Saving Schemes are launched by the Government of India or public sector financial institutions or banks and they offer reliability and risk-free returns on investment. Find below the list of various savings schemes along with the rates, tax deduction on principle, etc.

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List of Savings Schemes
Savings Scheme | Rate | Tax Deduction on principal? | Interest Taxable? |
Post Office Savings Account | 4.0% | No | Yes |
Post Office Recurring Deposit | 6.2% | No | Yes |
Post Office Monthly Income Scheme | 7.4% | No | Yes |
Post Office Time Deposit (1 year) | 6.8% | No | Yes |
Post Office Time Deposit (2 year) | 6.9% | No | Yes |
Post Office Time Deposit (3 year) | 7% | No | Yes |
Post Office Time Deposit (5 year)* | 7.5% | Yes | Yes |
Kisan Vikas Patra (KVP) | 7.5% | No | Yes |
Public Provident Fund (PPF) | 7.1% | Yes | No |
Sukanya Samriddhi Yojana | 8% | Yes | No |
National Savings Certificate | 7.7% | Yes | No |
ELSS (Equity Linked Savings Scheme) | Market Linked | Yes | Yes# |
NPS (National Pension Scheme) | Market Linked | Yes | Yes** |
Tax Saving FDs | 6.75%* | Yes | Yes |
Senior Citizens’ Saving Scheme (SCSS) | 8.2% | Yes | Yes |
Interest rates updated on 1st April 2023
*Maximum current rate among major banks. Rate changes from one bank to another.
#At Long Term Capital Gains Tax rate of 10%. Gains up to Rs. 1 lakh are exempt.
**40% is tax free
Tax Saving FDs
Tax saving FDs carry a deduction under Section 80 C of the Income Tax Act for investment up to Rs. 1.5 lakh per annum. For example, if you invest Rs. 1 lakh in a tax saving FD and you are in the 20% tax slab, you will save Rs. 20,000 in tax (20% of Rs. 1 lakh). These FDs have a minimum lock in period of 5 years and can be opened through any public or private sector bank or post office. The interest earned through tax saver FDs is taxable at your slab rate. It is a suitable investment option for those who are looking for guaranteed returns and low risk. The minimum investment in tax saving FDs is Rs. 100. There is no maximum limit but tax deduction is only available for contributions up to Rs. 1.5 lakh per year.
- Interest rate: Differs from bank to bank. Currently around 5.75% – 8.60%.
- Tenure : 5 years
- Minimum Investment: Rs. 100
- Maximum Investment: None
- Deduction on Principal: Yes
- Tax on interest: Taxable at slab rate
Table for interest rates of Tax-saving Bank FDs
Banks | Tax-Saver FD interest rates | |
General | Senior Citizens | |
SBI | 6.50% | 7.50% |
HDFC Bank | 7% | 7.50% |
ICICI Bank | 7% | 7.50% |
Kotak Mahindra Bank | 6.20% | 6.70% |
Bank of Baroda | 6.50% | 7.15% – 7.50% |
Data as of 3rd April 2023, Source: Bank Websites
Unit Linked Insurance Plan (ULIP)
A Unit Linked Insurance Plan (ULIP) is an integrated plan which offers life insurance cover and investment through a single scheme. Investment in ULIPs is tax deductible under Section 80 C up to Rs. 1.5 lakh per annum and the maturity proceeds of a ULIP are also exempt under Section 10(10)(D). ULIPs specify a life insurance cover (usually around 10 times your annual premium) and they allow you to choose ULIP funds which invest in equities and/or debt and function very similar to mutual funds. The minimum annual investment varies from fund to fund but is usually set at Rs. 2,500. There is no maximum limit but tax deduction is only available for contributions up to Rs. 1.5 lakh per year.
- Interest rate: Rate of return is not fixed, depends on ULIP fund performance.
- Tenure : 5 years (minimum) – 20 years (maximum). Different for different insurance companies.
- Minimum investment: Rs. 2,500. Different for different insurance companies.
- Maximum Investment: None
- Deduction on Principal: Yes
- Tax on interest: Not Taxable
Equity Linked Savings Scheme (ELSS)
ELSS or Equity Linked Savings Scheme is a type of mutual fund. ELSS Funds have a lock-in of 3 years, which is the shortest lock-in among the various tax-saving schemes in India. Investing in ELSS Funds (also called Tax Saving Funds) is tax deductible under Section 80 C up to Rs. 1.5 lakh per annum. The returns on ELSS funds will be taxed as long term capital gains at a 10% rate. Dividends from ELSS funds will also be taxed at 10% under the Dividend Distribution Tax. ELSS funds invest at least 80% of their assets in equity (stocks) and offer a high compounding potential in the long term. You can know more about them here. The minimum annual investment in ELSS funds is Rs. 100, although it varies from one fund to another. There is no maximum limit but tax deduction is only available for contributions up to Rs. 1.5 lakh per year.
- Interest rate: Rate of return is not fixed, depends on ELSS fund performance.
