PPF vs FD vs SCSS: where your money earns the most right now
Government scheme rates are frozen until 31 December, while bank FD rates are starting to climb after the RBI’s 7 October rate hike. Here’s PPF vs FD vs SCSS (and every other safe option) compared after tax, and which one fits you.
⚡ The 30-second answer
- Aged 60 or above? SCSS at 8.2% is the best safe, government-backed option, with interest paid every quarter.
- In the 30% tax slab? PPF wins. Its 7.1% is tax-free, which equals about 10.3% on a taxable FD.
- Have a daughter under 10? Sukanya Samriddhi pays 8.2%, also tax-free.
- Need the money in 1–3 years? Use bank FDs, but book them in parts: rates are likely to rise further if the RBI hikes again in December.
01 · The ratesPPF vs FD vs SCSS and other safe options (Oct–Dec 2026)
| Scheme | Rate | Lock-in | Tax on interest | Limit |
|---|---|---|---|---|
| Senior Citizens’ Savings Scheme (SCSS) Age 60+, paid quarterly | 8.2% | 5 years (extendable by 3) | Taxable | ₹30 lakh |
| Sukanya Samriddhi (SSY) Girl child under 10 | 8.2% | Till age 21 | Tax-free | ₹1.5 lakh/yr |
| National Savings Certificate (NSC) | 7.7% | 5 years | Taxable | No limit |
| Kisan Vikas Patra (KVP) Doubles in 115 months | 7.5% | 2.5 years min | Taxable | No limit |
| Post Office 5-yr Time Deposit | 7.5% | 5 years | Taxable | No limit |
| Post Office Monthly Income (MIS) | 7.4% | 5 years | Taxable | ₹9.5 L single / ₹15 L joint |
| Public Provident Fund (PPF) | 7.1% | 15 years | Tax-free | ₹1.5 lakh/yr |
| Post Office 1 / 2 / 3-yr Time Deposit | 6.9 / 7.0 / 7.1% | 1–3 years | Taxable | No limit |
| Small finance bank FD (5-yr) e.g. Suryoday, Jana | 7.8–8.25% seniors up to 8.5% | Flexible* | Taxable | Insured to ₹5 lakh |
| Big bank FD (5-yr) HDFC, ICICI, Axis | 6.4–6.5% seniors 6.9–7.1% | Flexible* | Taxable | Insured to ₹5 lakh |
*Bank FDs can be broken early with a small penalty, usually 0.5–1%. Small savings rates are set by the government each quarter; bank FD rates change any time. All rates as of 8 October 2026.
02 · The catchThe rate you see isn’t the rate you get
Interest on FDs, SCSS, NSC, KVP, MIS and time deposits is added to your income and taxed at your slab rate, plus 4% cess. PPF and Sukanya Samriddhi interest is fully tax-free under both the old and new tax regimes.
The 80C deduction (up to ₹1.5 lakh for PPF, SSY, SCSS, NSC and 5-year tax-saver FDs) only helps if you’re in the old tax regime. Many salaried people are now in the new regime, where 80C doesn’t apply, but PPF’s tax-free interest still does.
03 · Your numbersPPF vs FD vs SCSS calculator: what you keep after tax
Shows the post-tax yearly return and what your money grows to, assuming interest is reinvested at the same rate. PPF allows only ₹1.5 lakh a year, and SSY applies only to a daughter’s account; shown for rate comparison. Schemes with a longer lock-in than your chosen period are marked. Cess of 4% included. Estimates, not advice.
04 · Your pickWhich one fits you?
👴 Retired, 60+
SCSS first (8.2%, up to ₹30 lakh), then a senior FD at a small finance bank for the rest. Submit Form 15H if your total income is below the taxable limit to avoid TDS.
💼 Salaried, 30% slab
Max out PPF (₹1.5 lakh a year) before anything else. For extra low-risk money held a year or more, arbitrage funds are taxed like equity, often less than FD interest at 30%.
👧 Parent of a girl under 10
Sukanya Samriddhi: 8.2% tax-free, the highest tax-free government rate available. (PPF vs FD)
⏱️ Need money in 1–3 years
Bank FD ladder: split into 3 FDs of 1, 2 and 3 years. Book half now and half after banks raise rates. Keep any one bank under ₹5 lakh for full deposit insurance.
🧾 Low or no tax
NSC or a small finance bank FD: the higher headline rate wins when tax isn’t eating into it. (PPF vs FD)
💸 Want monthly income
Post Office MIS (7.4%, paid monthly), or SCSS if you’re 60+ (paid quarterly).
05 · TimingLock in now, or wait?
Small savings rates are fixed until 31 December 2026; the government announces the January–March rates around 31 December. With the RBI now raising rates, these could go up from January, but that’s not certain. The government has kept PPF at 7.1% and SCSS at 8.2% unchanged for many quarters, through both rate cuts and holds.
For SCSS, NSC, KVP and time deposits, the rate you book is locked for the whole term. For PPF and SSY, the rate floats with each quarter, so there’s no reason to wait: deposit early in the financial year to earn interest for more months.
For bank FDs, another 0.25% RBI hike is possible on 4 December. Booking part now and part after December avoids betting on one outcome.
FAQCommon questions (PPF vs FD VS SCSS)
PPF vs FD vs SCSS: which is best in 2026?
It depends on your age and tax slab. If you’re 60+, SCSS (8.2%) usually wins. If you pay 20% or 30% tax, PPF wins by a wide margin because its interest is tax-free. If you pay little or no tax, or need the money within a few years, a high-rate bank FD can earn more and isn’t locked for 15 years.
What is the SCSS interest rate for October–December 2026?
8.2% a year, paid quarterly. The rate you book is fixed for the full 5-year term.
Did the RBI rate hike change PPF or SCSS rates?
No. Small savings rates are set by the Finance Ministry each quarter and were already fixed for October–December on 30 September. The next review is around 31 December.
Are small finance bank FDs safe?
They are RBI-regulated banks, and deposits are insured by DICGC up to ₹5 lakh per depositor per bank. Keeping each bank’s deposit under ₹5 lakh, including interest, means it is fully covered.
Is TDS deducted on FD and SCSS interest?
Yes, once interest from one bank or post office crosses ₹50,000 a year (₹1 lakh for senior citizens). Submit Form 15G, or 15H if you’re 60+, if your total income is below the taxable limit.
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Sources: Relakhs: small savings rates Oct–Dec 2026 · CalcGuru · Upstox: senior citizen FD rates · Stable Money: FD rates. Rates change; confirm with your bank or post office before investing. Educational content, not financial advice.
