India's small-savings schemes are government-backed instruments offered through post offices and some banks. Their eligibility, access, notified rates and tax treatment differ, so compare current official terms rather than assuming one category is universally better than a bank deposit or market-linked investment.
The sections below summarize the major structures without assigning a product winner.
Current Interest Rates (Check Government Notifications for Updates)
| Scheme | Rate (recent) | Compounding | Tax on Interest |
|---|---|---|---|
| SSY (Sukanya Samriddhi) | 8.2% (Q3 FY 2026-27) | Annual | Exempt |
| SCSS (Senior Citizens Savings) | 8.2% | Quarterly payout | Taxable at slab rate |
| POMIS (Post Office MIS) | 7.4% | Monthly payout | Taxable at slab rate |
| NSC (National Savings Certificate) | 7.7% | Annual (compounded, paid at maturity) | Taxable (deemed accrual) |
| KVP (Kisan Vikas Patra) | 7.5% | Annual (doubles in ~115 months) | Taxable at slab rate |
| PPF | 7.1% | Annual | Exempt |
| Post Office Time Deposit (5-yr) | 7.5% | Annual | Taxable (80C eligible) |
Rates are revised quarterly by the Ministry of Finance. The rates above reflect the most recent available figures — always verify before investing.
Sukanya Samriddhi Yojana (SSY)
Who can open: Parents/legal guardians of a girl child below age 10. Maximum one account per girl (two accounts if twins/triplets). Maximum two accounts per family (one per girl child).
Contribution: Minimum ₹250/year, maximum ₹1.5 lakh/year. Section 80C eligibility depends on the applicable tax regime and current rules.
Interest rate: 8.2% per annum, notified for Q3 FY 2026-27 (1 October–31 December 2026). Rates are notified periodically and may change in future quarters.
Maturity: Account matures 21 years from date of opening, or when the girl marries after age 18 — whichever is earlier. Contributions must be made for 15 years from opening.
Partial withdrawal: After the girl turns 18, up to 50% of balance can be withdrawn for higher education expenses.
Tax treatment: Contributions may qualify under Section 80C under the applicable tax regime, while interest and maturity proceeds are currently described as exempt under the scheme's tax treatment. Check current tax rules for your circumstances.
Planning context: SSY has specific eligibility, contribution, tenure and withdrawal rules. Compare those constraints with your time horizon and liquidity needs; the rate notified for one quarter is not fixed for the full account tenure.
SCSS (Senior Citizens Savings Scheme)
Who can open: Any person aged 60 or above. Retired government/defence employees can open from age 55. Deposits within 1 month of receiving retirement benefits.
Contribution: Minimum ₹1,000, maximum ₹30 lakh per individual (₹60 lakh for a couple — each can open a separate account). Deposit in lump sum only — no recurring contributions.
Interest: 8.2% per annum, paid quarterly. This is the most attractive feature — regular quarterly cash flow.
Maturity: 5 years, extendable by 3 more years (once).
Tax treatment: Eligible contributions may fall within the combined Section 80C ceiling under the applicable regime and conditions. Interest is generally included in the taxpayer's income computation. For relevant post-office time deposits, the Section 194A threshold from 1 April 2025 is ₹50,000 generally and ₹1,00,000 for a resident senior citizen; this is a withholding threshold, not a tax exemption.
Comparison note: Review eligibility, account limits, quarterly interest, premature-closure rules and the currently notified rate against the actual bank-deposit terms being considered.
POMIS (Post Office Monthly Income Scheme)
Who can open: Any adult resident Indian. Joint accounts allowed (up to 3 adults).
Contribution: Minimum ₹1,000, maximum ₹9 lakh for single account, ₹15 lakh for joint account.
Interest: 7.4% per annum, paid monthly. If you don't need the monthly income, reinvest it automatically — the scheme allows linking to a post office RD.
Maturity: 5 years. Premature closure after 1 year (penalty applies: 2% deduction before 3 years, 1% deduction after 3 years).
Tax treatment: No Section 80C deduction is described for this investment. Interest is generally included in the taxpayer's income computation. For relevant post-office time deposits, the Section 194A threshold from 1 April 2025 is ₹50,000 generally and ₹1,00,000 for a resident senior citizen. No TDS does not make the interest tax-free.
Comparison note: Monthly payout frequency does not by itself establish suitability. Compare access, account limits, current rate, tax treatment and household cash-flow needs.
NSC (National Savings Certificate)
Who can open: Any adult resident Indian. Can be bought in the name of a minor.
Denomination: Issued in multiples of ₹1,000. No maximum limit.
Interest: 7.7% per annum, compounded annually. Interest is not paid out — it's reinvested and paid at maturity. The 5-year certificate pays principal + accumulated interest at maturity.
Tax treatment: Eligible amounts may fall within the combined Section 80C ceiling under the applicable regime and conditions. Accrued interest and any related deduction require period-specific review; neither the ceiling nor reinvestment creates a fixed personal saving.
Maturity: 5 years. No premature withdrawal except on death or court order.
Comparison note: Compare the documented tenure, access, notified rate and tax treatment with the specific deposit alternative. Do not choose either product solely for a deduction.
KVP (Kisan Vikas Patra)
Who can open: Any adult resident Indian. Originally for farmers (hence the name) but open to all.
How it works: Lump sum investment that doubles at maturity. At 7.5% compounded annually, doubling happens in approximately 115 months (9 years and 7 months). The post office issues a certificate.
Minimum/maximum: ₹1,000 minimum, no maximum.
Tax treatment: Do not assume that the absence of periodic cash interest or TDS means tax arises only at maturity. Verify the applicable accrual and reporting treatment for the taxpayer and period.
Premature closure: Not permitted before 2.5 years. After 2.5 years, premature closure results in a lower effective interest rate.
Comparison note: Review current KYC, tenure, access, notified-rate and tax rules. A stated maturity period does not make the product universally preferable or tax-free.
Comparison Questions
Compare each scheme using the same set of facts:
- eligibility and account-holder restrictions;
- contribution limits and tenure;
- access, withdrawal and premature-closure rules;
- the rate notified for the applicable quarter; and
- current tax treatment, including whether an eligible contribution merely uses part of a shared deduction ceiling.
Terms such as “tax-free” or “EEE” should be tied to the specific contribution, interest and withdrawal rules. They do not mean every transaction, extension or taxpayer circumstance receives identical treatment.
Comparing with Bank Deposits
Use current, like-for-like terms rather than assuming one category always has a higher rate or better outcome. Small-savings rates are notified periodically, while bank-deposit rates and premature-closure terms vary by institution and tenure. Government backing and bank-deposit insurance are different protections, not interchangeable claims of universal suitability.