- Tenure : 3 years (minimum), no maximum tenure
- Minimum Investment: Rs. 100. Different for different ELSS funds
- Maximum Investment: None
- Deduction on Principal: Yes
- Tax on interest: Taxable at 10% (LTCG)

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Government Savings Schemes
Mostly, government schemes are perceived as good investments due reliability, security and dependability. Let’s take a look at them :
Public Provident Fund (PPF)
The Public Provident Fund (PPF) has an interest rate of 7.1%. It has a term of 15 years, which can be extended indefinitely in blocks of 5 years. The interest on the PPF is tax free and contributions to the PPF are tax deductible up to Rs. 1.5 lakh per annum under Section 80C of the Income Tax Act, 1961. You can open a PPF account with a bank or a post office. Some banks like ICICI and Axis also allow you to open PPF accounts online. You can make partial withdrawals from the expiry of 5 years from the year in which the account is opened. Loan facility is available as well but from the third year. You can read more about the PPF here. The minimum investment amount per year is Rs. 500 and the maximum investment amount per year is Rs. 1.5 lakh.
- Interest rate: Changes every quarter. 7.1% for April to June 2023.
- Tenure : Minimum 15 years, can be extended indefinitely
- Minimum investment: Rs. 500 per year
- Maximum Investment: Rs. 1.5 lakh per year
- Deduction on Principal: Yes
- Tax on interest: Not taxable
National Savings Certificates (NSC)
This certificate offers an interest rate of 7.7% compounded annually but payable only at maturity. It can be purchased from any post office. The minimum investment is Rs. 100 and there is no maximum limit. The tenure for this certificate is 5 years. The interest earned is deemed to be reinvested and eligible for tax deduction up to Rs. 1.5 lakh under Section 80 C. The principal amount invested also counts towards the same tax deduction up to Rs. 1.5 lakh. The current issue is called the NSC VIII Issue.
- Interest rate: 7.7%
- Tenure : 5 years
- Minimum investment: Rs. 100
- Maximum Investment: None
- Deduction on Principal: Yes
- Tax on interest: No (Interest is tax deductible).
Post Office Savings Account
This account is like a savings account with a bank, except that it is held with a post office. Only one account can be opened with one post office and can be transferred from one post office to another. You can also open an account in the name of a minor. The interest rate is 4% and is fully taxable. However a deduction of Rs. 10,000 per annum is available on your total savings account interest including post office savings interest under Section 80TTA of the Income Tax Act, 1961. The minimum balance for non-cheque account is Rs. 50 and Rs. 500 for accounts with cheque facility.
- Interest rate: 4%
- Tenure : None
- Minimum Investment: Rs. 50
- Maximum Investment: None
- Deduction on Principal: No
- Tax on interest: Yes
Post Office Time Deposit
This is like a Bank Fixed Deposit (FD). The minimum amount required for a Post Office Time Deposit Account (POTD) is Rs. 200 and there is no maximum limit. The interest rates are as mentioned below :
Tenure | Rate from 1st April to 30th June |
1 year | 6.8% |
2 year | 6.9% |
3 year | 7.0% |
5 year | 7.5% |
- Interest rate: 6.8% – 7.5%
- Tenure : 1-5 years
- Minimum Investment: Rs. 200
- Maximum Investment: None
- Deduction on Principal: No (except tax-saver deposit with post office)
- Tax on interest: Yes

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Post Office Recurring Deposit Account
In this account, you deposit a fixed amount every month and each instalment compounds in value. The account offers an interest rate of 6.2% that is compounded annually. The tenure for this account is fixed at 5 years which can be renewed and extended to 10 years. The minimum instalment is Rs. 10. No upper limit of investment is fixed in this account. This scheme offers no tax rebate and the interest on it is fully taxable.
- Interest rate: 6.2%
- Tenure : 5 years
- Minimum investment: Rs. 10
- Maximum Investment: None
- Deduction on Principal: No
- Tax on interest: Yes
Post Office Monthly Income Scheme (POMIS)
This account provides monthly interest against your deposit with the post office. The minimum deposit amount is Rs. 1,000 and the maximum deposit is Rs. 9 lakh (Rs. 15 lakh for a joint account). The interest rate on offer is 7.4%. Any number of such accounts may be opened in any post office subject to the maximum balance limit (after adding balances in all accounts). The term of the POMIS is 5 years. You can set up an ECS facility to automatically credit the monthly interest from POMIS to your savings account. You can prematurely encash it after one year of opening the account. The premature encashment penalty for such termination is 2% of your deposit within 1-3 years. If you prematurely encash it after 3 years but before maturity at 5 years, the penalty is 1%.
- Interest rate: 7.4%
- Tenure: 5 years
- Minimum Investment: Rs. 1,000
- Maximum Investment: Rs. 9 lakh (Rs. 15 lakh for a joint account)
- Deduction on Principal: No
- Tax on interest: Yes
Kisan Vikas Patra (KVP)
KVP offers an interest rate of 7.5% compounded annually. It can be purchased from any post office. The invested amount doubles every 115 months. The minimum amount for investing in KVP is Rs. 1,000. Thereafter you can invest in multiples of Rs. 1,000 with no upper limit. Premature encashment of the KVP Certificate is allowed 2.5 years after purchase. The KVP certificate can be held either by a single holder or as a joint holding between two individuals. It can also be purchased on behalf of a minor. This scheme offers no tax rebate on either contributions or interest earned.
