How the Senior Citizen Savings Scheme works
The Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme aimed at giving retirees a safe, regular income. You deposit a lump sum, and the scheme pays out interest every quarter for a fixed 5-year tenure — there's no reinvestment or compounding within the tenure, so the quarterly (and annual) payout stays constant for the entire 5 years, unlike PPF or SSY where interest compounds and the balance keeps growing.
Who can open an SCSS account
SCSS is generally available to individuals aged 60 and above. There are two notable exceptions for people who retire earlier:
- Individuals who have taken voluntary retirement (VRS) or superannuated can open an account from age 55, provided they invest within a specified time window of receiving their retirement benefits.
- Retired defense personnel can open an account regardless of age, subject to meeting specific service and retirement conditions, and also within a specified time window.
In both exception cases, the source of funds and the timing of the deposit matter, so it's worth confirming the exact conditions with the post office or bank before investing.
TDS on SCSS interest
SCSS interest is fully taxable at your income tax slab rate — there is no exemption, unlike PPF or SSY. If your total SCSS interest in a financial year exceeds ₹50,000, the bank or post office automatically deducts TDS on the excess before crediting it to you. If your total income is below the taxable threshold, you can submit Form 15H (for senior citizens) to the bank/post office to avoid this TDS deduction — just remember that the interest is still taxable in your hands; Form 15H only stops the deduction at source, it doesn't exempt the income itself.
Extension after maturity
When your account matures at the end of 5 years, you can extend it in a block of 3 years (and can do this more than once), by submitting a request within a year of maturity. Extended accounts can typically be closed at any time after one year without the usual premature-closure penalty, though rules can vary — check the current terms with your bank or post office.
Premature withdrawal penalty
You can close an SCSS account before the 5-year tenure ends, but a percentage of the deposit is deducted as a penalty — the deduction is steeper the earlier you withdraw (for example, closing within the first year forfeits interest already paid, while closing later attracts a smaller cut). Because of this, SCSS works best as money you're reasonably confident you won't need before the account matures.
Deposit limit
The maximum you can deposit — whether in a single account or across multiple accounts — is ₹30,00,000. This calculator automatically caps the deposit amount you enter at this limit.