Post office scheme
Interest rates on fixed deposits (FD) have been decreasing since 1% reduction in repo rate by Reserve Bank of India (RBI) since February. In such a situation, Senior Citizen Savings Scheme (SCSS), which is supported by the Government of India, comes out as a better option. It is completely safe, it gets good interest and also provides tax exemption under Section 80C, which is right for senior citizens who want safe and stable returns.
The Government of India reviews the interest rate on other small savings schemes including SCSS every quarter. Recently, the government has declared the interest rates of SCSS for the July to September quarter of FY 2025-26. According to the government, there has been no change in the interest rates of small savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS).
The Finance Ministry said in a circular on 30 June 2025, “Interest rates on various small savings schemes for the second quarter of FY 2025-26 (1 July 2025 to 30 September 2025) will be equal to the first quarter (1 April 2025 to 30 June 2025).
SCSS interest rate
SCSS gets interest at the rate of 8.2% annually, which comes into account every three months. At the same time, interest in FD is either available at maturity or according to the bank rules, monthly, quarter, half or annual can also be found. However, more than 8% interest on FD is being received only in very few banks, that too in some small finance banks.
Government Bank (PSU Banks)
- Karur Vaishya Bank pays 7.25% interest to senior citizens.
- Indian Overseas Bank gives 7.45%.
- Punjab and Sindh Bank pays 7.55% interest to senior citizens.
- The Federal Bank pays 7.35% interest on 444 days FD.
Private bank
- Axis Bank pays 7.25% interest to senior citizens on 5 years to 10 years FD.
- HDFC Bank gives 7.1% on FD of at least 21 months at least 21 months.
- ICICI Bank pays 7.1% interest on FD from 2 years to 10 years to 10 years.
- Yes Bank pays 7.85% interest on FD of at least 5 years at least 5 years.
Sciss tax details
The investment duration in SCSS is 5 years (which can be extended by 3 years). In this, a tax exemption of up to Rs 1.5 lakh is given under Section 80C. The maximum investment limit in this is 30 lakh rupees.
Rules to close scass account
The SCSS account is matured after 5 years. To close it, you have to submit a passbook and prescribed form in the post office. If the account holder dies before the account is matured, then from that date, interest will be available in the account at the rate of post office savings account. However, if the account is in the joint name or the spouse is enrolled, then they can continue to run this account till maturity and will continue to get interest at the SCSS rate.