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Compare Citizen Savings Scheme and Fixed Deposits to choose the best income option for retirement.
Senior citizen savings vs fixed deposits? Here is what you should know.
When it comes to post-retirement financial planning, safety, steady returns and capital preservation are key. Two of the most popular investment options for senior citizens in India are the Senior Citizen Savings Scheme (SCSS) and Fixed Deposits (FDs). While both cater to the need for secure and stable income, they differ significantly in features, interest rates and tax implications. Here’s a detailed comparison to help you choose the right option.
What is the Senior Citizen Savings Scheme (SCSS)?
SCSS is a government-backed savings plan tailored for individuals aged 60 years and above. It offers a fixed interest rate, currently 8.2% per annum with quarterly payouts. The scheme has a 5-year tenure, which can be extended by another 3 years, and allows a maximum investment of Rs 30 lakh per individual.
Available at post offices and authorised banks, SCSS provides tax benefits under Section 80C of the Income Tax Act for investments up to Rs 1.5 lakh.
What is a Fixed Deposit (FD) Account?
A Fixed Deposit (FD) is a secure, time-bound investment offered by banks, where a lumpsum earns interest over a fixed tenure. Senior citizens usually enjoy higher interest rates, making it ideal for steady post-retirement income.
FDs offer flexible tenures ranging from 7 days to 10 years and have no investment cap. Tax-saving FDs with a 5-year lock-in qualify for deductions under Section 80C. All bank FDs are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC), which insures deposits up to Rs 5 lakh per depositor per bank, adding a layer of security.
Key Differences Between Senior Citizen Savings Scheme and Fixed Deposit
Interest Rates & Returns
As of July 2025, the SCSS offers 8.2% per annum, payable quarterly. This makes it one of the highest-yielding government-backed options available to senior citizens.
Bank FDs offer interest rates between 6.5% and 7.75% for senior citizens, depending on the bank and deposit duration.
Tenure & Investment Limits
SCSS has a 5-year term, extendable by 3 years, with a maximum investment limit of Rs 30 lakh.
FDs provide more flexibility, offering tenures from 7 days to 10 years with no upper investment cap.
Taxation & Liquidity
Both SCSS and 5-year tax-saving FDs offer deductions under Section 80C up to Rs 1.5 lakh, but the interest earned is fully taxable.
SCSS allows premature exit after 1 year with penalties. FDs offer easier withdrawal options but may involve reduced interest and minor charges.
For senior citizens aiming for higher, secure returns with government assurance, SCSS is a solid option. However, those looking for flexible investment tenure and unlimited investment capacity may prefer FDs. A balanced combination of both could offer the best of stability and control in your retirement years.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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