Can I open multiple SCSS accounts?
Yes, you can open multiple SCSS accounts at different post offices or banks. However, the total investment across all accounts cannot exceed ₹30 Lakh.
What happens if I don't withdraw quarterly interest?
If you don't withdraw the quarterly interest, it does not earn any additional interest. The unclaimed interest simply accumulates without compounding, so it's advisable to withdraw or transfer it to another investment.
Can I transfer my SCSS account?
Yes, SCSS accounts can be transferred from one post office to another, or from post office to bank and vice versa, without any charges. The interest rate and maturity date remain unchanged.
What happens to SCSS on the death of the account holder?
In case of death, the nominee or legal heir can either continue the account till maturity or close it prematurely. If continued, the account earns the same interest rate. If closed, it's treated as premature closure but without any penalty.