What is SCSS (Senior Citizen Savings Scheme)?
Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme designed specifically for senior citizens aged 60 years and above. Launched by the Ministry of Finance, SCSS provides regular quarterly income at one of the highest interest rates among small savings schemes, making it ideal for retirees seeking stable income.
Key Features of SCSS
- Interest Rate: 8.2% per annum (Q4 FY 2025-26), paid quarterly
- Eligibility: Indian citizens aged 60+ years (55+ for VRS/retired individuals)
- Minimum Deposit: ₹1,000
- Maximum Deposit: ₹30 Lakhs (increased from ₹15L in Budget 2023)
- Tenure: 5 years, extendable by 3 years
- Tax Benefit: Deposit qualifies for Section 80C deduction (up to ₹1.5L)
- Interest Payment: Credited quarterly (April, July, October, January)
- Premature Closure: Allowed after 1 year with penalty
SCSS Interest Calculation
SCSS interest is simple interest, not compounded. It is calculated quarterly and paid directly to your account.
Quarterly Interest = Deposit × (Rate/100) ÷ 4
For ₹15,00,000 at 8.2%:
= 15,00,000 × 0.082 ÷ 4
= ₹30,750 per quarter
Annual Interest: ₹30,750 × 4 = ₹1,23,000
5-Year Total Interest: ₹1,23,000 × 5 = ₹6,15,000
Tax Treatment of SCSS
Principal: SCSS deposit qualifies for Section 80C deduction up to ₹1.5 lakh per financial year.
Interest: Interest is fully taxable as per your income tax slab. TDS is deducted at source if annual interest exceeds ₹50,000 (for senior citizens).
Maturity: Principal amount returned at maturity is tax-free as it was already taxed when invested.
Premature Closure Rules
| Closure Timing | Penalty |
|---|---|
| Before 1 year | Not allowed |
| After 1 year, before 2 years | 1.5% of deposit deducted |
| After 2 years, before maturity | 1% of deposit deducted |
SCSS vs PMVVY vs FD Comparison
| Feature | SCSS | PMVVY | Senior Citizen FD |
|---|---|---|---|
| Interest Rate | 8.2% | 7.4% | 7.0-7.5% |
| Max Investment | ₹30 Lakhs | ₹30 Lakhs | No Limit |
| Payout Frequency | Quarterly | Monthly/Quarterly/Annual | Monthly/Quarterly/Maturity |
| 80C Benefit | Yes | No | Only Tax Saver FD |
Frequently Asked Questions (FAQs)
Can I open joint SCSS account?
Yes, SCSS allows joint accounts. However, both account holders must be senior citizens. The maximum limit of ₹30 Lakhs applies per individual, so a joint account can have up to ₹60 Lakhs (₹30L each).
What happens if account holder dies before maturity?
In case of death of the account holder, the nominee or legal heir can close the account prematurely without any penalty. The principal along with accrued interest will be paid to the nominee.
Can NRI invest in SCSS?
No, SCSS is available only for resident Indian citizens. NRIs are not eligible to open SCSS accounts. However, if someone becomes NRI after opening the account, they can continue until maturity.
Is SCSS better than FD for senior citizens?
SCSS typically offers 0.5-1% higher interest than bank FDs and provides Section 80C tax benefits. However, FDs offer more liquidity and no maximum investment limit. SCSS is better for regular income needs with tax benefits.
How to extend SCSS after 5 years?
Visit your post office within one year after maturity and fill Form B to extend the account for 3 more years. The extension will be at the prevailing SCSS interest rate at that time, not the original rate.