Senior Citizens' Savings Scheme (SCSS)

What is the Senior Citizens' Savings Scheme?

The Senior Citizens' Savings Scheme (SCSS) is a government-backed small-savings deposit run under the Ministry of Finance and offered through India Post and authorised banks. It gives retired people a safe, fixed-return place to park a lump sum and draw a regular quarterly income from it.

According to the India Post small-savings pages, SCSS pays 8.2% interest per year for the current quarter, credited to the account holder every three months. The rate is set for the whole 5-year term at the time the account is opened, so it does not change even if quarterly rates are later revised. Because the deposit is backed by the Government of India, both the principal and the interest carry sovereign safety, which is why SCSS is one of the most popular retirement instruments in the country.

Key features

• Government-guaranteed deposit; no market risk to the principal.
• Interest of 8.2% a year, paid quarterly on the first working day of April, July, October and January.
• Deposit tenure of 5 years, extendable once by a further 3 years.
• Maximum deposit of Rs 30 lakh per individual; minimum Rs 1,000.
• Deposits eligible for Section 80C deduction up to Rs 1.5 lakh a year.

Who is eligible for the Senior Citizens' Savings Scheme?

You can open an SCSS account if:

• You are a resident Indian aged 60 years or above.
• You are aged 55 to 60 and have retired on superannuation or under a voluntary retirement scheme, provided you open the account within one month of receiving your retirement benefits and the deposit does not exceed those benefits.
• You are a retired defence services employee aged 50 or above, subject to the same one-month condition (other than civilian defence employees).

Accounts can be held singly or jointly, but a joint account is allowed only with the spouse. In a joint account, the whole deposit is treated as belonging to the first holder.

You cannot open an SCSS account if:

• You are a Non-Resident Indian (NRI).
• You are applying on behalf of a Hindu Undivided Family (HUF).
• You are below the age limits and do not qualify under the retirement exceptions.

If an account holder becomes an NRI after opening the account, the account continues to maturity but cannot be extended.

How much can you deposit and earn under SCSS?

The maximum you can invest across all your SCSS accounts is Rs 30 lakh, a ceiling raised from Rs 15 lakh in the 2023-24 Union Budget. The minimum deposit is Rs 1,000, and deposits must be in multiples of Rs 1,000. Deposits of up to Rs 1 lakh can be made in cash; anything above must be by cheque or demand draft.

At 8.2% a year, a full Rs 30 lakh deposit generates about Rs 2.46 lakh in interest a year, or roughly Rs 61,500 every quarter, before tax. A husband and wife can each open their own accounts up to Rs 30 lakh, letting a couple place a larger sum in the scheme.

What documents are required for SCSS?

How to apply for the Senior Citizens' Savings Scheme

1. Visit your nearest post office or an authorised bank branch (major public and private sector banks offer SCSS).
2. Collect and fill the SCSS account opening form (Form A) and attach your age proof, PAN, Aadhaar and photographs.
3. Hand over the deposit; cash up to Rs 1 lakh, or a cheque/demand draft for larger amounts, and complete KYC.
4. Nominate one or more people using the nomination form at the time of opening or later.
5. Collect your passbook showing the deposit, the rate and the maturity date.

Many banks and India Post also allow SCSS to be operated through internet banking once the account is opened, and interest can be routed automatically to your savings account by ECS.

How is interest paid and taxed?

Interest is credited quarterly and can be withdrawn or auto-swept to a linked savings account. If the quarterly interest is not withdrawn, it does not earn additional interest, SCSS interest is simple, not compounded.

Deposits qualify for a deduction of up to Rs 1.5 lakh a year under Section 80C. The interest earned is fully taxable in your hands, and TDS is deducted if total interest in a year crosses the threshold set for senior citizens. You can submit Form 15H to avoid TDS if your total income is below the taxable limit.

Can you close an SCSS account early?

Premature closure is allowed, with a penalty:

• After 1 year but before 2 years — 1.5% of the deposit is deducted.
• After 2 years but before 5 years to 1% of the deposit is deducted.
• Before 1 year, no interest is payable, and any interest already paid is recovered from the principal.

On the death of the account holder, the account is closed and the balance paid to the nominee or legal heir, with interest at the SCSS rate up to the date of death.

Extension and maturity

On completing 5 years, you can extend the account once for 3 more years by applying within a year of maturity. The extended deposit earns the SCSS rate in force on the date of maturity. During the extension, you can close the account after one year without any penalty. If you neither extend nor close, the account continues to earn the ordinary post office savings rate after maturity.

Help and grievance redressal

• India Post customer care: 1800 266 6868
• Visit the post office or bank branch where the account is held for statements, nomination changes and closure.
• Small-savings scheme rules are published on the National Savings Institute (nsiindia.gov.in) and India Post websites.

SCSS is a government scheme; no agent can charge a fee to open an account for you, and the deposit is made directly to the post office or bank, never to an intermediary.