Was the interest rate hiked for the April- June 2025 quarter?
Every quarter, the government reviews the interest rate on SCSS and revises it if the government deems fit to do so. For this quarter i.e. April-June 2025, the interest rate on SCSS has not been revised by the government. Investors in SCSS will get 8.2% interest per annum on their deposits. The interest is fully taxable and due and paid each quarter.
The account can be opened with a minimum deposit of Rs. 1,000 or any sum in multiples of Rs. 1,000 not exceeding Rs. 30,00,000. To clarify further, the total amount invested by a senior citizen in the SCSS at any point of time cannot exceed Rs 30 lakh. The tenure of the deposit is 5 years and can be further extended by 3 years.
SCSS taxation
Investment under this scheme qualifies for claiming the benefit of the tax break allowed under section 80C of Income Tax Act, 1961.
TDS, at the prescribed rate, is applicable to the interest paid on this scheme if total interest paid across all active SCSS accounts exceeds Rs.1 lakh in a financial year. No TDS will be deducted if form 15 G/15H is submitted and total interest in the relevant FY is not above prescribed limit.
Earlier, the threshold limit of interest for TDS was Rs 50,000 i.e TDS was deducted if the total interest in the FY exceeded Rs 50,000. This limit was hiked in Budget 2025 to Rs 1 lakh and it is applicable from April 1, 2025.
SCSS premature closure rules
The account can be closed any time after opening.
If closed before 1 year, no interest will be paid, and any interest credited will be recovered.
If closed after 1 year but before 2 years, a penalty of 1.5% of the principal amount will be deducted.
If closed after 2 years but before 5 years, a penalty of 1% of the principal amount will be deducted.
Extended accounts can be closed after 1 year of extension without any deductions.
SCSS maturity and account closure
The account matures after 5 years and can be closed by submitting the prescribed application form with the passbook at the post office.
In case of death of account holder before maturity of the account
Upon the account holder’s death, the deposit will earn PO Savings Account interest from the date of death. However, if the spouse is a joint holder or sole nominee, they may continue the account at the SCSS rate of interest until maturity, provided they meet SCSS eligibility requirements. Further, the condition of total investment limit of Rs 30 lakh is not breached by the joint holder /nominee. To clarify: The joint holder/nominee may be a senior citizen who already holds SCSS accounts. In such a case, the SCSS account of the deceased can be continued by the joint holder or nominee only if the total of the investment in the existing SCSS accounts of the joint holder plus the investment amount of the deceased’s SCSS account together do not exceed Rs 30 lakh.
SCSS account extension
The account can be extended for 3 years beyond maturity by submitting an application along with the passbook at the post office. The extension request must be made within 1 year of maturity. The extended account earns interest at the SCSS rate applicable to new SCSS deposits on the date of maturity of the original 5-year SCSS account.
