Senior Citizen Saving Scheme

This article talks about the Senior Citizen Saving Scheme(SCSS), which provides a source of income to those who are reaching their old age and have little or no source of income.

Senior citizens are an elemental part of a country’s growth and development. To protect their needs and interests many schemes are launched by the central government from time to time. One such scheme is the Senior Citizen Saving Scheme (SCSS). The aim of this scheme is to provide a source of income to those who are reaching their old age and have little or no source of income. Under SCSS interest will be paid on deposits made by senior citizens. It is a preferred fixed-income investment alternative for people who are above the age of 60. As SCSS is a government-backed investment scheme, it gives assured returns on a quarterly basis. SCSS can be availed through any certified bank and post office in India through a simple process.

SCSS interest rates are subject to quarterly reviews and revision. Interest is calculated and credited to the account on a quarterly basis. SCSS interest rate for the 2nd quarter of FY22 (July-September) is 7.4% (Compounding of Interest not permissible). The interest rate on other savings accounts in India is ranging from 2.75%-6% as of the 2nd quarter of FY22. Fixed account interest rates are similar to SCSS, but it suffers from its own limitations as there are a number of restrictions on such accounts. The SCSS account matures in 5 years, although it can be extended for further 3 more years, at the option of the depositor. This extension option is available for only one time in the life of the SCSS account and must be availed within one year of maturity of the SCSS account.


The following persons are eligible for SCSS Scheme:

  • He/She must have attained the age of 60 or more on the date of opening of the account.
  • Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation (Investment must be made within a month of availing the retirement benefits).
  • Retired Defense Personnel subject to a minimum age of 60 years.

HUFs and NRIs are not eligible to invest in the above-mentioned scheme.


Eligible investors can make a lump sum deposit in an SCSS Account. The minimum deposit allowed under SCSS Scheme is Rs. 1000 and in multiples thereof. The maximum Deposit allowed is Rs. 15 Lakhs or the amount received on retirement whichever is lower.

Though cash deposits are permitted in an SCSS account, it is only allowed for deposits less than 1 lakh. For an amount exceeding 1 lakh using a cheque or demand, the deposit is mandatory.


SCSS accounts can be easily opened at any authorized banks or post office branches in India.

We can open an SCSS account at any post office in India by just filling in the account opening form and submitting it along with copies of KYC documents including proof of identity, proof of address, and proof of age along with two passport sizes photographs.

Besides post offices, we can open SCSS accounts at Public/Private banks. The procedure is the same as in the case of post offices but there are some benefits associated with opening an SCSS account through banks:

  • The accrued interest can be credited directly to the depositor’s savings account with the bank
  • Standard account statements are forwarded to depositors through post or mails
  • Bank provides 24X7 customer service


SCSS should be the preferred investment option for senior citizens due to the following benefits:

  • Being a government-backed small savings scheme, it is one of the safest and most reliable schemes available.
  • As already mentioned, the SCSS account offers an interest rate of 7.4%, which makes it among the most beneficial investment options, especially compared to the other traditional ways of savings such as FD and Savings Account.
  • SCSS also provides tax benefits to the depositor. Under section 80C of the Income Tax Act, SCSS is eligible for a tax deduction of up to Rs. 1.5 Lakh per annum.
  • The process of investing in SCSS is quite simple, where we can easily open accounts at our nearest post offices or bank branches.
  • The interests are paid on a quarterly basis which ensures periodic payouts adding to our account. Interest is credited on the first day of April, July, October & January every financial year.


SCSS provides the option for the withdrawal of deposits after one year of opening the account, but penalties are applicable in these cases. The extent of the penalty depends on the time when the amounts are withdrawn.

  • If the amount is withdrawn within 2 years of opening the account, 5% of the deposited amount is deducted as a penalty.
  • If the amount is withdrawn between 2-5 years of opening the account, 1% of the deposited amount is deducted as a penalty.