Senior Citizen Savings Scheme (SCSS)

Senior Citizens Savings Scheme (SCSS) is a government-backed savings instrument offered to Indian residents aged over 60 years. The deposit matures after 5 years from the date of account opening but can be extended once by an additional 3 years. The SCSS interest rate for April to June 2020 has been set at 7.4%. This is the highest interest rate among the various small savings schemes in India.  SCSS is available through Public / Private sector banks and India Post Offices. Being a government-backed savings instrument, the terms and conditions applicable to the SCSS are the same, regardless of the bank/ post office you invest through.

Senior Citizens Savings Scheme Interest Rates

As of  April 2020, the interest rate available on the SCSS account is 7.4% per annum for the first quarter (April to June) of the financial year 2020-2021. This rate of interest is reviewed quarterly by the Ministry of Finance and subject to periodic change. Interest on SCSS account deposits is calculated and credited quarterly. The following are the historic interest rates of the SCSS account.

Minimum and Maximum SCSS Deposit Limits

Depositors are allowed to make a lump sum deposit with a minimum deposit of Rs.1000. Deposits greater than Rs.1000 have to be made in multiples of Rs.1000. The maximum SCSS limit deposit is Rs.15 lakh.  

While deposits in the SCSS accounts can be made in cash, this is allowed only for amounts less than Rs. 1 lakh. If the deposit amount for Senior Citizens Savings Scheme exceeds Rs. 1 lakh, using a cheque/demand draft for making the deposit is mandatory.

Maturity of Senior Citizen’s Savings Scheme

Deposits made into a Senior Citizens’ Savings Scheme mature after 5 years calculated from the date of account opening. However, the account holder does have the option of extending the account for an additional 3 years after it has matured. This extension option is currently available just once and the extension request has to be made within 1 year of maturity of the SCSS account.  

Eligibility for Senior Citizens Saving Schemes

In order to avail of this saving scheme for senior citizens, resident Indians have to meet the following key conditions:

  • The scheme is available to any resident individual aged 60 years and above.
  • Also, individuals who have attained 55 years but are less than sixty years old are also eligible to apply for the senior citizen’s savings scheme provided they have retired under applicable superannuation or VRS rules. In such cases, the account should be open within 1 month of the receipt of retirement benefits.
  • The scheme is also available for the retired defense personnel irrespective of above-mentioned age limits subject to fulfillment of other terms & conditions.
  • Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs) are not entitled to open a Senior Citizens Savings Scheme account.
  • Also, Hindu Undivided Family members are not entitled to open the account under these rules.

Taxability on Senior Citizens Savings Scheme

  • Investments made in a Senior Citizen Savings Scheme account qualify for income tax deduction benefit up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act, 1961.
  • Interest on SCSS is fully taxable. In case the interest amount earned is more than Rs. 50,000 for a fiscal, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.
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