SCSS Interest Tax: TDS Threshold and 80TTB Explained

First, the number itself. From April 1, 2025, the Finance Act, 2025 raised the TDS threshold on interest. For a senior citizen, for a deposit at a post office, the limit went from ₹50,000 to ₹1,00,000. The change sits in the body of section 194A itself — now section 393(1) of the Income-tax Act, 2025, Table Sl. No. 5. There is no circular behind it, because it never needed one.

So if you're reading an article from before April 2025, the ₹50,000 figure you're seeing is out of date. Current SCSS rates — 8.2% for the October-December 2026 quarter — are worth a separate look if the deposit is new to you. (Source: India Post small savings rates; SCSS quarterly rate 8.2%)

TDS only kicks in when your total interest for the financial year crosses ₹1,00,000. At the current 8.2% rate, that takes a deposit of roughly ₹12.2 lakh.

The account ceiling is ₹30 lakh, so the threshold sits in the middle of the range of balances the scheme allows. A typical account never gets there.

One exception, if you're under 60. The scheme does not open only at 60. Paragraph 3(1) of the SCSS, 2019 scheme has a second limb: someone aged 55 or more but under 60 may open an account if they have retired on superannuation or otherwise, and open it within three months of receiving the retirement benefits, with proof attached — that window was widened from one month by G.S.R. 829(E) dated November 7, 2023. Retired Defence Services personnel — excluding Civilian Defence employees — can open at 50. (Source: SCSS 2019 scheme, NSI; SB Order 22/2023)

Both of those cohorts sit in the "others" column rather than the senior-citizen column. So while you are under 60 your threshold is ₹50,000, not ₹1,00,000 — roughly ₹6.1 lakh of deposits at 8.2% — and section 80TTB is unavailable to you.

Some accounts in that cohort do get there, but it is harder than the number suggests. For the 55-to-59 group specifically, your deposit is capped at the retirement benefits you actually received, or ₹30 lakh, whichever is lower — roughly your provident fund and gratuity. You cannot top up to the ceiling to reach the threshold.

And this is the part that matters most — but it isn't permanent. Both the threshold and the deduction turn on whether you were 60 or older at any point during the financial year, and that test is applied fresh every year. So the year you turn 60, the ₹1,00,000 threshold and the 80TTB deduction both become available to you — nothing to ask your post office to change.

One thing does stay fixed. Because you opened under the retirement limb, your deposit remains capped. The threshold and the deduction catch up. The deposit ceiling does not.

If you are one of the people who does cross the threshold, two things surprise people.

First, TDS is on the whole amount, not just the extra bit. The threshold is a line, not a slab. If your interest for the year is ₹1,05,000, tax is deducted on ₹1,05,000 — not on ₹5,000. Just over the line is genuinely expensive.

Second, it's per payer, and it's your total. If you hold SCSS accounts at more than one post office, each counts separately.

And the rate: 10% at the normal rates in force. If your PAN is missing or invalid at the post office's record, it goes to 20% — that's section 397(2) of the Income-tax Act, 2025, the provision formerly numbered 206AA — a real penalty rather than a technicality.

Here is the most practically useful thing in this whole article.

The Department of Posts had to issue a formal order because post offices were deducting TDS even after senior citizens had submitted a valid Form 15G or 15H. No rule had changed. The account at the branch simply hadn't been updated.

The order — SB Order No. 37/2021, dated November 22, 2021 — says this plainly, and instructs every circle to fix its records. The mechanism is worth understanding: the exemption applies only if your account and your customer record (the "CIF") have actually been seeded with your 15G/15H. Your paperwork sitting in a file at the counter is not the same as your record being updated in the system. (Source: DoP SB Order No. 37/2021)

So if TDS has been deducted from you despite a valid 15G or 15H, you have a grievance, not a tax liability.

Here's the part that will actually change your tax outcome.

Section 80TTB — now section 153 of the Income-tax Act, 2025 — lets a resident senior citizen aged 60 or above deduct up to ₹50,000 of interest income from deposits with a banking company, a co-operative society in banking, or a post office. The full deduction is allowed where the interest is ₹50,000 or less; above that, you still get ₹50,000. (Source: Income Tax Department — 80TTB, incometaxindia.gov.in)

One honest caveat. The law lists "a Post Office as defined in section 2(d) of the Post Office Act, 2023" on the face of the statute, and the Department's own summary describes 80TTB as covering interest on deposits "with a banking company, a post office, co-operative society engaged in banking business, etc." So the statutory reading supports SCSS. But there is no CBDT circular that specifically confirms SCSS qualifies, and commentary is genuinely split on it. If your post office or CA hesitates, that hesitation has a reason.

Why this matters more than the threshold, for the smaller-balance accounts most of you hold. Take a senior citizen earning ₹60,000 of interest in a year — just above the old threshold, below the new one. They pay no TDS at all, and 80TTB saves them ₹15,000 of tax at a 30% rate. The threshold problem doesn't exist for them. The deduction problem is real.

