What is a small-savings scheme?

Small-savings schemes are government accounts run through post offices and authorised banks. PPF, Sukanya Samriddhi, the post office recurring deposit, the time deposit, NSC, Kisan Vikas Patra and the Senior Citizens’ Savings Scheme are in this family. The Ministry of Finance notifies the interest rate every quarter. A rate in an old booklet is not the rate that is paid.

For 1 October 2026 to 31 December 2026 the card was left unchanged from the previous quarter. PPF is 7.1%. Sukanya Samriddhi is 8.2%. The five-year recurring deposit is 6.7%. The five-year time deposit is 7.5%. NSC is 7.7%. The Senior Citizens’ Savings Scheme is 8.2%. Money already in PPF or Sukanya Samriddhi earns the rate for each quarter. It is not locked on the opening day the way a bank FD locks the rate on the receipt.

These are not market-linked. NPS is regulated by PFRDA, not by this quarterly card. A bank FD is the bank’s own card. A mutual fund has no notified rate at all. Putting them in one “safe return” list hides the thing that actually differs: who sets the rate, and whether the payout is taxed.

Tax is not the same across the family. PPF and Sukanya Samriddhi can be EEE on the payout, with the contribution deduction only in the old regime. A post office time deposit’s interest is taxable. A five-year deposit can still sit in the section 123 basket. Read the product, not the family name.

A worked example

PPF at 7.1%: ₹1,50,000 a year produces a maturity of ₹45,17,701 if the rate never changes, on the PPF calculator.

Post office RD at 6.7%: ₹1,000 a month for 60 months produces ₹71,366, of which ₹11,366 is interest, on the RD calculator. That interest is taxable even when the post office does not deduct tax.

Sukanya Samriddhi’s notified rate for the same quarter is 8.2%, on the Sukanya Samriddhi calculator. The FD, RD and PPF guide says which job each one does. The Sukanya guide is the girl-child account, not a general savings account.

Mistakes people make

• Using a rate from the scheme PDF when the quarter’s memorandum has moved on.
• Calling NPS or a bank FD a small-savings scheme because both feel safe.
• Assuming every account in the family is tax-free. PPF’s maturity is. A recurring deposit’s interest is not.
• Locking a 15-year plan to today’s 7.1% as if it were contractual.
• Opening Sukanya Samriddhi for a child who is not eligible. The account is for a girl who has not turned 10.

The source

The rates are the Ministry of Finance memorandum for 1 October 2026 to 31 December 2026. The tax deduction, where it exists, is section 123 (this was section 80C). PPF’s payout exclusion is Schedule II (this was section 10(11)).