Senior Citizen Savings Scheme (SCSS) — Complete Guide

The Senior Citizen Savings Scheme (SCSS) is one of the safest and most rewarding investment options for people aged 60 and above in India. It is backed by the Government of India, so your money is completely safe.

This guide explains everything about SCSS in simple language — how to open an account, what interest you will earn, tax benefits, and more.

What is the Senior Citizen Savings Scheme (SCSS)?

SCSS is a government-backed savings scheme specially designed for senior citizens. It offers:

• High interest rate — currently 8.2% per annum
• Quarterly interest payout — money comes to your bank account every 3 months
• Government guarantee — your money is 100% safe
• Tax saving — deduction under Section 80C of Income Tax Act

The scheme is managed by the Ministry of Finance and is available at all post offices and most major banks across India.

Who Can Open an SCSS Account? (Eligibility)

You can open an SCSS account if you meet any one of these conditions:

Important Rules:

• NRIs (Non-Resident Indians) cannot open an SCSS account
• HUF (Hindu Undivided Family) is not eligible
• If you took VRS, you must invest within one month of receiving your retirement benefits
• Retired defence personnel must invest within one month of receiving retirement benefits

SCSS Interest Rate & Payout

How Interest is Paid

• Interest is credited directly to your savings account on the 1st of April, July, October, and January
• If you do not withdraw the interest, it will not earn any extra interest — so make sure to use or reinvest it
• The government reviews and announces SCSS interest rates every quarter

Note: The interest rate is set by the Ministry of Finance every quarter. It has been 8.2% since April 2023. Always check the latest rate before investing.

How Much Can You Invest?

Key Points:

• The ₹30 lakh limit applies to all your SCSS accounts combined (individual + joint)
• You can open more than one SCSS account, but total across all accounts cannot exceed ₹30 lakh
• Joint account is allowed only with your spouse — but the entire amount is treated as yours for the ₹30 lakh limit

How to Open an SCSS Account (Step-by-Step)

Where to Open

You can open an SCSS account at:

1. Any Post Office (head post office or branch post office)
2. Authorised Banks — SBI, PNB, Bank of Baroda, Canara Bank, ICICI Bank, and many others

Step-by-Step Process

1. Visit your nearest post office or bank with the required documents (listed below)
2. Fill up the SCSS account opening form — the staff will help you if needed
3. Submit your documents — age proof, identity proof, address proof, and photographs
4. Make the deposit — by cheque or cash (cash allowed only up to ₹1 lakh)
5. Receive your passbook — this is your proof of investment, keep it safe
6. Link your savings account — for receiving quarterly interest payments

Tip for Senior Citizens: Take a family member along to the bank or post office for assistance. The staff is usually very helpful.

Documents Required

Please carry the original documents along with one photocopy of each:

For Joint Account (with Spouse):

• Spouse's KYC documents (Aadhaar, PAN, photos) are also required
• Marriage certificate may be asked

Tax Benefits Under Section 80C

SCSS gives you income tax deduction under Section 80C:

• The amount you invest in SCSS is eligible for deduction
• Maximum deduction is ₹1,50,000 per year (combined with other 80C investments like PPF, LIC, ELSS, etc.)
• This can save you up to ₹46,800 in tax (for the 30% tax bracket)

Example:

If you invest ₹1,50,000 in SCSS and you are in the 30% tax bracket:

• Tax saved = ₹1,50,000 × 30% = ₹45,000 (plus cess)

Important: This deduction is available only under the Old Tax Regime. Under the New Tax Regime, Section 80C deduction is not available.

TDS on SCSS Interest

The interest you earn from SCSS is fully taxable. Here are the TDS (Tax Deducted at Source) rules:

How to Avoid TDS

• If your total income is below the taxable limit, submit Form 15H at the post office or bank at the beginning of each financial year
• This will ensure no TDS is deducted from your interest

Tip: Even if TDS is deducted, you can claim a refund by filing your income tax return.

Tenure and Maturity

After Maturity:

• You can withdraw the full amount without any penalty
• You can extend for 3 years at the interest rate applicable on the date of maturity
• If you do not withdraw or extend, the money will earn the post office savings account interest rate (currently 4%)

Premature Withdrawal Rules

You can close your SCSS account before 5 years, but a penalty will be charged:

Example:

If you invested ₹10,00,000 and withdraw after 18 months:

• Penalty = ₹10,00,000 × 1.5% = ₹15,000

Advice: Try to keep the money invested for the full 5 years to avoid any penalty and earn maximum interest.

Nomination and Joint Account

Nomination

• You can nominate one or more persons when opening the account
• Nomination can be changed anytime by filling a simple form
• In case of the account holder's death, the nominee can claim the money easily

Joint Account

• Only allowed with your spouse (husband or wife)
• The first account holder is treated as the investor for all purposes
• The full amount counts towards the first holder's ₹30 lakh limit

Transferring SCSS Account

You can transfer your SCSS account:

• From one post office to another post office
• From post office to bank (or bank to post office)
• From one bank to another bank

How to Transfer:

1. Submit a transfer request at your current post office or bank
2. They will send your account details to the new branch
3. Visit the new branch with your passbook and KYC documents
4. The transfer is usually completed within 2–4 weeks

Note: There is no penalty or charge for transferring your SCSS account.

SCSS vs Fixed Deposit — Comparison

Verdict:

SCSS is better for senior citizens who want safety, higher interest, and tax benefits. Fixed deposits are better if you need more flexibility or want to invest more than ₹30 lakh.

Frequently Asked Questions (FAQs)

1. Can I open more than one SCSS account?

Yes, you can open multiple SCSS accounts. However, the total investment across all accounts (including joint accounts) cannot exceed ₹30 lakh.

2. What happens if the account holder passes away?

The nominee or legal heir can claim the amount. The account will be closed, and the balance along with interest up to the date of death will be paid. No premature withdrawal penalty is charged in case of death.

3. Can I open SCSS account online?

Currently, most banks and post offices require you to visit in person for opening an SCSS account. Some banks like SBI may offer partial online facility, but you will still need to visit the branch for verification.

4. Is SCSS interest rate fixed for 5 years?

No. The interest rate is reviewed every quarter by the government. However, once you open an account, the rate applicable at that time is locked in for that deposit. Rate changes apply only to new deposits.

5. Can both husband and wife open separate SCSS accounts?

Yes, if both are above 60 years of age, each can open their own SCSS account and invest up to ₹30 lakh each. That means a couple can invest up to ₹60 lakh combined in SCSS.

6. What is the difference between SCSS and Post Office Monthly Income Scheme (POMIS)?

SCSS offers higher interest (8.2%) with quarterly payouts and is only for senior citizens. POMIS offers 7.4% interest with monthly payouts and is available to all adults. SCSS also gives Section 80C tax benefit, while POMIS does not.

7. Can I use SCSS to save tax under the new tax regime?

No. The Section 80C deduction is not available under the New Tax Regime. You need to choose the Old Tax Regime to claim SCSS tax benefits.

Summary

The Senior Citizen Savings Scheme is one of the best investment options for senior citizens in India. With a high interest rate of 8.2% per annum, quarterly income, government safety guarantee, and tax benefits, it is ideal for retirees looking for a safe and regular income.

Visit your nearest post office or bank today to open your SCSS account.

This guide is for informational purposes. Interest rates and rules may change. Please verify the latest details from your post office, bank, or the National Savings Institute website.