When planning your retirement savings or looking for safe, guaranteed returns, two popular options often come up: SBI’s 5-Year Fixed Deposit (FD) and the Senior Citizens’ Savings Scheme (SCSS). But which one offers better returns, flexibility, and tax benefits in 2025? Let’s break down FD Vs SCSS in detail so you can make a smart, informed decision.
Whether you’re a senior citizen looking to secure your hard-earned money, a financial planner guiding clients, or someone helping your parents invest, understanding the differences between these two can significantly impact your savings.
FD Vs SCSS: SBI’s 5-Year FD or SCSS
| Feature | SBI 5-Year Fixed Deposit (FD) | Senior Citizens’ Savings Scheme (SCSS) |
|---|---|---|
| Interest Rate (2025) | 7.50% p.a. (Senior Citizens) | 8.20% p.a. |
| Lock-in Period | 5 Years | 5 Years |
| Minimum Deposit | ₹1,000 | ₹1,000 |
| Maximum Deposit | No upper limit (Tax benefit only up to ₹1.5 lakh under 80C) | ₹30 lakh |
| Tax Benefit | Section 80C (up to ₹1.5 lakh) | Section 80C (up to ₹1.5 lakh) |
| Premature Withdrawal | Not allowed (for tax-saving FD) | Allowed after 1 year, with penalty |
| Interest Payout | Quarterly/Monthly payout or reinvestment | Quarterly payout |
| Risk & Security | Backed by SBI + DICGC insurance (₹5 lakh coverage) | Sovereign guarantee (Govt of India) |
In 2025, SCSS stands out as the better option for senior citizens, offering higher interest rates (8.20% p.a.), government-backed security, and steady quarterly payouts. On the other hand, SBI’s 5-Year FD is a solid option if you seek flexible deposit limits and are already an SBI customer.
Understanding SBI’s 5-Year Fixed Deposit (FD)
A Fixed Deposit (FD) is one of the simplest, safest, and most preferred investment tools, especially for those who want to preserve their capital while earning steady returns.
SBI’s 5-Year Tax Saving FD offers an interest rate of 7.50% per annum for senior citizens in 2025. It comes with a lock-in period of 5 years, which means you cannot withdraw your money before maturity if you are availing of the tax benefit under Section 80C.
Key Features of SBI’s 5-Year FD:
- Minimum Deposit: ₹1,000
- Maximum Deposit: No cap, but tax deduction applies only up to ₹1.5 lakh under Section 80C
- Interest Payout Options: Monthly, quarterly, or reinvestment at maturity
- Tax Benefits: Eligible for Section 80C deduction
- Risk Level: Very low, as SBI is a government-backed bank, and deposits up to ₹5 lakh are insured under DICGC
Example:
If you invest ₹1,50,000 in SBI’s 5-year FD, you will earn around ₹11,250 yearly (approximate, based on 7.5% p.a.), and at the end of 5 years, you’ll have around ₹1,56,250, depending on payout options and compounding.
see also: This Bank is Giving the Highest Interest Rate on FD
What is Senior Citizens’ Savings Scheme (SCSS)?
The Senior Citizens’ Savings Scheme (SCSS) is specifically designed for Indian citizens aged 60 and above. Backed by the Government of India, it offers 8.20% interest rate in 2025, making it one of the highest-paying safe investments for senior citizens.
Key Features of SCSS:
- Minimum Deposit: ₹1,000
- Maximum Deposit: ₹30 lakh
- Interest Payout: Quarterly, directly credited to your savings account
- Lock-in Period: 5 years (extendable by 3 years)
- Tax Benefits: Eligible under Section 80C up to ₹1.5 lakh
- Risk Level: Extremely low due to sovereign guarantee
Example:
If you invest ₹15,00,000 in SCSS, you will receive ₹30,750 every quarter (approximately ₹1,23,000 yearly), offering a stable income stream, ideal for retirees.
FD Vs SCSS: Side-by-Side Breakdown
1. Interest Rates
- Winner: SCSS
With 8.20% p.a., SCSS clearly beats SBI’s FD at 7.50% p.a.
2. Liquidity
- SBI FD: No premature withdrawal allowed under the tax-saving FD option.
- SCSS: Withdrawal allowed after 1 year, but with a penalty (1-1.5%).
Winner: SCSS (more flexible)
3. Tax Benefits
Both offer:
- Deduction up to ₹1.5 lakh under Section 80C.
- Interest earned is taxable and may lead to TDS deduction if it crosses ₹50,000 per annum (for senior citizens).
4. Investment Limit
- SBI FD: No upper limit.
- SCSS: ₹30 lakh cap.
For high-net-worth individuals, SBI FD offers flexibility, but most retirees prefer SCSS due to higher returns.
5. Risk and Security
- SBI FD: Insured up to ₹5 lakh under DICGC.
- SCSS: 100% sovereign guarantee.
Winner: SCSS for absolute safety.
Who Should Choose SBI FD?
If you prefer:
- Monthly income options.
- No upper deposit limit.
- Comfort in dealing with your trusted SBI branch.
Professionals:
Those looking to diversify beyond government-backed schemes, with the possibility of depositing higher amounts without restrictions.
Who Should Choose SCSS?
Ideal for:
- Senior citizens aged 60+ seeking guaranteed higher returns.
- Those relying on regular quarterly income.
- Risk-averse investors who prioritize sovereign safety.
- Investors who want limited lock-in flexibility with premature withdrawal options.
see also: These Are the Best Tax-Saving FDs
FD Vs SCSS: SBI’s 5-Year FD or SCSS FAQs
1. Can I invest in both SBI FD and SCSS?
Yes, you can invest in both simultaneously and enjoy the benefits of diversification.
2. Which is safer: SCSS or SBI FD?
Both are safe, but SCSS has a sovereign guarantee, making it slightly safer than FDs (insured up to ₹5 lakh).
3. Is the SCSS interest rate fixed for 5 years?
Yes, the rate is locked at the time of investment and remains fixed throughout the 5-year period.
4. Can NRIs invest in SCSS or SBI 5-Year FD?
NRIs are not eligible for SCSS. However, they can invest in SBI FDs through NRE/NRO accounts, but tax-saving FDs are not available to NRIs.
5. What happens after SCSS maturity?
You can extend the SCSS for 3 more years or withdraw the entire amount with accumulated interest.
