Senior Citizen Savings Scheme is a sovereign-backed deposit for retirees. Eligibility 60 plus (55 plus for VRS, 50 plus for defence retirees). Maximum deposit Rs 30 lakh, 5-year term extendable by 3 years. Current rate is 8.2% per annum, paid quarterly. Maxed out, an account pays Rs 61,500 every quarter (Rs 2,46,000 per year). Deposit qualifies for Section 80C (old regime); interest is fully taxable but TDS only kicks in above Rs 50,000 per year.
Who is eligible for SCSS
Senior Citizen Savings Scheme is meant for resident Indians at retirement:
- Age 60 plus: any resident.
- Age 55-60: only if retired under voluntary retirement (VRS) and account opened within one month of receiving retirement benefits. The deposit cannot exceed the retirement corpus received.
- Age 50 plus: defence personnel (excluding civilian defence employees) on retirement, similar one-month window.
NRIs and HUFs cannot open SCSS. Joint accounts are allowed only with the spouse.
Accounts can be opened at any post office or designated bank (SBI, ICICI, HDFC, Axis, PNB, BoB and most others).
Deposit, tenure, and rate
Maximum deposit: Rs 30,00,000 per individual across all SCSS accounts. The cap was raised from Rs 15 lakh in Budget 2023.
Minimum: Rs 1,000.
Tenure: 5 years from the deposit date. Extendable once by 3 more years on application within one year of maturity.
Interest rate: 8.2% per annum for FY 2025-26, paid quarterly (last working day of March, June, September, December). Rates are reset every quarter for new accounts; existing accounts continue at the rate locked at deposit.
Deposit: qualifies for Section 80C deduction up to Rs 1.5 lakh (shared cap) under the old regime. New regime gets no 80C benefit.
Interest: fully taxable as "Income from Other Sources" at slab rate.
TDS:
- TDS at 10% applies on interest above Rs 50,000 per year (Section 194A, special senior-citizen threshold).
- Submit Form 15H if your total income is below the basic exemption to avoid TDS.
Section 80TTB: senior citizens get up to Rs 50,000 deduction per year on interest from FDs, RDs, savings accounts and SCSS combined (old regime only).
Under the new regime, neither 80C on deposit nor 80TTB on interest applies. SCSS still attracts retirees because the rate beats most bank FDs.
Premature withdrawal
Allowed any time after one year, with penalty:
- 1 to 2 years: 1.5% of deposit deducted.
- 2 to 5 years: 1% of deposit deducted.
If you close in year 1, no interest is paid - any interest already credited is reversed.
In the extension period (years 6 to 8), the account can be closed at any time without penalty after the first year of extension.
SCSS vs PMVVY vs senior FD
SCSS vs PMVVY (Pradhan Mantri Vaya Vandana Yojana): PMVVY closed for new subscriptions in March 2023. Existing PMVVY holders continue at their locked-in rate (7.4%) until policy maturity. SCSS is now the primary government-backed retiree income product.
SCSS vs senior-citizen FD: leading bank FDs offer 7.5%-8% for seniors on 5-year terms. SCSS is currently slightly higher and is sovereign-backed. FDs offer flexible tenure (1-10 years) and lump-sum interest options; SCSS pays only quarterly interest.
SCSS strategy: most retirees max SCSS first (Rs 30L), then ladder bank FDs across 1, 2, 3 and 5-year tenures for liquidity. PPF (Rs 1.5L per year cap) and POMIS (Rs 9 lakh joint) round out the basket.
Run the math for your situation
Use our IN India calculator to plug in your own numbers and see exactly what you owe / save.
Resident Indians aged 60 plus. Also age 55 plus for voluntary retirement (VRS) cases within one month of retirement benefits, and age 50 plus for retired defence personnel. NRIs and HUFs are not eligible.
What is the SCSS deposit limit in 2026?
Rs 30,00,000 per individual across all SCSS accounts (raised from Rs 15 lakh in Budget 2023). Couples can hold separate accounts up to Rs 30 lakh each, totalling Rs 60 lakh in a household.
Is SCSS interest tax-free?
No - SCSS interest is fully taxable as Income from Other Sources at slab rate. TDS at 10% applies on interest above Rs 50,000 per year. Section 80TTB allows up to Rs 50,000 deduction on aggregated senior interest income (old regime only).
Can SCSS be extended after 5 years?
Yes - one extension of 3 years is allowed on application within one year of the original maturity. The interest rate during extension is the rate prevailing on the day of extension.
What is the SCSS premature withdrawal penalty?
Account closed between 1-2 years: 1.5% of deposit deducted. Closed between 2-5 years: 1% deducted. Within the first year, no interest is paid and any credited interest is reversed.
Key takeaways
Default is the new regime since AY 2024-25; opt into old regime explicitly via Form 10-IEA.
Section 87A rebate covers all tax up to Rs 12.75 lakh gross income in the new regime (Budget 2025).
Rough rule: if your total old-regime deductions exceed Rs 4-5 lakh, the old regime usually wins.
HRA exemption, 80C deduction, and Section 24(b) home loan interest are old-regime-only benefits.
Standard deduction: Rs 75,000 in new regime vs Rs 50,000 in old regime.
Salaried employees can switch regime annually; self-employed / business income can switch only once in lifetime.
By audience: what to focus on
Different reader types need different angles on this topic. Pick the one closest to your situation.
Salaried employees
Maximise tax-advantaged retirement contributions (EPF/401(k)/SIPP/RRSP). Check whether your country prefers the old vs new regime, employer-match thresholds, and salary-sacrifice options. Use the calculators below with your CTC / gross income.
