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For a family saving for a daughter, Sukanya Samriddhi usually wins on rate and tax. For everyone else who wants safe, tax-free growth, PPF is the stronger long-term choice, while NSC and bank FDs suit shorter goals but are taxed every year. Reports say the government has kept small savings rates unchanged for the latest quarter, with the top rate at 8.2%.
Unchanged does not mean fixed forever. These rates are reviewed every quarter, so the numbers below are a snapshot, and the rupee examples are estimates, not promises.
Key takeaways
- Sukanya Samriddhi carries the highest rate of the four (8.2%), but only for a girl child and with a long lock-in.
- PPF (7.1%) is tax-free on deposit, interest and maturity under the old tax regime, which often beats a higher taxable rate.
- NSC and bank FD interest is added to your income and taxed at your slab rate, so the post-tax gap can be large.
- Rates are reset quarterly. Check the latest notification before you commit.
What are the current rates and rules, side by side?
Here is the comparison most people are looking for. Rates are as reported for the latest quarter; bank FD rates vary by bank and tenure, so we show a typical range.
| Feature | PPF | Sukanya Samriddhi | NSC | Bank FD (5-year) |
|---|---|---|---|---|
| Interest rate | 7.1% | 8.2% | 7.7% | Typically about 6% to 7.5%, bank dependent |
| Lock-in | 15 years, extendable in 5-year blocks | Matures 21 years after opening; deposits for 15 years | 5 years | 5 years for tax-saver FD; other FDs flexible |
| Yearly limit | Rs 500 to Rs 1.5 lakh | Rs 250 to Rs 1.5 lakh | From Rs 1,000, no upper limit | No upper limit |
| Who can open | Resident individual | Parent or guardian of a girl under 10 | Resident adult (or for a minor) | Anyone with a bank account |
| Tax on deposit | Section 80C (old regime) | Section 80C (old regime) | Section 80C (old regime) | 80C only for tax-saver FD (old regime) |
| Tax on interest | Tax-free | Tax-free | Taxable at slab rate | Taxable at slab rate, with TDS above a threshold |
| Safety | Government of India backed | Government of India backed | Government of India backed | Bank deposit; insured up to Rs 5 lakh per depositor per bank |
The official small savings rate announcements are published by the Ministry of Finance and carried by the Press Information Bureau.
How much does Rs 1 lakh a year grow to?
We assume Rs 1 lakh is deposited at the start of each financial year for 15 years, the rate stays where it is today, and the money is not withdrawn. Real rates will change, so treat this as a guide to scale, not a forecast.
We assume a 7% bank FD rate and a 31.2% tax rate (30% slab plus cess) for the after-tax column. NSC and FD are assumed to be rolled over at the same rate, which is a simplification because each new purchase gets the rate of that day.
| Scheme | Total deposited | Value after 15 years (before tax) | Value after 15 years (after tax, 30% slab) |
|---|---|---|---|
| PPF at 7.1% | Rs 15 lakh | about Rs 27.1 lakh | about Rs 27.1 lakh (no tax) |
| Sukanya at 8.2% | Rs 15 lakh | about Rs 29.8 lakh | about Rs 29.8 lakh (no tax) |
| NSC at 7.7%, rolled over | Rs 15 lakh | about Rs 28.6 lakh | about Rs 23.2 lakh |
| Bank FD at 7%, rolled over | Rs 15 lakh | about Rs 26.9 lakh | about Rs 22.3 lakh |
The arithmetic for PPF
Each deposit compounds yearly at 7.1%. The value is Rs 1,00,000 × ((1.07115 − 1) ÷ 0.071) × 1.071. That is Rs 1,00,000 × 25.32 × 1.071, which comes to roughly Rs 27.12 lakh. Of that, about Rs 12.1 lakh is interest, and none of it is taxed.
The arithmetic for Sukanya
Using the same method at 8.2%, 15 years of deposits reach about Rs 29.84 lakh. The account then keeps earning for six more years until it matures at year 21. Rs 29.84 lakh × 1.0826 (about 1.605) gives roughly Rs 47.9 lakh from Rs 15 lakh of deposits. If the rate falls during those years, the final number will be lower.
Why NSC and FD lose ground after tax
An NSC at 7.7% looks better than PPF at 7.1% until tax arrives. At a 31.2% effective rate, 7.7% shrinks to about 5.3%. PPF stays at 7.1%, so PPF wins by a clear margin for anyone in the 30% slab.
For a single Rs 1 lakh NSC held five years at 7.7%, the maturity value is about Rs 1,44,900, since Rs 1,000 grows to about Rs 1,449. The roughly Rs 44,900 of interest is taxable, though the interest earned each year is treated as reinvested for the first four years.
PPF vs Sukanya Samriddhi: which is better?
