Senior Citizen Savings Scheme (SCSS) – Interest Rate, Advantages & Eligibility Criteria for SCSS


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Senior Citizen Savings Scheme (SCSS) commonly known as SCSS is a government backed savings option for elderly citizens of India. Let us understand this well-designed policy for senior citizens in detail. 

Senior Citizen Savings Scheme is a plan to offer monetary security to the elderly people in India who are above the age of 60 years. This scheme is designed by the government of India to allow a steady income coming for the senior Indian citizens after they are retired. The scheme comes with many benefits such as regular money flow, investment options and tax benefits among others.  The duration of the SCSS is 5 years. However, it can further be extended for another 3 years. The scheme is currently available at a current rate of interest of 8%.

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Interest Rate of Senior Citizen Savings Scheme 2023

The current rate of interest under SCSS is 8% per annum as of the initial quarter of 2023. The SCSS rate of interest is generally regulated by Ministry of Finance, Government of India and is changed on a periodic basis. The interest rate under SCSS is computed and credited on a quarterly basis.

Below is the applicable rate of interest on SCSS scheme:

Time Period Interest Rate (% Annually)
Jan to March FY 2023-24 8
Oct to Dec FY 2022-23 7.6
Jul to Sep 2022-23 7.4
April to June FY 2022-23 7.4
Jan to Mar FY 2021-22 7.4
Oct to Dec FY 2021-22 7.4
Jul to Sep FY 2021-22 7.4
April to June FY 2021-22 7.4
Jan to March 2021 FY 2020-21 7.4
Oct to Dec 2020 FY 2020-21 7.4
Jul to Sep 2020 FY 2020-21 7.4
Apr to Jun FY 2020-21 7.4
Jan to March FY 2019-20 8.6
Oct to Dec 2019 (Q3 FY 2019-20) 8.6
Jul to Sep 2019 (Q2 FY 2019-20) 8.6
Apr to Jun 2019 (Q1 FY 2019-20) 8.7
Jan to March 2019 (Q4 FY 2018-19) 8.7
Oct to Dec 2018 (Q3 FY 2018-19) 8.7
Jul to Sep 2018 (Q2 FY 2018-19) 8.3
Apr to Jun 2018 (Q1 FY 2018-19) 8.3

Also Read: Best investment for senior citizens in India

Senior Citizen Savings Scheme ROI Calculation 

The SCSS interest rate can be calculated easily. All you need is to compute the compound interest on the amount invested taking into account the SCSS interest rate as applicable in that quarter. By making the calculations, the policy seeker can come to know about the interest earned on the investment. The payment or the maturity amount is paid to the savings bank account of the policyholder each year.

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7 Advantages of Senior Citizen Saving Scheme

The fact that SCSS is a savings cum investment plan, it serves best for the elderly citizens. In fact, SCSS is one of the ideal policies offering high interest rates. Further, the fact that it is a government backed plan makes it all the more popular and effective. The SCSS is a scheme that is formulated to fulfil the insurance requirement of senior citizens who are investment oriented.

Here are some advantages of this plan:

  1. Easily available – The SCSS is an easily available scheme that can be availed with ease. You can simply visit your bank nearby or post office and fill out an SCSS application form to get the process done.
  2. Reliability – SCSS is a government supported investment instrument provided by the Indian Government and is loaded with the assurance of financial security.
  3. Multiple Accounts – The best part about an SCSS account is that an individual can have multiple accounts in the form of individual or joint accounts. However, in case of a joint account, the other investor must be the spouse of the key investor.
  4. Good Returns – The Senior Citizen saving scheme interest rate is 8.7 % per year at present, which makes it a plan with good return.
  5. Flexible Duration – The SCSS scheme is available with a five years’ time period, which can be extended for 3 more years. Hence, the SCSS can be used as a mid- and long-term investment plan as well.
  6. Tax Saving Scheme – The SCSS scheme can be used for saving TDS and income tax under Section 80C of Income Tax Act, 1961.
  7. Premature Policy Termination – In the event of financial crisis, the SCSS scheme can be closed prematurely to access your money saved under the scheme. However, for this the SCSS account should be active for at least a year. The bank, however, will levy a 1.5 % penalty for premature closure of the scheme. In case your SCSS account is 2-year-old, you are levied with 1% penalty for terminating the policy before maturity.

