Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme pays 8.2% a year for the July to September 2026 quarter, and each account is capped at ₹30,00,000. Interest is paid quarterly and the deposit runs five years, extendable by three.

At the full ₹30,00,000, that is ₹2,46,000 of interest a year, or ₹61,500 every quarter. It is the highest sovereign-backed income available to a retiree in India. It is also fully taxable, which is the part the brochures underplay.

What are the SCSS rules, in one table?

Rule or limit	Figure	Applies to	Source
Interest rate	8.2% a year	July to September 2026 quarter	Ministry of Finance quarterly notification
Maximum deposit	₹30,00,000	Per account holder	Scheme rules
Minimum deposit	₹1,000	Per account	Scheme rules
Tenure	5 years, extendable by 3	All accounts	Scheme rules
Interest payout	Quarterly	All accounts	Scheme rules
Section 80C deduction	Up to ₹1,50,000	Old tax regime only	Income-tax Act, FY 2026-27
TDS on interest	10% above ₹1,00,000 a year	Senior citizens, section 194A	Income-tax Act, FY 2026-27
Section 80TTB deduction	Up to ₹50,000 of interest	Senior citizens, old regime only	Income-tax Act, FY 2026-27

Rate as of 1 July 2026. Small savings rates are reset every quarter by the Ministry of Finance, so check the current quarter before you deposit.

What does SCSS actually pay you after tax?

Not 8.2%. Interest is added to your income and taxed at your slab rate. There is no special treatment.

In the 30% bracket, with 4% cess, the effective rate is about 5.64%. In the 20% bracket it is about 6.49%. A retiree with little other income may pay nothing at all.

Under the old regime, section 80TTB shelters up to ₹50,000 of interest income for a senior citizen. The new regime does not offer it. Which regime you are in changes the answer materially, so run both through our old versus new regime calculator.

Is SCSS better than a bank fixed deposit?

On safety, clearly yes. SCSS is a government scheme. A bank deposit is insured only up to ₹5,00,000 per depositor per bank, principal and interest together.

On headline rate, some small finance banks pay more. Senior citizen rates of 8.5% are available in that segment, against SCSS at 8.2%. But you would be holding ₹30,00,000 against ₹5,00,000 of insurance cover.

The sensible use is both. Put the core in SCSS, and split anything above the cap across insured bank deposits. Compare current levels on our best FD rates page and model the income with the FD calculator.

How much can a retired couple put in?

Twice the cap, if both qualify. The ₹30,00,000 limit applies per account holder, so a couple can hold ₹60,00,000 between two individual accounts.

That is ₹4,92,000 of annual interest at the current rate. Split across two people, it also splits across two sets of slabs and two 80TTB deductions.

Beyond that ceiling, you need somewhere else to go. RBI floating rate savings bonds are the obvious next stop for sovereign-backed income. See RBI floating rate bonds.

What are the traps in SCSS?

The first is the rate reset. The 8.2% applies to deposits made in this quarter and is fixed for your account’s term. The rate on new deposits changes every quarter.

The second is liquidity. Premature closure is allowed but carries a deduction from the interest already paid. The exact deduction depends on how long the account has run, so ask the post office or bank for the figure in writing before you close.

The third is TDS. Tax is deducted once interest crosses ₹1,00,000 in a year. If your total income is below the taxable limit, file Form 15H at the start of the year rather than claiming a refund later. Our TDS rates chart sets out the thresholds.

Common questions

What is the current SCSS interest rate?

8.2% a year for the July to September 2026 quarter, set by the Ministry of Finance quarterly notification. The rate that applies to your account is the one in force when you open it, and it stays fixed for the five-year term. New deposits in a later quarter may get a different rate.

How much interest will I get on ₹30 lakh in SCSS?

At 8.2%, a full ₹30,00,000 deposit earns ₹2,46,000 a year. That is paid as ₹61,500 every quarter. Tax at your slab rate applies on the whole amount, and tax is deducted at source once the interest crosses ₹1,00,000 in a financial year.

Is SCSS interest tax free?

No. It is fully taxable at your slab rate, and this is the most common misunderstanding about the scheme. The deposit itself qualifies for a section 80C deduction under the old regime. Senior citizens under the old regime can also set off up to ₹50,000 of interest income under section 80TTB.

Can I extend my SCSS account after five years?

Yes, by three years. The extension has to be applied for, and the rate applying to the extended period is the one in force at extension, not your original rate. Ask the post office or bank for the applicable rate in writing before you commit to the extension.

Can I open SCSS in a bank or only at a post office?

Both. The scheme is offered through post offices and through authorised banks. The rules, rate and limits are identical because they are set by the government, not the institution. Pick whichever handles quarterly payouts into your account most reliably.

Sources

Small savings rates for the July to September 2026 quarter, Ministry of Finance quarterly notification, as of 1 July 2026
Section 80C, section 80TTB and section 194A thresholds for FY 2026-27 — incometax.gov.in
Deposit insurance limit of ₹5,00,000 per depositor per bank — DICGC

We have not published the premature closure deduction percentages. We could not verify the current figures against a primary source, and getting that number wrong would cost a reader money at exactly the moment they need it. Ask your post office or bank for it in writing.