Senior Citizen Savings Scheme (SCSS) Interest Rate, Deposit Limit changed in 2023: Know impact

Senior citizens are pouring money into the Senior Citizen Savings Scheme (SCSS), thanks to recent changes, official data shows.

The changes in interest rate and deposit limit for Senior Citizen Savings Scheme (SCSS) this year have benefited accountholders a lot. The interest rate for SCSS deposits has gone up to 8.2% in 2023, which is better than the 5-year Fixed Deposit interest rates offered by banks and the post office.

Meanwhile, in Budget 2023, the Government also announced a decision to allow an individual senior citizen to deposit up to Rs 30 lakh in his/her SCSS accounts.

A report by The Financial Express says the SCSS interest rate and deposit limit changes have also resulted in bumper collections for the Central Government trying to part-finance fiscal deficit from deposits into small savings schemes.

According to the report, the collections under the revamped SCSS schemes jumped 176% y-o-y in the first quarter of FY 2023 to Rs 55,000 crore.

In the first three months of FY 2023-24, as many as 6,52,000 new SCSS accounts were also added. In the first quarter of FY 2022-23, only Rs 19,925 was deposited in SCSS accounts.

The Government increased the SCSS interest rate to 8.2% for the April-June Quarter of FY 2023-24. For the July-October quarter of the financial year, the same rate will apply. There is no limit on the number of SCSS accounts a senior citizen can have. However, under revamped SCSS rules, the sum of all deposits by a senior citizen in his/her all SCSS accounts cannot be more than Rs 30 lakh.

SCSS interest income

The SCSS account matures in 5 years but it can be extended for another three years. The scheme provides quarterly interest on deposits to senior citizens. While the SCSS interest rate is revised by the Finance Ministry on a quarterly basis, if a senior citizen opens an SCSS today, s/he will be eligible to get 8.2% annually compounded interest till the maturity of the account.

Calculation shows that 8.2% interest on a Rs 10,000 deposit will give a quarterly interest income of Rs 205 to a senior citizen. On a maximum deposit of Rs 30 lakh, the quarterly interest income would be Rs 61,500.