FD or Small Savings Schemes: Which Gives Better Returns? Find Out With Easy Calculations

For investors who prefer safety over high risk, India offers several trusted investment options. Government-backed small savings schemes like PPF, NSC, KVP, and SCSS continue to attract attention, especially since their interest rates, ranging between 6.9% and 7.5%, remain unchanged for the March quarter. This stability makes them a reliable choice for steady returns.

Why Fixed Deposits Still Top the List

Fixed Deposits remain the go-to option for many retail investors. The biggest reason? Clarity and simplicity. You know exactly how long your money is locked in and what returns you’ll get. With bank FD rates currently hovering around 6.25% to 6.40%, they work well for short-term financial goals.

FD vs Small Savings: What’s the Real Difference?

The key difference lies in returns and flexibility. Small savings schemes usually offer slightly higher interest than FDs, but they come with longer lock-in periods. For instance, NSC requires a 5-year commitment, while PPF locks your money for 15 years. If liquidity matters, FDs offer more freedom.

Current Small Savings Interest Rates at a Glance

• National Savings RD: 6.7%
• Post Office MIS: 7.4%
• Senior Citizens Savings Scheme (SCSS): 8.2%
• PPF: 7.1%
• Sukanya Samriddhi Account: 8.2%
• National Savings Time Deposit: 6.9%-7.5%
• Kisan Vikas Patra (KVP): 7.5%
• NSC: 7.7%
• Mahila Samman Savings Certificate: 7.5%

Tax Angle: What You Should Know

FD interest is fully taxable as per your income slab, which can reduce actual returns. On the other hand, interest from many small savings schemes remains tax-free, making them more efficient for long-term investors, even though fresh tax deductions may not apply under the old regime.

The Smart Move: Balance Is Key

Financial experts recommend not putting all your money into one option. A balanced debt portfolio that includes PPF for long-term goals, NSC for medium-term needs, and FDs for short-term plans helps spread risk while ensuring steady growth.

Each investment serves a different purpose. PPF builds long-term wealth, NSC offers secure medium-term returns, and FDs provide flexibility for short-term needs. Choosing the right mix based on your goals and time horizon can help you stay safe and smart, with your money.