Interest-ing Alternatives: Government Schemes That Outpace the Usual

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Introduction: Indian risk-averse investors have always preferred Fixed Deposits (FDs). As inflation is nibbling into real returns, however, some government-backed schemes currently offer better returns—with no compromise on security. Six of these are listed below, which offer security, tax benefit, and better interest rates:.

Top Performers in Focus:

Senior Citizens' Savings Scheme (SCSS)

Interest Rate: 8.2% per year (rev. quarterly)

Tenure: 5 years (renewable for 3 years)

Payment: Quarterly

Best for: Retirees seeking stable income

Taxation: Interest is tax-deductible but qualifies for Section 80C tax benefits

Notable: Appealing for large lump-sum investments due to increased cap of ₹30 lakh

Sukanya Samriddhi Yojana (SSY)

Interest Rate: 8.2% per year

Tenure: Up to age 21 or married at 18 or later

Payout: At maturity, in lump sum

Best for: Girl child parents

Taxation: EEE status (Exempt-Exempt-Exempt)

Notable: One of India's highest tax-free returns

Public Provident Fund (PPF)

Interest Rate: 7.1% per year

Tenure: 15 years (renewable in blocks of 5 years)

Payout: Lump sum at maturity

Best for: Long-term savers

Taxation: EEE status

Significant: Government-guaranteed and risk-free with compounding interest

Post Office Monthly Income Scheme (POMIS)

Interest Rate: 7.4% annual interest

Tenure: 5 years

Payout: Monthly

Most suitable for: Core investors seeking regular income

Taxation: Interest is taxable

Exceptional: Capital is preserved; ideal for homemakers and retirees

National Savings Certificate (NSC)

Interest Rate: 7.7% per year

Tenure: 5 years

Payout: At maturity (yearly compounded)

Most appropriate: Mid-term savers

Taxation: Interest is deductible, but reinvested interest can be claimed under Section 80C

Highly visible: Conveniently located at post offices with no investment limit

National Pension System (NPS)

Interest Rate: It is variable (usually 8–10% depending on market performance)

Tenure: Until retirement

Payout: Mostly lump sum + annuity

Best for: Long-term retirement planning

Taxation: Partial exemption from tax on maturity; annuity is taxatble

Substantial: Provides equity exposure at affordable fund management Closing Insight: While FDs remain a safe haven, these schemes of the government offer a wiser combination of security, returns, and tax efficiency. You are saving for retirement, your child, or just extra cash, every month, there is a scheme for you.

Sources: LiveMint, Finology Research Desk, Samayam Telugu, MSN Money India