The Senior Citizens Savings Scheme (SCSS) is designed specifically for elderly individuals residing in India. This scheme provides a reliable source of income along with top-notch security and tax advantages. Eligible senior citizens residing in India have the option to invest a lump sum amount in the scheme either individually or jointly, in order to receive regular income as well as tax benefits.
The scheme, offered through Post Offices, gives tax benefits to senior citizens under the Old Tax Regime. The scheme does not provide any tax benefits in the new tax regime.
Tax on SCSS deposits
It is important to note that deposits made in Senior Citizen Savings Scheme (SCSS) accounts do not qualify for tax deductions under the new tax regime.
The Finance Bill 2025 has introduced a new tax regime starting from the financial year 2025-26, making income up to Rs 12 lakh tax-free for individuals. This change means that senior citizens with total income, including those from SCSS, below Rs 12 lakh will not be required to pay any taxes.
Additionally, senior citizens will no longer be able to claim a deduction of up to Rs 50,000 per year under section 80TTB in the new tax regime.
However, senior citizens filing taxes under the old regime are eligible to claim a deduction. They can avail a deduction of up to Rs 1.5 lakh under section 80C of the Income-tax Act, 1961.
Although a senior citizen can invest a maximum of Rs 30 lakh at once in a SCSS account, the maximum deduction that can be claimed under section 80C is limited to Rs 1.5 lakh in a financial year.
For instance, if a senior citizen invests Rs 5 lakh in their SCSS account in April 2024, they can claim a deduction of Rs 1.5 lakh while filing the Income Tax Return (ITR) for Assessment Year 2025-26 in July of that year. However, they will not be able to claim a deduction for the remaining amount in the current year or the following year.
Furthermore, the Rs 1.5 lakh deduction will only be allowed if the account holder has not already utilised the Section 80C deduction limit through investments in other tax-saving schemes.
Tax on interest amount
The SCSS account offers a quarterly interest payment, usually disbursed at the beginning of each quarter. This interest is subject to tax at the applicable slab rates for individual account holders.
Under the old tax regime, account holders can claim a deduction of up to Rs 50,000 on their interest income. This deduction is available to senior citizens as per Section 80TTB of the Income-tax Act and covers income from bank and post office deposits, including SCSS accounts.
For instance, let us consider a scenario where a senior citizen has invested Rs 10 lakh in their SCSS account for a duration of 5 years. At the current interest rate of 8.2%, the total interest income accrued over the 5-year period will amount to Rs 4.1 lakh, with an annual interest payout of Rs 82,000. Of this, the account holder may claim a deduction of Rs 50,000 under Section 80TTB in the old regime, while the remaining amount will be subject to taxation.
Here’s the taxable income for various investment amounts (taking 8.2% per annum)
| Amount invested | Interest in 5 years | Interest paid in 1 year | Total taxable interest income |
| Rs 1 lakh | Rs 41,000 | Rs 8,200 | 0 |
| Rs 2 lakh | Rs 82,000 | Rs 16,400 | 0 |
| Rs 3 lakh | Rs 1,23,000 | Rs 24,600 | 0 |
| Rs 4 lakh | Rs 1,64,000 | Rs 32,800 | 0 |
| Rs 5 lakh | Rs 2,05,000 | Rs 41,000 | 0 |
| Rs 6 lakh | Rs 2,46,000 | Rs 49,200 | 0 |
| Rs 7 lakh | Rs 2,87,000 | Rs 57,400 | Rs 7,400 |
| Rs 8 lakh | Rs 3,28,000 | Rs 65,600 | Rs 15,600 |
| Rs 9 lakh | Rs 3,69,000 | Rs 73,800 | Rs 23,800 |
| Rs 10 lakh | Rs 4,10,000 | Rs 82,000 | Rs 32,000 |
| Rs 15 lakh | Rs 6,15,000 | Rs 1,23,000 | Rs 73,000 |
| Rs 30 lakh | Rs 12,30,00 | Rs 2,46,000 | Rs 1,96,000 |