Small savings schemes such as the Provident Fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP), Sukanya Samriddhi Scheme (SSS), and Senior Citizens Savings Scheme (SCSS); and bank fixed deposits (FDs) are among the investment and financial instrument of choice for conservative investors.
This is because these options allow investors to earn assured returns and claim income tax deductions.
Most of these schemes give an interest in the range of 4-8.2% per annum. Notably, the government has kept the interest rates for small savings schemes unchanged in the April-June quarter this year, for the eighth consecutive time.
Whether you decide to invest in a fixed deposit or in a small savings scheme, each has its own set of advantages. We bring you some comparisons on the interest rates, tenure, tax advantages and more, to keep in mind so that you can make the choice that works best for your financial plan.
FDs vs small savings schemes: Quick comparison
- Rate of interest: For most investors, the higher the rate of return the better the choice of investment (with considerations for risk and tenure added, of course). Most banks offer an annual FD interest rate in the ranging from 6.25-6.66% in April 2026. In comparison, various small savings schemes offer interest rates in the range of 4-8.2% (see table below).
| Small Savings Scheme Instrument | Return (%) |
|---|---|
| Sukanya Samriddhi Scheme | 8.2% |
| Public Provident Fund | 7.1% |
| Post office savings deposit | 4% |
| Kisan Vikas Patra | 7.5% |
| National Savings Certificate | 7.7% |
| Monthly income scheme | 7.4% |
| Bank | Return (%) |
|---|---|
| State Bank of India | 6.25% |
| Kotak Mahindra Bank | 6.50% |
| HDFC Bank | 6.25% |
| Yes Bank | 6.66% |
| ICICI Bank | 6.25% |
- Lock-in period: Although small savings schemes offer higher interest than FDs, they typically have a lock-in period. NSC has a lock-in period of five years and PPF has a 15-year lock-in period.
- Tax benefit: Another big consideration is the tax benefit. Here, FDs are taxable at the slab rate, whereas interest income on small savings schemes is tax-free up to ₹1.5 lakh under Section 80C of Income-Tax Act; or up to ₹10,000 under Section 80TTA of the I-T Act; as applicable.
Can you choose more than one option?
Yes, you can choose more than one option to invest. In fact, experts recommend curating your portfolio so that it includes a mix of investment options, including FDs and small savings schemes.
Typically, investment in these schemes (PPF/NSC and FD) takes care of the portion of the portfolio that is invested in debt. Therefore, both of these investments serve the same purpose.
(All rates are as mentioned on the respective bank’s official website, at time of writing on 11 April 2026)
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
