Senior Citizens' Savings Scheme (SCSS): rules, interest rate and tax

The Senior Citizens' Savings Scheme (SCSS) is a government savings scheme for residents aged 60 and over, and some early retirees. You make one deposit of up to ₹30 lakh for five years and get interest every quarter: 8.2% a year for accounts opened from 1 October to 31 December 2026.

What is the Senior Citizens' Savings Scheme (SCSS)?

SCSS is a small savings scheme: a savings product run by the Government of India and sold through post offices and some banks. It takes one deposit per account for five years and pays interest every quarter, a three-month block of the year.

The money goes into a government account. Deposit insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC) covers bank deposits; it does not apply to these schemes.

Who can open an SCSS account?

A resident citizen of India aged 60 or more can open an account. Younger people can in three cases.

• Early retirees aged 55 to under 60. Open within three months of receiving your retirement benefits, with proof of the payment date and an employer's certificate. The deposit is capped at those benefits or ₹30 lakh, whichever is lower.
• Retired defence personnel. They can open an account from age 50, on the same conditions as other early retirees. Civilian defence staff are not included.
• A government employee's spouse. If the employee had reached 50 and died in service, the spouse may open an account.

Retirement benefits include provident fund dues, gratuity, commuted pension, leave encashment and ex-gratia payments under a voluntary retirement scheme (VRS). So a VRS payout counts. Women and men have the same rules.

You can open an account alone or jointly with your spouse, and nobody else. In a joint account, the first holder's age decides eligibility. The second holder has no age limit, and the whole deposit counts as the first holder's.

Opening needs your Aadhaar and your PAN or Form 60. If you later become an NRI, the account runs to maturity but cannot be extended.

How much can you deposit in SCSS?

Each account takes one deposit, in multiples of ₹1,000, and all your SCSS accounts together cannot hold more than ₹30 lakh. Any excess is refunded straight away and earns only the post office savings account rate until then.

If both spouses are individually eligible, each can hold up to ₹30 lakh. That can be in a single account, a joint account with the other, or both; a joint account counts towards the first holder's limit. After an account closes, you may open a new one within the limit.

What is the SCSS interest rate, and how is it paid?

The rate is 8.2% a year for accounts opened from 1 October to 31 December 2026. Interest is paid on the first working day of April, July, October and January.

The Ministry of Finance announces the rate every quarter. It said in 2016, when rates became quarterly, that they would track government bond yields of similar maturity; its recent notices give no formula. The rate has stayed at 8.2% for twelve quarters, from 1 January 2024 to 31 December 2026.

The rate you get is the one for the quarter in which you open the account, and it stays for the five years. At 8.2%:

• ₹15,00,000 earns ₹30,750 a quarter, or ₹1,23,000 a year.
• ₹30,00,000, the maximum, earns ₹61,500 a quarter.

Your first payment is smaller, covering only the days from deposit to quarter-end. Interest can go to your savings account if authorised. Unclaimed interest earns nothing more, but you can claim it any time after the due date.

Can you close SCSS early or extend it?

You can close an SCSS account at any time, but it costs you. The whole account closes; partial withdrawals are not permitted.

If you claimed a section 123 deduction, a tax add-back applies too; see the tax section below.

Extension. After five years the account matures, meaning it reaches its end date. You can extend it by applying in Form-4 within a year of maturity, for three years at a time, any number of times. The extension earns the rate in force on the maturity date. Close an extended account within a year of the extension and 1% of the deposit is deducted; after that, nothing is. If you do neither at maturity, the money earns the post office savings account rate.

How is SCSS taxed?

SCSS interest is added to your income and taxed at your slab rate, the rate for your income band. The deposit counts towards section 123 (the old Section 80C), but only under the old tax regime (the one that allows deductions), and within ₹1,50,000 a year across all section 123 items. The default new regime allows no section 123 deduction. For the wider picture, see tax saving for senior citizens, section 123 deductions and the new regime.

Add-back within five years. If you took the section 123 deduction and then withdraw within five years of the deposit, the amount withdrawn counts as income in the year you withdraw it. Interest already taxed is left out, as is money a nominee receives after your death.

