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SCSS ( Senior Citizen Savings Scheme ) - Tax Benefits, Eligibility and Interest Rate

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Yesha Dalwadi

Income Tax
SCSS Benefits
Tax Savings & Deductions

Having a steady income source in one’s retirement days is one of the important financial goals of individuals. Hence, investing is saving schemes that will provide a regular income during retirement is of utmost importance. SCSS (Senior Citizen Savings Scheme) is one such savings scheme that aims to provide individuals above the age of 60 to invest in order to have a secure source of income. This article will help you understand the various aspects that you need to consider when investing in SCSS.

What is SCSS?

SCSS is a retirement savings scheme backed by the government of India. It is a scheme that offers stable returns to its account holders and as the government monitors the scheme the risk of the capital loss is at its minimal. An individual can avail the benefit of SPSS via Indian Post Office or certified Public/Private Banks. The rate of interest on SCSS is compounded quarterly and distributed at every quarter on the first date of April, July, October, and January. Currently, the interest rate for the first quarter of the financial year 2020-21 is 7.4%

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Who is the Eligible to open an SCSS Account?

Residential individuals can invest in Senior Citizen Savings Scheme if they fall under the following eligibility criteria:

What are the benefits of investing in SCSS?

Investing in SCSS can have many advantages, some of which are as follows:

Income Tax Benefits

SCSS is one of the best retirements saving schemes as it offers a stagnant source of income, high-interest rate and also Income Tax Benefits. An individual can avail deductions under section 80C up to INR 1.5 lakhs on the principle amount if they opt for old tax regime. It is also important to note that the interest receivable is taxable as per the applicable tax slab. If the interest amount receivable is more than INR 50,000 for a year, TDS is applicable to the interest. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.

Minimum and Maximum Deposit Limits

The minimum amount that one can deposit in this scheme is INR 1000 and the maximum is INR 15,00,000. Moreover, it is important to note that deposits in SCSS can be made only in multiples of INR 1000.

One can deposit an amount in cash but it cannot exceed INR 1 lakh. However, if you want to deposit more than INR 1 Lakh than it has to be via cheque or demand draft.

Maturity and Withdrawals

The maturity period of SCSS is 5 years but can be further extended for 3 more years. An account holder can withdraw from their SCSS account prematurely after one year. There is also a penalty of 1.5% on the deposited amount which will be charged if someone wants to close before the completion of 2 years. Furthermore, if the account holder wishes to close the account after 2 years then there is a penalty of 1% on the deposit amount.

How to Open an SCSS Account?

One can open an SCSS account by either going to the post office or private/public bank. Self Attested copy of the following documents will be needed:

After these documents are ready, one can go to the post office or private/public bank to open the account.

Which Banks are Offering SCSS Account?

Following is the list of banks from where one can open an SCSS account:


Is it possible for an account holder obtain a loan by pledging the deposit/account under the SCSS, 2004?

No, withdrawals for loans is not permissible under this scheme as it defies the very nature of the scheme.

Can I transfer my account from one deposit office to another?

Yes, Form G must be filled, to transfer an account from one deposit office to another.

Am I allowed to cancel or change my nomination?

Yes, the nomination can easily be cancelled or changed by submitting a fresh nomination in Form-C to the bank/post office wherein said SCSS account is being maintained.

I am 57 and my wife is 50 years old, can I appoint her as partner in a joint account under SCSS?

As you are the primary account holder SCSS account, it is your age that is the qualifying factor. You can appoint your spouse as the joint account holder. Her age does not affect eligibility to act as your joint partner in the account. 

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