Small Savings Schemes in India: SCSS, PPF, SSY & NSC – Complete 2026 Guide

Small Savings Schemes in India in 2026

by Rajeev Pathak

Introduction:

Small Savings Schemes are for everyone in the family. While Senior Citizen Saving Scheme (SCSS) is for Dada Ji (grand-father), National Saving Certificates are for Mom-Dad, Public Provident Fund (PPF) is for Bhai-Bhabhi and Sukanya Samrudhi Yojana is for the little angel. Thus, these small savings schemes are like a family pack for long term savings, and financial security. Small Savings Schemes are the schemes of  the Government of India, and as such, are the safest investment options for investors who look for fixed returns under a safety umbrella. These schemes offer sovereign guarantee, predictable returns, and tax benefits, making them ideal for retirees, salaried individuals, and long-term planners, including our young daughters.

In this detailed guide, we cover:

• Senior Citizen Savings Scheme (SCSS)
• Public Provident Fund (PPF)
• Sukanya Samrudhi Yojana (SSY)
• National Savings Certificate (NSC)

Let’s examine each scheme in depth:

Senior Citizen Savings Scheme (SCSS)

Overview

SCSS is designed specifically for senior citizens seeking regular income with capital safety. It is one of the highest interest-paying government-backed fixed-income schemes.

Eligibility

• Age 60 years and above
• 55–60 years (voluntary retirement subject to conditions)
• Individual accounts only (joint with spouse allowed)

Interest Rate (2026)

• Around 8.2%+ per annum (reviewed quarterly by Government)
• Interest is paid quarterly

Investment Limit

• Minimum: ₹1,000
• Maximum: ₹30 lakh (subject to prevailing limits)

Tenure

• 5 years
• Extendable by 3 years

Advantages

✔ Sovereign guarantee
✔ High interest rate compared to bank FDs
✔ Quarterly income
✔ Section 80C tax deduction
✔ Suitable for retirement income planning

Disadvantages

✘ Interest is fully taxable
✘ TDS applicable if interest exceeds exemption limit
✘ Limited liquidity

Premature Withdrawal

Allowed after 1 year with penalty:

• 1–2 years: 1.5% deduction
• After 2 years: 1% deduction

Nomination

• Available at account opening or later
• Multiple nominees allowed

In Case of Death

• Nominee/legal heir receives proceeds
• Spouse may continue the account (subject to eligibility)
• No premature penalty charged in case of the death of the depositor

Public Provident Fund (PPF)

Overview

PPF is one of India’s most popular long-term tax-saving instruments, ideal for retirement corpus building.

Eligibility

• Indian residents
• One account per individual
• Minor accounts allowed (guardian operated)

Interest Rate (2026)

• Around 7.1% per annum (compounded annually)
• Reviewed quarterly

Investment Limit

• Minimum: ₹500 per year
• Maximum: ₹1.5 lakh per financial year

Tenure

• 15 years
• Extendable in blocks of 5 years

Tax Benefits

• EEE Status (Exempt-Exempt-Exempt)
• Investment eligible under 80C
• Interest tax-free
• Maturity tax-free

Advantages

✔ Completely tax-free returns
✔ Long-term wealth creation
✔ Loan facility available
✔ Partial withdrawals allowed
✔ Risk-free

Disadvantages

✘ Long lock-in period
✘ Limited annual investment cap

Premature Closure

Allowed after 5 years under specific conditions:

• Medical emergency
• Higher education
• Change in residency

Nomination

• Can be made or changed anytime

In Case of Death

• Nominee receives accumulated amount
• Account closes; cannot be continued

Sukanya Samrudhi Yojana (SSY)

Overview

Sukanya Samrudhi Yojana (SSY) is a girl child-focused savings scheme aimed at securing education and marriage expenses.

Eligibility

• Girl child below 10 years
• Maximum two girl children (exceptions for twins)

Interest Rate (2026)

• 8.2%+ per annum (compounded annually), subject to review every quarter
• Among the highest in small savings category

Investment Limit

• Minimum: ₹250 per year
• Maximum: ₹1.5 lakh per year

Tenure

• Deposit period: 15 years
• Maturity: 21 years from opening

Tax Benefits

• EEE category (like PPF)

Advantages

✔ High interest rate
✔ Tax-free returns
✔ Supports long-term planning for daughters
✔ Partial withdrawal allowed for education

Disadvantages

✘ Very long tenure
✘ Money locked until girl turns 18/21
✘ Strict eligibility conditions

Partial Withdrawal

• Up to 50% after girl turns 18 (for education)

Premature Closure

Allowed for:

• Marriage after 18
• Medical emergency
• Death of guardian

In Case of Death of Girl Child

• Account closed
• Balance paid to guardian

 

National Savings Certificate (NSC)

Overview

NSC is a fixed-income investment suitable for conservative investors seeking tax deduction and guaranteed returns.

Eligibility

• Indian residents
• Individuals only

Interest Rate (2026)

• Around 7.7%+ per annum (compounded annually)

Tenure

• 5 years

Investment Limit

• Minimum: ₹1,000
• No maximum limit

Tax Benefits

• Investment eligible under Section 80C
• Interest taxable but deemed reinvested (eligible for 80C except final year)

Advantages

✔ Fixed return
✔ No market risk
✔ No upper limit
✔ Good for short-medium term planning

Disadvantages

✘ Interest taxable
✘ No regular income
✘ No liquidity before 5 years (except special cases)

Premature Withdrawal

Allowed only in:

• Court order
• Death of holder

Nomination

• Can be added at purchase or later

In Case of Death

• Nominee receives principal + accrued interest

 

Which Small Savings Scheme Should You    Choose?

• For regular retirement income → SCSS
• For long-term tax-free wealth creation → PPF
• For daughter’s future planning → SSY
• For 5-year guaranteed returns with tax deduction → NSC

A diversified approach combining 2–3 schemes often works best.

 

FAQs on Small Savings Schemes

1. Are small savings schemes completely safe?

Yes, they are backed by the Government of India, making them sovereign guaranteed.

2. Can NRIs invest?

No. Only resident Indians are eligible (existing accounts may continue under rules).

3. Are interest rates fixed?

Rates are revised quarterly but remain fixed once invested (scheme-specific).

4. Can these be opened online?

Yes, through select banks and post offices offering online services.

5. Are these better than Bank FDs?

For safety and tax benefits, yes. For flexibility, FDs may be better.

Conclusion:

Small Savings Schemes are ideal for investors seeking safety, certain income, and tax benefits. While Small Saving Schemes  may not beat inflation over the long term, they provide stability and peace of mind in a diversified portfolio.

For readers of safal-nivesh.com , these schemes can be foundation pillars for a well-structured financial architecture.