SCSS Interest Rate 2020

What is the interest rate on SCSS (Senior Citizens’ Savings Scheme) for 2020? How and when the interest rates of SCSS set? What are the historical interest rates offered? We try to answer these common queries about SCSS in this post.

Senior Citizens’ Savings Scheme (SCSS) is one of the best fixed deposit schemes for Retired Senior Citizens as its safe (backed by Government of India), has assured quarterly payments, gives tax benefit and easy to handle.

How and when does the interest rates change?

Starting April 2016, Government of India announces interest rate on small saving schemes including Senior Citizen Savings Scheme, PPF, Sukanya Samriddhi Account, , Post Office Fixed and Recurring Deposits every quarter. This is done to keep these interest rates in sync with the market rates. The table below shows the interest reset schedule:

Also Read: Best Tax Saving Investments u/s 80C

SCSS Interest Rate History:

SCSS was launched on 2^nd August 20004 and offered interest rate of 9% until Marc 2012. Starting FY 2012-13 it was market linked and offered 9.3%. 

As of 2020, SCSS interest rates are 8.6% (Jan to Mar)

The good thing about SCSS is unlike PPF or Sukanya Samriddhi  once invested the interest rate remains unchanged over the tenure of the deposit.

The table below gives the details of SCSS interest rates. 

Starting FY 2016-17 interest rates are reset quarterly

Before FY 2016-17 interest rates

Also Read: All you wanted to know about SCSS

SCSS Investment Limit:

Senior Citizens’ Savings Scheme matures at the end of five years from the date of deposit. 

A person can invest maximum of Rs 15 lakhs in Senior Citizens’ Savings Scheme. You can open multiple accounts and joint account with your spouse only but the total investment across all accounts cannot exceed Rs 15 lakhs.

Spouses can open separate accounts with Rs 15 Lakh limit for each of them. So a couple can invest maximum of Rs 30 Lakhs.

The minimum investment is Rs 1,000 and can be increased in multiples of Rs 1,000 thereof.

Amount below Rs 1 Lakh can be deposited in cash while any amount above that has necessarily be deposited using cheque.

Also Read: How to Calculate Income Tax for Senior Citizens?

SCSS Interest Payment:

The interest earned is paid on the last working day of every quarter – March 31, June 30, September 30, December 31. The payout date remains constant irrespective of date of deposit.

The payment can be made directly to depositor’s account through ECS or post dated cheques.

Download: Free ebook for Income Tax Planning for FY 2019-20

Tax Benefit, Taxation and TDS:

The investment up to Rs 1.5 lakhs in Senior Citizens’ Savings Scheme is eligible for tax deduction u/s 80C.

However the interest earned is fully taxable. The interest income is added to the income of the investor and taxed according to the marginal tax rate.

TDS (tax deduction at source) is deducted @ 10% of interest paid in case the annual interest is more than Rs 50,000 in a financial year. However if your total income for the year is below exempted limit of income tax, you can submit form 15H (for more than 60 years) or 15G (for less than 60 years) to the concerned bank/post office to avoid TDS hassles.