A worked example: ₹15,00,000 deposited in SCSS
Depositing ₹15,00,000 into a Senior Citizen Savings Scheme account at the current 8.2% p.a. rate produces an annual interest payout of ₹1,23,000, which is paid out in four equal quarterly instalments of ₹30,750 each. Because SCSS pays simple interest rather than compounding it, the account accumulates ₹6,15,000 in total interest over the standard 5-year tenure, and the original ₹15,00,000 principal is returned in full at maturity — bringing the total maturity amount to ₹21,15,000.
The formula: simple interest paid out quarterly, not compounded
The calculation has two steps. First, annual interest = principal × 8.2%; for a ₹10,00,000 deposit that is ₹10,00,000 × 0.082 = ₹82,000. Second, that annual figure is simply divided by 4 to get the quarterly payout — ₹82,000 / 4 = ₹20,500 every quarter. There is no compounding step anywhere in the formula: each quarter's interest is paid out immediately rather than added back to the principal, so the principal used to calculate next quarter's interest never changes.
A larger deposit: ₹30,00,000, the SCSS maximum
At the statutory ceiling of ₹30,00,000 (the combined limit across single and joint accounts), the same formula scales linearly: annual interest of ₹2,46,000 splits into quarterly payouts of ₹61,500, total interest over the 5-year tenure reaches ₹12,30,000, and the maturity amount — principal plus total interest — comes to ₹42,30,000.
Why the principal is returned in full, not compounded
SCSS is built to hand a retiree a predictable income stream, not to maximise a lump-sum payout at the end. Paying interest out every quarter instead of compounding it means the account balance driving next quarter's interest never grows, so every quarterly cheque for a given deposit stays exactly the same size for the full 5-year tenure — a deliberate trade-off that favours steady, spendable income over a larger but locked-up final number.