Tax & Savings
SCSS vs POMIS
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Two government income schemes for retirees — different rates, different ceilings, different payout rhythms, and one of them has an age gate.
What Each Scheme Is
The Senior Citizen Savings Scheme is a five-year government deposit for people aged sixty and above, with earlier entry for defined categories of retirees. It pays interest quarterly, carries the highest rate among small savings schemes, and is capped at ₹30 lakh per person.
The Post Office Monthly Income Scheme is open to any resident adult with no age condition. It runs for five years, pays interest monthly, and is capped at ₹9 lakh in a single account and ₹15 lakh in a joint account.
Both are sovereign obligations, both pay income out rather than compounding it, and both have rates reset quarterly by the government.
Key Differences
| Factor | SCSS | POMIS |
|---|---|---|
| Who can invest | Age 60 and above; 55 to 60 for defined retirees; 50 for defence personnel | Any resident adult |
| Ceiling | ₹30,00,000 per individual | ₹9,00,000 single, ₹15,00,000 joint |
| Payout frequency | Quarterly | Monthly |
| Term | 5 years, extendable by 3 | 5 years, renewable |
| Typical rate | Higher of the two | Lower of the two |
| 80C deduction | Yes, within the ₹1,50,000 ceiling, old regime | No |
| Tax on interest | Taxable at slab; TDS above ₹50,000 for senior citizens | Taxable at slab |
| Premature exit | Allowed with a penalty that reduces with elapsed time | Allowed after one year with a penalty |
Why Most Retirees Use Both
The ceilings are the reason. SCSS pays more, so it is filled first, but it stops at ₹30 lakh per person. POMIS then absorbs the next tranche, and a joint account raises its ceiling to ₹15 lakh.
A retired couple can therefore hold ₹60 lakh in SCSS between them and ₹15 lakh in a joint POMIS, which for many households covers a large part of the income requirement from sovereign-backed instruments.
The payout rhythms complement each other too. SCSS pays quarterly, POMIS monthly, and staggering the two gives a smoother household cash flow than either alone.
Neither Scheme Grows Your Money
This is the point most often missed. Both pay interest out. Neither reinvests it. The capital you put in is the capital you get back at the end of five years, in nominal terms.
With inflation around six per cent, a capital sum that is unchanged after five years has lost roughly a quarter of its purchasing power. The income has been spent; the principal has quietly shrunk in real terms.
That is acceptable if these schemes fund current spending and something else in the portfolio is growing. It is a serious problem if they are the entire retirement plan. Run the after-tax rate through the inflation-adjusted return converter to see the real position.
Tax, and the Reliefs That Apply
Interest from both is fully taxable at your slab. Neither is tax free, and the fact that it arrives as regular income does not change that.
Two reliefs matter for senior citizens on the old regime. Section 80TTB allows a deduction of up to ₹50,000 a year on deposit interest, which covers a meaningful part of a modest portfolio. And SCSS deposits qualify under Section 80C within the ₹1,50,000 ceiling, which POMIS does not.
Where total income is below the taxable threshold, Form 15H prevents TDS being deducted in the first place, avoiding the need to reclaim it later.
When Each Makes Sense
Start with SCSS
- You are sixty or above, or qualify under the early-retirement categories
- You want the highest sovereign-backed income rate available
- You are on the old regime and can also use the 80C deduction
- Quarterly income suits your household budgeting
Add POMIS
- You have already used the SCSS ceiling
- You are under sixty and SCSS is not open to you
- You want monthly rather than quarterly income
- A joint account lets you place a larger sum than a single one
How to Decide
If you are eligible for SCSS, fill it first up to the ceiling; it pays more and it carries a deduction POMIS does not.
Direct the next tranche to POMIS, using a joint account if that suits your circumstances, and stagger the start dates so income arrives through the year rather than in lumps.
Then look at what is left. Money that will not be spent for a decade should not sit in either scheme, because neither compounds and neither keeps pace with inflation. That portion belongs in something that grows.
Frequently Asked Questions
Sources and Method
The calculator applies each scheme’s rate to the amount you enter and divides by the payout frequency: quarterly for SCSS and monthly for POMIS. Neither column compounds, because neither scheme reinvests interest. The combined after-tax figure applies the slab rate you enter to the total interest.
- Senior Citizen Savings Scheme, 2019 and Post Office Monthly Income Account Scheme, 2019 — administered by the National Savings Institute; rates notified quarterly by the Ministry of Finance.
- Deduction on deposit interest for senior citizens — Income Tax Act, Section 80TTB. SCSS deduction under Section 80C.
Last reviewed 22 August 2026. Small savings rates are reset quarterly; confirm the current rate and ceiling at a post office or bank before investing. General information, not investment advice.