Want to save on taxes? Learn how to claim deductions on your Senior Citizen Savings Scheme

The Senior Citizen Savings Scheme is a five-year deposit for resident individuals aged 60 and above, with a 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. Interest is fully taxable but senior citizens can claim Section 80TTB deduction up to ₹50,000 on aggregate eligible interest under the old regime.

Mayank Wadhera

Published: 3 Feb 2023

Updated: 16 May 2026

3 min read

The Senior Citizen Savings Scheme (SCSS) is the gold standard small savings product for retirees in India. Backed by the Government of India and operated through post offices and authorised banks, SCSS combines a higher interest rate than most fixed-income alternatives with a Section 80C deduction. For FY 2026-27, with the deposit ceiling raised to ₹30 lakh and the interest rate notified quarterly by the Ministry of Finance, SCSS is more central than ever to a retiree's portfolio.

Eligibility and account opening

Resident individuals aged 60 years or above.
Retired civilian government employees aged 55-60 years can join within one month of receiving retirement benefits.
Retired defence personnel aged 50-60 years can join within one month of receiving retirement benefits.
Joint accounts allowed only with the spouse; either holder must meet age criteria.
Minimum deposit: ₹1,000; maximum: ₹30 lakh per individual aggregate across all SCSS accounts.
Account tenure: 5 years, extendable by 3 more years on application.

Interest rate and payout

SCSS interest is notified quarterly by the Ministry of Finance under the small savings scheme review and has historically been the highest among comparable sovereign small savings products. Interest is payable quarterly — credited on the first working day of April, July, October, and January — directly to the depositor's savings bank account. This makes SCSS particularly attractive for retirees who want predictable, regular cash flow.

Section 80C deduction on deposit

The amount deposited in SCSS qualifies for Section 80C deduction up to the overall annual ceiling of ₹1.5 lakh, along with other 80C investments. Even though the SCSS ceiling is ₹30 lakh, the 80C tax benefit is capped at ₹1.5 lakh in the year of deposit. The deduction is available only under the old tax regime. Senior citizens who opted for the new tax regime cannot claim 80C, so SCSS becomes purely a yield product.

Tax treatment of SCSS interest

SCSS interest is fully taxable as Income from Other Sources at the depositor's slab rate. TDS at 10 per cent applies if the aggregate annual interest from a single bank or post office branch exceeds ₹50,000 (the senior-citizen threshold). However, senior citizens under the old tax regime can claim Section 80TTB deduction up to ₹50,000 per year on aggregate interest from deposits, including SCSS, bank FDs, and post office schemes.

Premature closure terms

Closure between one and two years: 1.5 per cent of deposit deducted.
Closure between two and five years: 1 per cent of deposit deducted.
Closure within one year is not allowed; only the principal is returned if the account holder dies.
On extension and subsequent premature closure after one year of extended period, no penalty applies.

Worked example

Suppose a 62-year-old retiree deposits ₹15 lakh in SCSS on 1 April 2026 at a notified rate of, say, 8.2 per cent. Annual interest is approximately ₹1,23,000, paid in four quarterly tranches of about ₹30,750. In the year of deposit, ₹1.5 lakh qualifies for Section 80C (subject to the cap). On the interest side, ₹50,000 can be deducted under Section 80TTB under the old regime, and the balance ₹73,000 is taxable at slab rate. Under the new regime, neither 80C nor 80TTB is available.

Reporting in the ITR

Declare SCSS interest under Income from Other Sources, claim TDS credit from Form 26AS and AIS, claim Section 80C in the year of deposit, and claim Section 80TTB on interest if you are a senior citizen under the old regime. File Form 15H if the total income before SCSS interest is below the taxable threshold to suppress TDS at source.

Conclusion

SCSS is the cornerstone of retirement income planning in India. With the ₹30 lakh ceiling, quarterly payouts, sovereign comfort, and dual tax benefits via 80C and 80TTB under the old regime, it is hard to beat for senior citizens. Open an account immediately on attaining eligibility, structure deposits across spouse to maximise the household ceiling, and review the regime choice annually.

Frequently Asked Questions

Is SCSS eligible for Section 80C deduction?

Yes. Investment in the Senior Citizen Savings Scheme qualifies for deduction under Section 80C up to ₹1.5 lakh per financial year along with other 80C-eligible investments. The deduction is available only under the old tax regime, which must be specifically opted into if you have business income.

What is the maximum deposit limit in SCSS?

The maximum deposit limit in SCSS is ₹30 lakh per individual, aggregated across all SCSS accounts held in single or joint capacity. The limit was raised from ₹15 lakh in Budget 2023. Spouses can independently each hold up to ₹30 lakh, effectively doubling the household ceiling.

Is SCSS interest taxable?

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

Can SCSS be extended beyond 5 years?

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