Senior Citizen Savings Scheme (SCSS): Rate, Limit, Tax

The Senior Citizen Savings Scheme (SCSS) pays 8.2% a year for accounts opened in October–December 2026, credited every quarter, on deposits of up to ₹30 lakh per person. The rate is locked for the full five years, the scheme is backed by the Government of India, and the deposit qualifies for the old-regime deduction, but the interest is fully taxable. For most retirees it is one of the strongest fixed-income options available, as long as the money will not be needed suddenly.

Who can invest in SCSS

As of October 2026, an individual can open an SCSS account at a post office or authorised bank if they are:

• 60 years or older, or
• 55 to 60 and retired on superannuation, voluntary retirement (VRS) or a special voluntary scheme, provided the account is opened within three months of receiving retirement benefits and the deposit does not exceed those benefits, or
• 50 or older and a retired defence services personnel (not civilian defence staff), on the same conditions, or
• the spouse of a government employee who died in service at 50 or older, on specified conditions.

NRIs and HUFs cannot open an account. A joint account can be held only with your spouse, and the full deposit counts towards the first holder's ₹30 lakh limit.

SCSS key features (October 2026)

A key difference from PPF and Sukanya Samriddhi: the SCSS rate is locked at the rate on the day you open the account for the full five years. Future quarterly rate cuts do not affect an existing account, and future increases do not help it either.

Worked example: a retired couple

Ramesh (64) and Sunita (61) have ₹60 lakh from retirement benefits and savings. Each opens an SCSS account in their own name with ₹30 lakh in October 2026.

Quarterly interest per person ₹30,00,000 × 8.2% ÷ 4 = ₹61,500

Yearly interest per person ₹61,500 × 4 = ₹2,46,000

Household income from SCSS ₹2,46,000 × 2 = ₹4,92,000 a year, or about ₹41,000 a month on average, for five years.

Note that SCSS pays simple quarterly interest; it does not compound. If you do not need the payouts, they sit in your linked savings account unless you reinvest them, for example in a recurring deposit.

Tax for Ramesh. Suppose Ramesh also gets a pension of ₹6 lakh a year.

• New regime: pension ₹6,00,000 − standard deduction ₹75,000 + SCSS interest ₹2,46,000 = taxable income of ₹7,71,000. This is below ₹12 lakh, so the rebate makes his tax nil.
• TDS: his interest from the post office crosses ₹1 lakh, so 10% TDS (₹24,600 a year) would be deducted. Because his final tax is nil, he can submit Form 15H at the start of the financial year to stop TDS, or claim a refund in his return.

This is illustrative; your own position depends on all your income and the regime you choose. Use the FD calculator with quarterly payout to compare SCSS income with a bank FD.

Taxation in FY 2026-27

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. For SCSS:

• Deduction on deposit: Up to ₹1.5 lakh of the deposit qualifies under Section 123 (old Section 80C), but only under the old regime and within the shared ₹1.5 lakh cap.
• Interest: Taxed at your slab rate every year. Under the old regime, a senior citizen can deduct up to ₹50,000 of interest from deposits (old Section 80TTB, now within Section 153 of the new Act). That deduction is not available in the new regime.
• TDS: Deducted under Section 393 of the new Act (old Section 194A) at 10% once interest paid to a senior citizen by one payer crosses ₹1 lakh in the year. TDS is an advance tax, not the final tax.
• Form 15H: A resident aged 60 or more whose final tax on total income is nil can submit Form 15H to avoid TDS.

For how this compares with tax on other products, see tax on FD, mutual funds and stocks.

Premature closure and extension

Closing before five years

You can close an SCSS account early, but a deduction applies under the SCSS, 2019 rules:

For a ₹30 lakh account closed in year three, the deduction is ₹30,000. Because the post office treats the account as a 5-year commitment, plan only money you will not need. Keep an emergency fund outside SCSS.

Extending after maturity

Since the SCSS (Amendment) Scheme, 2023, the account can be extended for 3 years at a time, any number of times, by applying within one year of maturity or of the end of the previous extended block. The extended account earns the rate applicable on the date of maturity, not the original rate. During an extension, you can close the account after one year without deduction; closing within the first year of an extension attracts a 1% deduction.

SCSS vs other income options for retirees

SCSS currently pays more than most bank FDs for the same safety and locks the rate for five years. Its limits are the ₹30 lakh cap and the fixed term. Retirees often combine it with the Post Office Monthly Income Scheme for monthly cash flow and keep growth assets for the long run, as described in the retirement bucket strategy.

How to open an SCSS account

1. Go to a post office or an authorised bank (SBI, Bank of Baroda, PNB, ICICI Bank, HDFC Bank and other designated banks).
2. Fill in the SCSS account opening form and nominate one or more people.
3. Submit Aadhaar, PAN, photographs and, if under 60, proof of retirement and of the retirement benefit received.
4. Deposit by cheque or transfer; cash is accepted only below ₹1 lakh.
5. Link a savings account so that quarterly interest is credited automatically.
6. Submit Form 15H each April if your final tax is nil.

Key takeaways

• SCSS pays 8.2% a year for accounts opened in October–December 2026, locked for five years and paid quarterly.
• Each eligible person can invest up to ₹30 lakh; a couple can invest ₹60 lakh in two accounts.
• ₹30 lakh earns ₹61,500 a quarter, or ₹2.46 lakh a year, at the current rate.
• Interest is taxable; TDS applies above ₹1 lakh a year for seniors, avoidable with Form 15H if your final tax is nil.
• Early closure costs up to 1.5% of the deposit; extensions in 3-year blocks are now allowed repeatedly.
• Use SCSS for stable income, and keep emergency money and growth investments outside it.