TDS is not a tax, either. It's a credit against what you owe, and you get it back when you file your return, so the two are not even rivals. For a large-balance holder it can go the other way: on a maximum-balance ₹30 lakh account, TDS runs roughly ₹21,000-₹25,000 a year, against at most ₹15,000 of 80TTB saving — so there the threshold matters more than the deduction. Which of those two you are depends entirely on how much you have deposited.

Yes. In a joint account, the first holder's age decides who may open it, and there is no age limit on the second applicant. So an under-60 first holder can add a spouse of any age. Note that this is a rule about opening the account, not about how it's taxed — the threshold and 80TTB still follow your own age each year.

If you're relying on a no-deduction declaration, note that Forms 15G and 15H have been merged into Form No. 121 under the Income-tax Act, 2025 (section 393(6) and 393(7), Rule 211). CBDT's own FAQ states the mapping. (Source: CBDT Form No. 121 FAQs, incometaxindia.gov.in)

The form is stricter for people under 60, who must additionally show that their specified incomes don't exceed the tax-free limit. For senior citizens aged 60 and above, the only condition is that tax on your estimated total income is nil. That split is also a per-year test, not a one-time unlock — so the year you turn 60, the relaxed condition applies to you.

Submit it to each payer separately, and submit it early, ideally before interest is credited.

Report the gross SCSS interest under "Income from Other Sources." Claim the TDS against it in the TDS schedule. Cross-check both against your Form 26AS and the Annual Information Statement.

If you're 75 or above, there's one more provision to know about. Under the Income-tax Act, 2025, it is section 402(39) read with section 393(1) — the provision formerly numbered 194P, which is still how most bank circulars and a lot of search traffic refer to it. A resident senior citizen whose income is only pension and interest from an account with a specified bank — with the pension from that same bank — can have total income computed and tax deducted by the bank, and need not file a return at all.

The declaration that unlocks this is Form No. 125, prescribed by Rule 208 of the Income-tax Rules, 2026 (it was Form 12BBA under the old Rules).

Be careful here, though. "Specified bank" means a banking company that the Central Government specifies by notification. Under the outgoing Act that notification was Notification No. 98/2021 dated September 2, 2021, which defined it as a banking company that is a scheduled bank and has been appointed as agent of the Reserve Bank of India under section 45 of the RBI Act, 1934. India Post is not a scheduled bank.

On that definition, post-office SCSS interest appears to fall outside this provision, so you should not assume the no-return benefit applies to you. Treat this as likely but not settled: there is no notification extending "specified bank" to the Department of Posts, and equally no CBDT statement saying post offices are excluded.

If your SCSS is your only income and you're 75 or older, it's worth asking your post office directly whether they treat 194P as available to you. The answer determines whether you file a return at all.

Non-residents don't face the 194A threshold question at all — 194A applies to residents, and interest paid to a non-resident falls under section 393(2) of the Income-tax Act, 2025, Table Sl. No. 17 (formerly section 195) instead.

The history is murkier. The SCSS Rules, 2004 barred NRIs and HUFs from opening accounts, though an existing account could run to maturity without repatriation if the holder later became an NRI. The 2019 scheme says nothing on the point. Treat this as scheme history, not a settled position.

Open your last two Form 26AS documents and check whether TDS was deducted from your SCSS interest. That's one screen, and it answers the only question on this page that affects your actual money.

If TDS was deducted and you had filed a valid 15G or 15H (or Form 121), you have been over-deducted through no fault of your own. Raise it with your post office and quote SB Order No. 37/2021, dated November 22, 2021 — it exists precisely because this kept happening. If it was deducted correctly, you've learned you have a comfortable margin, and the only thing worth doing is making sure 80TTB is claimed in your return.

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• Section 194A and its Finance Act, 2025 amendment — incometaxindia.gov.in/w/section-194a
• CBDT threshold-limits table naming SCSS, as amended by the Finance Act, 2026 — incometaxindia.gov.in/w/threshold-limits-under-income-tax-act
• Section 80TTB including its senior-citizen Explanation — incometaxindia.gov.in/w/section-80ttb
• SCSS 2019 scheme paras 3(1), 3(5), 3(6) and 4(1), as notified by G.S.R. 916(E), amended by G.S.R. 829(E) dated 07.11.2023 — nsiindia.gov.in; SB Order No. 22/2023 (DoP)
• CBDT Form No. 121 FAQs — incometaxindia.gov.in/documents/d/guest/form-121-faqs
• Section 393 of the Income-tax Act, 2025, including 393(6) and its age note — incometaxindia.gov.in
• Department of Posts SB Order No. 37/2021, 22.11.2021 — utilities.cept.gov.in/dop/pdfbind.ashx?id=6123
• SCSS quarterly interest rate 8.2% (Oct-Dec 2026) — India Post / caclubindia rate coverage