Freelancers / self-employed
You bear higher self-employment tax + lose the employer match, but get access to higher contribution limits (Solo 401k, SEP-IRA, NPS Tier-I). Track business expenses meticulously. Quarterly estimated tax payments avoid underpayment penalty.
NRIs / expats
Tax residency rules (183-day, tie-breaker), double-taxation treaties, foreign tax credits all come into play. NRI restrictions on PPF (no new accounts) but expanded options on NPS. Cross-border income often needs specialist advice.
Retirees / pre-retirees
Sequence-of-returns risk in early retirement is the largest threat. Glide-path asset allocation, Roth-conversion analysis in low-income years, Required Minimum Distribution planning, and Medicare/healthcare gap funding (US) are the big items.
Quick reference: 12 specific scenarios
Scan the question list, expand only the rows that match your situation.
Should I choose the old or new tax regime?
Rough rule: if your total old-regime deductions (Section 80C + HRA + 24b + 80D + 80CCD(1B) + standard) exceed about Rs 4-5 lakh, the old regime usually wins. Otherwise the new regime wins, especially below Rs 12.75 lakh gross income where the new regime's 87A rebate gives zero tax. Use our regime comparator below to check both for your exact inputs.
What deductions are available only in the old regime?
Section 80C (Rs 1.5 lakh: PPF, ELSS, EPF, life insurance, home loan principal, tuition fees), HRA exemption, Section 24(b) home loan interest (Rs 2 lakh self-occupied), Section 80D health insurance (Rs 25k self / Rs 50k senior parents), Section 80CCD(1B) NPS (extra Rs 50k), Section 80E education loan interest, Section 80TTA/TTB savings interest. None of these are available in the new regime.
What's available in the new regime?
Lower slab rates (Nil / 5% / 10% / 15% / 20% / 30%) and a higher standard deduction of Rs 75,000 (vs Rs 50,000 in old regime). Section 87A rebate gives full tax waiver up to Rs 12.75 lakh gross income (Budget 2025). Employer NPS contribution (80CCD(2)) up to 14% of basic is allowed in both regimes.
Which regime is the default?
From AY 2024-25 onwards, the NEW regime is the default. To opt into the old regime, salaried employees must explicitly choose it each year via Form 10-IEA (filed before due date) or via the employer's investment declaration. Self-employed / business taxpayers can switch only once.
Can I switch between old and new regime each year?
Salaried employees CAN switch each year, but must signal the choice to the employer before the start of the financial year (or accept the new-regime default). Self-employed / business income taxpayers can switch only once in their lifetime - choose carefully.
How does Section 87A rebate work in the new regime?
Under the new regime, if your total taxable income is below Rs 12.75 lakh (Rs 12 lakh + Rs 75k standard deduction = effective threshold Rs 12.75L gross), the Section 87A rebate covers ALL the tax due, making your effective income tax ZERO. This is the single biggest reason most salaried Indians earning under Rs 13 lakh now prefer the new regime.
What is the marginal relief in the new regime?
If your income marginally exceeds the rebate threshold (Rs 12.75 lakh), the tax can jump significantly. Marginal relief caps the tax increase to the amount by which income exceeds the threshold. So an income of Rs 12.80 lakh doesn't pay full slab tax - the marginal-relief mechanism limits the tax to Rs 5,000 (the income above threshold).
Does HRA exemption apply in the new regime?
No. HRA exemption is an old-regime-only benefit. Under the new regime, the entire HRA you receive is added to taxable income with no exemption. This is a major reason metro-city renters with significant HRA may still find the old regime more tax-efficient.
Can I claim home loan interest in the new regime?
Self-occupied home loan interest (Section 24b, Rs 2 lakh) is NOT available in the new regime. Let-out / rented property home loan interest IS available in BOTH regimes against rental income (but with rental income loss capped at Rs 2 lakh against other heads in both).
How does the regime choice affect my TDS at source?
Your employer deducts TDS based on the regime you declare in your investment declaration (Form 12BB). If you don't declare, the employer applies the new regime by default. You can recover excess TDS by claiming the old regime when filing your ITR if it works out better.
Is the new regime always better for low-income earners?
Below Rs 12.75 lakh gross income, the new regime usually wins because of the 87A rebate covering all tax. Even if you have Rs 1.5 lakh of 80C deductions, the old regime would still pay Rs 50k+ in tax above Rs 7 lakh income, whereas the new regime pays zero up to Rs 12.75 lakh. The old regime wins only at higher incomes with very large deduction stacks.
Does the new regime allow PPF / NPS investments?
Yes, you can INVEST in PPF / NPS in either regime, but you can only CLAIM the deduction in the OLD regime. NPS Tier-I employer contribution (Section 80CCD(2)) up to 14% of basic salary is the one NPS-related deduction allowed in both regimes.
Related topics readers also search for
Common adjacent queries on this topic. Each calculator and explainer linked below covers one or more of these specifically.
old vs new tax regime calculatorsection 87A rebate explainedHRA exemption calculation80C deduction listsection 24b home loan interestnew tax regime slab rates 2026marginal relief new regimeform 10-IEA filingNPS additional deduction 80CCD(1B)standard deduction new regime
Sources and methodology
Numbers on this page are sourced from official government / regulator websites and refreshed automatically every Sunday by our build pipeline. Hover any number with a dotted underline to see its source and as-of date.
Methodology: each calculator linked from this post documents its formula. Live market data (FX, treasury yields, mortgage rates) is pulled from public APIs (exchangerate.host, FRED, BoE, ECB, BoC, CoinGecko, stooq).