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5 Disadvantages of Senior Citizen Savings Scheme (SCSS)

1. Limited investment amount: The SCSS allows for a maximum investment of Rs. 15 lakhs. This may not be the best alternative for people looking to invest a larger sum.

2. Taxation: The interest earned on the SCSS is taxable according to the investor’s tax bracket, which reduces overall returns.

3. Inflation risk: The interest rate on the SCSS may be insufficient to keep up with inflation, eroding the real value of the investment over time.

4. Fixed interest rate: Because the interest rate on the SCSS is fixed, investors will not be able to benefit from any increase in interest rates over the scheme’s tenure.

5. No joint account: Because the SCSS account can only be formed in the name of a single person, those who want to open a joint account with a spouse or family member may be disappointed.

Also Read: Best lic policy for senior citizens

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Senior Citizens Saving Schemes Eligibility Criteria  

Below are the criteria of eligibility for SCSS:

  • An SCSS account can be opened by an Indian citizen who is 60 years and above
  • The deposit limit under SCSS scheme is INR 1.5 lakh. So, an individual can deposit up to a maximum amount of INR 1.5 lakh
  • The tenure of the SCSS scheme is 5 years, after which the amount matures. However, the investor can extend the duration to another 3 years under the scheme

Also Read: Senior citizen health insurance scheme by government of India

How to Calculate the SCSS Maturity Amount?

The SCSS investments are compounded annually and are automatically credited to the savings account of the account holder. At present the SCSS interest rate is 8.7%.

So, for instance, if you deposit INR 15 lakh under the scheme for a period of 5 years, the maturity amount of the deposit is calculated as (15,00,000*1.086)^5 = Rs 22.65 lakh). One can use a SCSS online calculator to compute the maturity amount online within seconds. The investor can submit details like tenure of policy, the invested amount, and the interest rate.

Senior Citizen Saving Scheme Application Form

Application form of SCSS account can be availed either online or offline at any of the post offices across India and with most of the public and private sector banks in their official websites.

However, the SCSS account can’t be opened online. The applicant is likely to download the application form and get a print out of the form and fill in the required details. This form has to be submitted at the bank or post office together with the KYC papers.

Here are the documents needed to be submitted at the time of SCSS account opening:

  • Applicant’s name
  • PAN number
  • Family member details
  • For joint account, you need to mention details like name, age and address of the other account holder
  • Cheque/demand draft of the deposited amount
  • Nominee name (if any)

Is Premature Withdrawal of SCSS Deposit Possible?

Premature withdrawal of the SCSS account is possible before the policy ends. However, it is possible only after the account completes one year of the scheme. There is a penalty of 1.5% levied on the premature withdrawal of the account after the completion of one year of the scheme. Similarly, in case the account completes 2 to 5 years of time, the penalty levied is 1% on premature withdrawal of the scheme.

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To Sum Up

The senior citizen saving scheme interest rate is good as compared to many other investment policies. Hence, rather than investing in a low-interest income scheme or a high-risk investment plan, it is better to invest in SCSS to gain maximum benefit. It offers the elderly people an option to invest money in a safe and popular savings instrument.

Further, one can use a senior citizen saving scheme calculator to compute the maturity amount of your SCSS scheme.

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FAQs: Senior Citizen Savings Scheme (SCSS)

What is the frequency in which the rate of interest changes on Senior Citizen Savings Schemes?

The rate of interest of the SCSS gets modified every three months. Hence, the ROI changes four times a year.

Can a joint SCSS account be opened with other family members?

Yes, a joint SCSS account can be opened with your spouse only. The maximum sum that can be invested in a SCSS is INR 15 lakh.

Is section 80C of income tax applicable on SCSS?

Yes, the investments done towards the SCSS allow tax benefits under section 80C of the IT Act, 1961.

Is it possible to change the nominee under SCSS?

Yes, nominations made by a person under SCSS can easily be edited or cancelled by submitting a fresh nomination form.

In the case of a joint account of SCSS, what happens if the key account holder dies before maturity?

In that case, the second account holder or nominee can hold the SCSS account by maintaining the rules of the scheme.

What are the disadvantages of a senior citizen savings scheme?

One major drawback of SCSS is that the interest received under the plan is subjected to TDS and there is a higher limit to investment, which is, INR 15 lakhs.

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Mar 21, 2023
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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