Small savings schemes like Provident Fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP), Sukanya Samriddhi Yojana (SSS), and Senior Citizens Savings Scheme (SCSS) and bank fixed deposits (FDs) are among the investment and financial instruments for investors who prefer safe investments. This is because these options allow investors to earn fixed returns and claim income tax deduction.
Most of these schemes offer interest at the rate of 4-8.2 percent per annum. The special thing is that the government has kept the interest rates for small savings schemes unchanged for the eighth consecutive time in the April-June quarter this year. Whether you decide to invest in a fixed deposit or a small savings scheme, each has its own benefits. Let us compare FD and small saving schemes in detail…
Interest Rate: For most investors, the higher the rate of return, the better the investment option (of course, this also takes risk and tenure into consideration). Most banks are offering annual FD interest rates of 6.25-6.66 percent in April 2026. In comparison, various small savings schemes offer interest rates in the range of 4-8.2 per cent.
| Small Saving Scheme | Interest rate (in percent) |
| Sukanya Samriddhi Yojana | 8.2 |
| Public Provident Fund | 7.1 |
| post office savings deposit | 4 |
| Kisan Vikas Patra | 7.5 |
| National Savings Certificate | 7.7 |
| monthly income plan | 7.4 |
| bank FD | Returns (in percent) |
| 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 fixed deposits, they usually have a lock-in period. NSC has a lock-in period of five years and PPF has a lock-in period of 15 years.
Tax benefit: Another big thing is tax benefit. Here, FDs are taxed as per the slab rate, while the interest received on small savings schemes is tax-free up to Rs 1.5 lakh under Section 80C of the Income Tax Act or Rs 10,000 under Section 80TTA of the IT Act (whichever is applicable).
Yes, you can choose more than one option to invest. In fact, experts recommend that you build your portfolio in such a way that it has a mix of different investment options, including FDs and small savings schemes. Generally, investments in these schemes (PPF/NSC and FD) take care of the portion of the portfolio that is invested in debt. Therefore, both these investments serve the same purpose.
