Bank FD vs POTD vs NSC vs SCSS: After the RBI cut interest rates in 3 consecutive MPC meetings, banks have also started cutting the interest rates of Fixed Deposit. In such a situation, some government small savings schemes are also getting better returns than FD. The government has announced the new interest rates of Small Savings Schemes on June 30, 2025. However, the interest rates have not been changed for the time being. Let us understand in which government schemes people are getting more returns than the interest rates available to customers in SBI, HDFC Bank, ICICI Bank.
Getting more returns in these government schemes
If we compare the interest rates on fixed deposits in government banks, then investors are getting better returns in 3 major government schemes – National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS) and Post Office Term Deposit (POTD).
Where is getting how much interest?
All citizens are getting 7.5% interest in Post Office Time Deposit (POTD) (5 years), 7.7% interest on NSC and 8.2% interest to senior citizens in Senior Citizen Savings Scheme (SCSS). The duration of all these small savings schemes is 5 years.
Bank FD vs Government Saving Scheme
| Savings Scheme | Interest Rate (%) w.e.f 01.01.2025 to 31.03​​.2025 | Minimum Investment | Tax Implications |
| Post Office Savings Account (SB)
| 4.0% (Compounded annually) | Rs. 500 | No tax on interest (up to Rs. 10,000) |
| National Savings Recurring Deposit Account (RD)​​ | 6.7% (quarterly compounded) | Rs. 100/month | Taxable |
| National Savings Time Deposit Account (TD) | 6.9% – 7.5% (Compounded quarterly) | Rs. 1,000 | Taxable |
| National Savings Monthly Income ​Account (MIS) | 7.4% (Compounded monthly and paid) | Rs. 1,000 | Taxable |
| Senior Citizens Savings Scheme Account (SCSS)​ | 8.2% (Compounded quarterly and paid) | Rs. 1,000 | Taxable |
| Public Provident Fund Account (PPF )​ | 7.1% (compounded yearly) | Rs. 500/year | Tax Benefits |
| Sukanya Samriddhi Account (SSA)​ | 8.2% (Annually compounded) | Rs. 250 | Tax Benefits |
| National Savings Certificates (VIIIth Issue) (NSC) | 7.7% (Annually compounded) | Rs. 1,000 | Tax Benefits |
| Kisan Vikas Patra (KVP) | 7.5% (Annually compounded) | Rs. 1,000 | Taxable |
| Mahila Samman Savings Certificate | 7.5%Â (quarterly compounded) | Rs. 1,000 | Tax Benefits |
Which scheme is more beneficial?
By investing in government schemes like NSC, SCSS and POTD, investors are getting 0.5% to 1.2% more interest than bank FDs. SCSS is an excellent option especially for senior citizens, which gives a return of 8.2% – which is much better than the current bank FD rates in the market.
Tax saving advantage
Investors should now take a decision by comparing bank FDs and small savings schemes. While small savings schemes offer higher interest, they also include benefits like government guarantee, tax exemption (under 80C) and long-term protection. Schemes like PPF and SCSS are safe, and by investing in them you can save tax along with better returns. SCSS is a great option especially for retirement planning which gives senior citizens an assured return of 8.2%.
