What SCSS is for
The Senior Citizens’ Savings Scheme is a five-year government deposit for people who have retired and want a regular income from a lump sum. It is one of the few places that pays out interest every quarter at a fixed rate set by the Ministry of Finance, with the full deposit coming back at the end. You can open it at any post office or at most large banks with the same terms, because the rules come from the government, not the bank.
SCSS at a glance
| Interest rate | 8.2% a year (July–September 2026), fixed for the term |
|---|---|
| Interest paid | Every quarter: 1 April, 1 July, 1 October, 1 January |
| Deposit | ₹1,000 to ₹30 lakh per person, in multiples of ₹1,000 |
| Term | 5 years, extendable by 3 years at a time |
| Who can open | 60 and over; 55 to 60 if retired; retired defence personnel from 50 |
| Tax | Interest taxable at your slab; deposit deductible under the old regime |
How the interest is worked out
SCSS pays simple interest: the rate is applied to your deposit, never to past interest, because each quarter’s interest leaves the account as soon as it is due. So the calculation is short:
At 8.2%, a deposit of ₹10 lakh pays ₹20,500 a quarter, ₹82,000 a year and ₹4,10,000 over five years. The full ₹30 lakh pays ₹61,500 a quarter, or ₹20,500 a month on average.
Because nothing compounds inside the account, the five-year total is the only “return” you get. If you do not need the income, a deposit that compounds, such as a 5-year FD or NSC, will end up with more, even at a slightly lower rate.
The TDS line to watch
For senior citizens, TDS starts when interest from one post office or bank crosses ₹1,00,000 in a financial year. At 8.2%, that is any SCSS deposit above about ₹12,20,000. If your total income is below the taxable limit, give the post office your declaration at the start of each financial year so no tax is deducted. If it is above, the TDS is not an extra tax, only an advance on what you owe, and it shows in your Form 26AS against your PAN.
Adding the Monthly Income Scheme to SCSS
Many retirees fill SCSS first, because it pays the higher rate, and put the rest into the Post Office Monthly Income Scheme. For one person at today’s rates:
| Scheme | Deposit | Rate | Income a year |
|---|---|---|---|
| SCSS (maximum) | ₹30,00,000 | 8.2% | ₹2,46,000 |
| Monthly Income Scheme (single maximum) | ₹9,00,000 | 7.4% | ₹66,600 |
| Together | ₹39,00,000 | – | ₹3,12,600 |
That is about ₹26,050 a month before tax, from government-backed schemes whose rate cannot change until they mature. A married couple can do the same twice, in their own names.
Before you invest
- Plan the extension date. After five years the rate resets to whatever is current then. If rates have fallen, compare the extension with other options before signing.
- Keep some money outside it. Breaking SCSS in the first year costs you all the interest paid, so keep an emergency fund in a savings account or a short FD.
- Rates change each quarter. Check the latest on our post office interest rates page before you deposit.
Frequently asked questions
What is the SCSS interest rate now?
The Senior Citizens’ Savings Scheme pays 8.2% a year for July–September 2026. The rate on the day you deposit is locked in for the full five years, even if the government lowers it later.
Who can open an SCSS account?
Anyone aged 60 or more. People aged 55 to 60 who retired on superannuation or under a voluntary retirement scheme can also open one with their retirement benefits, and retired defence personnel from age 50. You can hold it alone or jointly with your spouse.
How much can I deposit in SCSS?
At least ₹1,000, in multiples of ₹1,000, up to ₹30 lakh per person across all your SCSS accounts. A joint account counts towards the first holder’s limit, so a couple can deposit up to ₹60 lakh between them by each opening an account.
When is SCSS interest paid?
On the first working day of April, July, October and January, straight into your post office or bank savings account. The first payment covers only the days from your deposit to the end of that quarter, so it is smaller than the rest. Interest that you leave uncollected earns nothing extra.
Is SCSS interest taxable?
Yes. The interest is added to your income and taxed at your slab rate. The post office deducts TDS once your interest crosses ₹1,00,000 in a year, which at 8.2% happens with a deposit of about ₹12,20,000 or more, unless you give it a declaration that your total income is below the taxable limit. The deposit itself qualifies for the ₹1.5 lakh deduction under Section 80C (now Section 123) in the old regime only.
Can I close SCSS before five years?
Yes, at any time, with a charge. Close it within the first year and all interest paid so far is taken back from your deposit. Between one and two years, 1.5% of the deposit is deducted; after two years, 1%. If the holder dies, the account can be closed without any charge.
What happens after five years?
You can withdraw the deposit, or extend the account for another three years by applying within a year of maturity. The extended account earns the rate in force on the date it matured, not the original one, so check the current rate before you decide.
Sources
- National Savings Institute – Senior Citizens’ Savings Scheme
- Department of Economic Affairs – small savings interest rates
- India Post – post office savings schemes
Last updated 21 September 2026. Results are estimates for planning only and are not investment, tax or legal advice. See our disclaimer.