TDS. TDS is tax deducted at source, before the interest reaches you. India Post's SCSS page says TDS applies once total interest in all accounts, including SCSS, passes the prescribed limit in a year. The post office or bank deducts it if your interest from all its deposits passes ₹1 lakh in the year, or ₹50,000 if you are under 60. If you are 60 or older and your tax for the year will be nil, give it a Form 121 to stop the deduction. Form 121 replaced Forms 15G and 15H. Under 60, the income declared on the form must also be below the tax-free limit.

Section 153. Senior citizens using the old regime can generally count SCSS interest, with bank and post office deposit interest, towards the ₹50,000 deduction under section 153 (the old Section 80TTB). Company and NBFC fixed deposit interest is outside it. See FD taxation.

Where can you open SCSS: post office or bank?

You can open an account at a post office, or at a bank authorised to run small savings schemes, which includes the public sector banks.

At the post office you open it in person, with the account opening form, KYC documents and a deposit slip. Some banks that offer the scheme may let you apply online; check with the bank. See indiapost.gov.in.

An account can move from a bank to a post office, or the other way round, with the prescribed form, the passbook and ₹100 plus GST.

What happens to an SCSS account when the holder dies?

The account closes and the money goes to the nominee or legal heirs. A nominee is the person you name to receive the money; legal heirs are the people the law entitles to it. They get the deposit with SCSS interest up to the date of death, then the post office savings rate until final closure. No early-closure deduction is mentioned for death.

A spouse can carry the account on, if the spouse is the joint holder or sole nominee and meets the eligibility conditions on the date of death. If each spouse held a separate account, the deceased's account is closed instead.

Nomination. It is mandatory when you open the account. You can name up to four nominees and change them any time before maturity; India Post lists ₹50 plus GST for that.

Claims. India Post settles a claim by nomination, or by legal evidence such as probate or a succession certificate. Without a nomination, claims up to ₹5 lakh can be paid on a claim form with an indemnity, affidavit and disclaimer. Above that, only a succession certificate works.

What are RBI floating rate savings bonds?

RBI Floating Rate Savings Bonds (FRSB) are seven-year Government of India bonds. The rate is reset every six months at the National Savings Certificate (NSC) rate plus 0.35 percentage point: 8.05% a year for 1 July to 31 December 2026.

"Floating" means the coupon, the interest rate on the bond, is not fixed but re-set at pre-announced intervals. The January to June 2027 rate is not yet announced.

Buying. The minimum is ₹1,000, with no maximum. Residents can buy them, jointly too, but NRIs cannot. On RBI Retail Direct you open a Bond Ledger Account (BLA) that holds the bonds electronically. You can also buy at branches of SBI, the nationalised banks and a few private banks authorised by the RBI. Cash is accepted only up to ₹20,000, and PAN is required.

Interest. It is paid every 1 January and 1 July, and none accrues after maturity. You cannot sell or transfer the bonds, except to a nominee or heir, and you cannot borrow against them.

Early exit. Only investors aged 60 or more can cash them early. The wait is six years at 60 to 70, five years at 70 to 80, and four years at 80 or more, with age counted on the date of encashment. Part-encashment is not allowed. After an investor's death, the legal heir's age sets the lock-in, not the nominee's.

The penalty is half of the last six months' interest. On ₹5,00,000 at 8.05%, that is ₹10,062.50 out of a half-year's ₹20,125.

Tax. The interest is taxable at your slab rate. TDS applies once it passes ₹10,000 in a year, with no higher limit for seniors, and Form 121 can be given for it too. See NSC and KVP, how bonds work and the RBI website.

SCSS, FRSB, senior FD or POMIS: how do they differ?

They differ in who can open them, how the rate is set, how often they pay and how they are taxed. Interest on SCSS and FRSB is taxed at slab rate.

Post office Monthly Income Scheme (POMIS). It takes up to ₹9 lakh alone or ₹15 lakh jointly and pays monthly: 7.4% for accounts opened 1 October to 31 December 2026. Details are in post office savings schemes.

Senior bank fixed deposit. RBI lets a bank, at its discretion, offer higher fixed rates to resident senior citizens, but not on a deposit in an HUF's name. As an example, SBI's rate card in force since 15 December 2025 gives senior citizens 0.5 percentage points more on a 1-year FD. Rates change; check the bank's own page on the day. DICGC covers bank deposits up to ₹5,00,000 per depositor per bank. See senior citizen fixed deposits.

Koshex offers fixed deposits from banks and companies, from ₹10,000. See the fixed deposit page. For your other income sources, read retirement income.