Are you a senior citizen? Learn how to claim tax deductions on your Senior Citizen Savings Scheme

The Senior Citizen Savings Scheme is a sovereign-backed five-year deposit for resident individuals aged 60 and above, with a deposit ceiling of ₹30 lakh per individual and interest paid quarterly at the rate notified by the Ministry of Finance. Investment qualifies for Section 80C deduction up to ₹1.5 lakh per year under the old tax regime. Senior citizens can additionally claim Section 80TTB deduction up to ₹50,000 on aggregate interest from deposits, including SCSS interest, under the old regime.

Priyanka Wadhera

Published: 3 Feb 2023

Updated: 16 May 2026

4 min read

If you have crossed 60 and are looking to convert your retirement corpus into a tax-efficient income stream, the Senior Citizen Savings Scheme (SCSS) deserves to be the first product you open. Backed by the Government of India and operated through post offices and authorised banks, SCSS offers the highest interest rate among Section 80C-eligible instruments, a quarterly payout to fund household cash flow, and a ₹30 lakh ceiling raised under Budget 2023 that continues for FY 2026-27. Here is the senior citizen's playbook for SCSS in the AY 2027-28 cycle.

Eligibility criteria

Resident individuals aged 60 years and above.
Retired civilian government employees aged 55-60 years, within one month of receiving retirement benefits.
Retired defence personnel aged 50-60 years, within one month of receiving retirement benefits.
Joint accounts permitted only with the spouse; either holder must meet age criteria.
Non-resident Indians and Hindu Undivided Families are not eligible.
Account opened at any India Post branch or designated commercial bank.

Deposit limits and tenure

Minimum deposit is ₹1,000 in multiples of ₹1,000. The maximum deposit is ₹30 lakh per individual, aggregated across all SCSS accounts held single or jointly. The basic tenure is 5 years, extendable by an additional 3 years on application within one year of maturity. Spouses can each independently hold up to ₹30 lakh, effectively allowing a household ceiling of ₹60 lakh — a significant planning opportunity.

Interest rate and payout

Interest on SCSS is notified quarterly by the Ministry of Finance under the small savings scheme review and is among the highest sovereign-backed rates available in India. Interest is paid quarterly — on the first working day of April, July, October, and January — directly to the depositor's savings bank account. This regular, predictable cash flow is what makes SCSS the cornerstone of retirement income planning.

Section 80C deduction

Deposits in SCSS qualify for Section 80C deduction up to ₹1.5 lakh per financial year, aggregated with other 80C investments like PPF, NSC, life insurance premium, and home loan principal. The deduction is available only under the old tax regime. While the SCSS ceiling is ₹30 lakh, the tax benefit caps at ₹1.5 lakh in the year of deposit. Senior citizens should review whether the cumulative 80C + 80TTB benefit makes the old regime more attractive than the new regime.

Section 80TTB on interest

This is where SCSS becomes especially powerful for seniors. Section 80TTB allows senior citizens aged 60 and above to claim a deduction up to ₹50,000 per year on aggregate interest from deposits with banks, post offices, and co-operative banks, including SCSS interest. This is in addition to the Section 80C deduction on the deposit. Section 80TTB is available only under the old tax regime. The combination of 80C on deposit and 80TTB on interest can shelter a meaningful slice of retirement income from tax.

TDS and Form 15H

TDS at 10 per cent applies on SCSS interest if the aggregate annual interest credited at a single branch exceeds ₹50,000 (the senior-citizen threshold). The rate increases to 20 per cent if PAN is not linked. Senior citizens whose total income before deductions is below the basic exemption threshold can submit Form 15H to suppress TDS. Track Form 26AS and AIS to claim TDS credit while filing the ITR.

Reporting in the ITR

Claim Section 80C deduction in the year of deposit, within ₹1.5 lakh aggregate.
Report quarterly interest under Income from Other Sources.
Claim Section 80TTB up to ₹50,000 under the old regime.
Reconcile TDS credits from Form 26AS and AIS.
Submit Form 15H to suppress TDS where total income is below taxable threshold.
Pay advance tax where total tax liability exceeds ₹10,000.

Conclusion

SCSS is purpose-built for the senior citizen — high yield, quarterly payouts, sovereign comfort, and dual tax benefits via 80C and 80TTB under the old regime. With the ₹30 lakh ceiling per holder and household-level structuring with the spouse, a substantial retirement corpus can be deployed productively. Open the account immediately on attaining 60, structure deposits across spouse, and review the regime choice annually based on your interest income profile.

Frequently Asked Questions

What is the eligibility age for the Senior Citizen Savings Scheme?

SCSS is available to resident individuals aged 60 years and above. Retired civilian government employees aged 55-60 and retired defence personnel aged 50-60 can also open accounts, provided they invest within one month of receiving retirement benefits. NRIs and HUFs are not eligible to open SCSS accounts.

What is the maximum SCSS deposit limit?

The maximum deposit limit per individual in SCSS is ₹30 lakh, aggregated across all SCSS accounts held single or jointly. The limit was raised from ₹15 lakh in Budget 2023 and continues for FY 2026-27. Spouses can each independently hold up to ₹30 lakh, doubling the household ceiling to ₹60 lakh.

How is SCSS interest taxed for senior citizens?

SCSS interest is taxable as Income from Other Sources at the depositor's slab rate. TDS at 10 per cent applies if annual interest exceeds ₹50,000 at one branch. Senior citizens under the old tax regime can claim Section 80TTB deduction up to ₹50,000 on aggregate interest from deposits, including SCSS.

Can SCSS be extended beyond 5 years?

Yes. SCSS has a basic tenure of 5 years and can be extended by 3 additional years by submitting an extension application within one year of maturity. The extended account earns the interest rate prevailing on the original maturity date, and premature closure during the extension period is allowed without penalty after 1 year.