They are not really rivals, because Sukanya is only open for a girl child. If you qualify, Sukanya is the better scheme on rate and has the same tax-free status as PPF. The trade-off is access. Money is largely locked until the girl turns 18, and partial withdrawal is limited to a share of the balance, typically up to 50%, for education or marriage.
PPF suits you if you want a retirement-style corpus for yourself. You can take a partial withdrawal from the seventh year, and you can extend the account in 5-year blocks after 15 years, with or without fresh deposits.
Many families use both: Sukanya for the daughter, PPF for their own long-term savings. Each has its own Rs 1.5 lakh annual cap, but the Section 80C limit of Rs 1.5 lakh is shared across all eligible investments.
PPF vs FD: which is better?
For money you will not touch for 10 to 15 years, PPF is better for most taxpayers because its interest is tax-free. For money you need within one to three years, an FD is the practical choice because PPF cannot be broken early in the first years.
A bank FD does win on flexibility. You can choose tenures from a few months to several years, and you can break it with a small penalty. If your income is below the taxable limit, the tax disadvantage of FDs shrinks, and the rate gap matters more.
Many people also keep an emergency fund in a savings account or short FD before locking money into any small savings scheme.
Is NSC worth it today?
NSC pays more than PPF on paper and has a short 5-year lock-in, but the taxable interest erodes the advantage. It makes sense if you are in a low tax bracket, want a government-backed five-year product, and still claim 80C under the old regime.
If you chose the new tax regime, the 80C deduction is not available, and the case for NSC weakens further. A bank FD or a debt option may then give similar returns with more flexibility.
Which one for a daughter?
For the best small savings scheme for a daughter, Sukanya Samriddhi is the default. It has the highest government rate, tax-free interest, and rules designed around education and marriage needs.
If your goal is more than 15 to 20 years away and you can accept market ups and downs, some parents add an equity mutual fund alongside it. That carries risk and no guaranteed return, and you can read our guide on how direct mutual fund plans work before deciding.
Common mistakes to avoid
- Depositing after the 5th of the month. In PPF, interest is computed on the lowest balance between the 5th and month-end, so a late deposit can earn nothing for that month. Many savers deposit in April by the 5th for the full year of interest.
- Missing the minimum deposit. A PPF or Sukanya account becomes inactive if you skip the yearly minimum, and reviving it costs a default fee of Rs 50 per year plus the missed deposit.
- Putting more than Rs 1.5 lakh into PPF in a year. The excess earns no interest.
- Assuming the rate is locked. PPF and Sukanya rates move with each quarterly review, even though they have been steady lately.
- Ignoring tax on FD interest. TDS starts above a threshold, which was raised in the 2025 Budget (Rs 50,000 a year for most people, Rs 1 lakh for seniors), but interest is taxable even when no TDS is cut.
Myth vs fact
Myth: A higher interest rate always means a better scheme.
Fact: Post-tax return is what you keep. At a 30% slab, PPF at 7.1% beats NSC at 7.7%.
Myth: Unchanged rates mean the rate is guaranteed for the full term.
Fact: The rate changes whenever the government revises it, for existing accounts as well as new ones.
Myth: Tax-saver FDs give tax-free returns.
Fact: They give a deduction on the deposit under the old regime. The interest is still taxable.
Note for NRIs and the new tax regime
NRIs generally cannot open a new PPF or Sukanya account, and existing PPF accounts cannot normally be extended after the resident status changes. Rules differ by case, so check with your bank or post office. Our guide on NRI rules under the new Income Tax Act covers the wider tax picture.
If you have large capital gains from property, Section 54EC bonds are a separate government-linked route worth reading about.
FAQ
Will the Sukanya Samriddhi interest rate change in 2026?
It can. The government reviews small savings rates every quarter and has recently held them steady. Check the latest Ministry of Finance notification before each deposit year.
Can I invest in both PPF and Sukanya Samriddhi?
Yes. They are separate accounts with separate Rs 1.5 lakh yearly limits. However, the Section 80C deduction limit of Rs 1.5 lakh covers all eligible investments together, and applies only under the old regime.
Is PPF better than a fixed deposit?
For long-term savings, usually yes, because PPF interest is tax-free and government-backed. For short-term needs, an FD is better because of its flexible tenure and easier exit.
What is the NSC interest rate in India?
Reports put it at 7.7% for the latest quarter, compounded annually and paid at maturity. The rate on a certificate stays fixed for its 5-year term.
How many Sukanya accounts can a family have?
Typically one account per girl child and a maximum of two daughters, with an exception for twins or triplets. Confirm the details with your bank or post office.
Bottom line
If you have a daughter under 10, open Sukanya Samriddhi first. Put your own long-term tax-free savings in PPF, and use NSC or FD only for shorter goals. Before you decide, check the current quarter's rates, work out your tax slab, and consider speaking to a chartered accountant or registered adviser if your situation is complex.
