What SCSS is
The Senior Citizens Savings Scheme is a government-backed deposit for people aged 60 and above (55 for those who took voluntary retirement, 50 for retired defence personnel). It pays interest every quarter and runs for five years, extendable by three years at a time. The rate is fixed on the day you invest, currently 8.2% for July–September 2026, and stays the same for the full term even if the government cuts rates later.
Quarterly interest = deposit × rate ÷ 4Worked example
Key rules
| Feature | Rule |
|---|---|
| Deposit limit | ₹1,000 to ₹30 lakh per person (a couple can hold separate accounts) |
| Tenure | 5 years; extendable in 3-year blocks |
| Early closure | Allowed with a penalty: 1.5% of the deposit before 2 years, 1% after |
| Tax | Deposit deductible under the old regime; interest fully taxable |
| TDS | Deducted if interest exceeds ₹1 lakh in a year for senior citizens |
Building a retirement income ladder
SCSS is often the first building block of a retiree's income because it combines a high fixed rate with a sovereign guarantee. A common combination is SCSS for up to ₹30 lakh each, the Post Office Monthly Income Scheme for monthly cash flow, and a small SWP from a balanced fund to beat inflation over time.
Interest is taxable, so in the higher slabs its post-tax return is lower than the headline rate. The results above show the yearly interest after tax for the slab you pick.
Tax planning for SCSS income
If your SCSS interest pushes your income above the tax-free limit, consider splitting deposits between spouses, each in their own name up to ₹30 lakh, so the interest is taxed in two hands. Under the old regime, senior citizens can also deduct up to ₹50,000 of interest income from deposits.
Frequently asked questions
Can a couple invest ₹60 lakh in SCSS?
Yes, if both spouses are eligible: each can hold up to ₹30 lakh in their own name. A joint account counts only toward the first holder's limit.
Does the SCSS rate change after I invest?
No. The rate on the day you open the account applies for the whole five-year term.
Is SCSS interest taxable?
Yes, at your slab rate. Senior citizens can claim a deduction of up to ₹50,000 on interest income under the old regime.
Official references: National Savings Institute – SCSS · India Post