How SCSS interest is calculated
The Senior Citizen Savings Scheme (SCSS) pays a fixed rate of 8.2% per annum,
credited as simple interest every quarter — it is not compounded. The quarterly
interest is:
- Quarterly interest = Deposit × annual rate ÷ 4
So a ₹15,00,000 deposit at 8.2% earns ₹15,00,000 × 8.2% ÷ 4 =
₹30,750 every quarter, which works out to about ₹10,250 a month and
₹1,23,000 a year. Your principal stays the same throughout and is returned in full at
maturity, so over the 5-year term you receive ₹6,15,000 in interest on top of your deposit.
SCSS interest rate & key features (2026)
- Interest rate: 8.2% p.a., paid quarterly (reviewed every quarter by the Ministry of Finance; locked at the rate when you open the account).
- Tenure: 5 years, extendable once by a further 3 years.
- Deposit limit: minimum ₹1,000, maximum ₹30,00,000 per individual (raised from ₹15 lakh in 2023).
- Eligibility: age 60+, or 55–60 under VRS/superannuation, or 50+ for defence retirees.
- Where to open: any post office or authorised bank (SBI, and other public/private banks).
Premature closure rules & penalty
SCSS allows premature closure, but a penalty applies depending on how long the account has run:
- Within 1 year: no interest is payable; any interest already credited is recovered from your deposit.
- After 1 year, before 2 years: 1.5% of the deposit is deducted.
- After 2 years, before 5 years: 1% of the deposit is deducted.
Turn on Estimate premature closure above to see the exact penalty and the net
amount you would receive for your deposit and closure date.
Tax on SCSS
The SCSS deposit qualifies for a deduction of up to ₹1.5 lakh under Section 80C
(old regime only). The interest is fully taxable as per your slab, and banks/post offices deduct
10% TDS once your SCSS interest crosses ₹50,000 in a
financial year — submit Form 15H to avoid it if your income is below the taxable limit. Check your
overall liability with our income tax calculator, and note that
seniors can also claim up to ₹50,000 of interest under Section 80TTB.
SCSS vs other options
SCSS is one of the best fixed-income options for retirees, but it is worth comparing. A
fixed deposit offers flexible tenures and a monthly-income mode; the
5-year NSC is a tax-saving lump-sum option; and
PPF gives tax-free long-term growth. For steady income you can also
pair SCSS with the Post Office Monthly Income Scheme (POMIS).
If you want to draw down a mutual-fund corpus instead, see our
SWP calculator.
Frequently asked questions
What is the SCSS interest rate in 2026?
The Senior Citizen Savings Scheme (SCSS) interest rate is 8.2% per annum for the current quarter (April–June 2026). The rate is set by the Ministry of Finance and reviewed every quarter, but the rate applicable when you open your account is locked in for the full 5-year term. Interest is paid out quarterly, not compounded.
How is SCSS interest calculated?
SCSS pays simple interest that is credited every quarter. The quarterly interest is Deposit × annual rate ÷ 4. For example, ₹15,00,000 at 8.2% earns ₹15,00,000 × 8.2% ÷ 4 = ₹30,750 every quarter, or ₹1,23,000 a year. The principal is not compounded — it is returned in full at maturity, and you receive the interest as regular income.
What is the maximum deposit in SCSS?
The maximum you can invest in SCSS is ₹30,00,000 (₹30 lakh), raised from ₹15 lakh in the 2023 Budget. The minimum is ₹1,000, in multiples of ₹1,000. The limit is per individual across all your SCSS accounts, so a senior couple can invest up to ₹60 lakh combined in separate accounts.
Who is eligible to open an SCSS account?
Anyone aged 60 or above can open an SCSS account. People aged 55–60 who have retired under superannuation or a voluntary retirement scheme (VRS) can open one within a month of receiving their retirement benefits, and defence retirees can open one from age 50. NRIs and HUFs are not eligible.
What is the penalty for premature closure of SCSS?
If you close the account within 1 year, no interest is payable and any interest already paid is recovered. Closing after 1 year but before 2 years deducts 1.5% of the deposit; closing after 2 years but before 5 years deducts 1% of the deposit. Turn on the premature-closure estimate above to see the exact penalty and net amount for your case.
Is SCSS interest taxable, and is there TDS?
Yes, SCSS interest is fully taxable under "Income from other sources" as per your slab. The deposit qualifies for a Section 80C deduction of up to ₹1.5 lakh (old regime only). TDS at 10% applies if your total SCSS interest exceeds ₹50,000 in a financial year; you can submit Form 15H to avoid TDS if your income is below the taxable limit. Senior citizens can also claim up to ₹50,000 under Section 80TTB.
Can the SCSS account be extended after 5 years?
Yes. On maturity you can extend the account once for a further 3 years, and the extension earns the SCSS rate applicable on the maturity date. You can close an extended account after one year of extension without any penalty. This calculator lets you switch between a 5-year and an 8-year (extended) term.
SCSS vs Post Office MIS — which gives more income?
SCSS currently pays 8.2% but only seniors (60+) can invest, with a ₹30 lakh cap and quarterly payout. The Post Office Monthly Income Scheme (POMIS) pays 7.4% with a ₹9 lakh single / ₹15 lakh joint cap and a monthly payout, and is open to all adults. Seniors usually earn more from SCSS; combine both to maximise regular income.