- Interest rate: 7.5%
- Tenure : 115 months
- Minimum Investment: Rs. 1,000
- Maximum Investment: None
- Deduction on Principal: No
- Tax on interest: Yes
Mahila Samman Bachat Patra
To commemorate Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, has been launched for a two-year period up to March 2025. The Mahila Samman Savings Certificate will offer a deposit facility of up to Rs. 2 lakh in the name of women or girls at a fixed interest rate of 7.5% along with a partial withdrawal option.
- Interest rate: 7.5%
- Tenure: 2 years
- Maximum Investment: Rs. 2 lakh
Savings Schemes for the Girl Child
The Government has set up certain small savings schemes aimed specifically at the girl child. The Sukanya Samriddhi Yojana is a savings account with a 21 year tenure which was launched in 2015. Parents can open Sukanya Samriddhi Accounts for girls aged 10 years or younger under the scheme.
Sukanya Samriddhi Yojana
The Sukanya Samriddhi Yojana is a government savings vehicle created for the benefit of the girl child who is 10 years of age or younger. A Sukanya Samriddhi Account has an interest rate of 8%. The minimum annual investment is Rs. 1,000 and the maximum is Rs. 1.5 lakh. The account can be opened by a parent or legal guardian for a girl child. A maximum of two such accounts can be opened by a parent/legal guardian for two girls. The account matures 21 years after opening or on marriage of the girl child after she reaches the age of 18. A premature withdrawal of 50% of the account balance can be made after the girl crosses 18, even if she is not married.
- Interest rate: 8%
- Tenure : 21 years
- Minimum Investment: Rs. 1,000 per annum
- Maximum Investment: Rs. 1.5 lakh per annum
- Deduction on Principal: Yes
- Tax on interest: No
Savings Schemes for Senior Citizens
Two major savings schemes cater specifically to senior citizens, those individuals who are aged 60 or above. These schemes – Senior Citizens Savings Scheme (SCSS) and Pradhan Mantri Vaya Vandana Yojana (PMVVY) offer higher rates of interest than prevailing FD rates. SCSS also offers a tax deduction for annual contributions up to Rs. 1.5 lakh under Section 80 C.
Senior Citizens Saving Scheme (SCSS)
The SCSS is open to individuals above the age of 60 and has an interest rate of 8.2%. You can apply for an SCSS account at a bank or post office. The minimum investment is Rs. 1,000 and maximum is Rs. 15 lakh. The tenure of the SCSS is 5 years and can be extended for another 3 years. To extend the account, you have to give a request within 1 year of the original maturity of the account. The investment in the SCSS is tax deductible up to Rs. 1.5 lakh per annum under Section 80 C but the interest on the SCSS is fully taxable. You can ask for premature closure after one year of opening the account. The premature closure penalty is 1.5% if closure is requested 1-2 years from account opening and 1% is closure is requested after 2 years.
- Interest rate: 8.2%
- Tenure : 5 years
- Minimum Investment: Rs. 1,000
- Maximum Investment: Rs. 15 lakh
- Deduction on Principal: Yes
- Tax on interest: Yes

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NPS (National Pension Scheme)
The National Pension System (NPS), earlier known as New Pension Scheme is a pension system open to all citizens of India. The NPS invests the contributions of its subscribers into equities and debt and the final pension amount depends on the performance of these investments. Any Indian citizen from the age of 18-65 can open an NPS account. The NPS matures at the age of 60, but can be extended till the age of 70. Partial withdrawals up to 25% of your contributions can be made from the NPS after three years of account opening for specific purposes like home buying, children’s education or serious illness. The minimum annual contribution for an NPS account is Rs. 1,000. There is no maximum limit but the tax deduction under section 80C and 80 CCD (1B) is limited to Rs. 2 lakh per annum.
- Interest rate: Depends on returns of pension funds
- Tenure : Till the age of 60
- Minimum Investment: Rs. 1,000 per year
- Maximum Investment: None
- Deduction on Principal: Yes
- Tax on interest: No, but maturity amount is partially taxable (40% is exempt).
Also Read How to Open NPS Account Online
Aadhaar and PAN Now Mandatory for All Post Office Schemes
- According to a recent notification issued by the Ministry of Finance, it is now mandatory to provide your Aadhaar number and PAN to open a new post office account. If you have not been allotted an Aadhaar, you need to provide proof of application of enrollment for Aadhaar card or enrollment ID at the time of account opening and furnish the Aadhaar number to the Accounts Office within 6 months from the date of opening the post office account.
- In case you already have an existing post office account and have not submitted your Aadhaar number, you need to submit the same within a period of 6 months with effect from 1st April 2023. Moreover, if you have not submitted your PAN at the time of account opening, you need to submit the same within a period of 2 months from the date of happening of any of the following events, whichever is earliest, namely:
– The balance at any given time in the post office account is more than Rs. 50,000
– The aggregate of all credits in the post office account in any financial year is more than Rs. 1 lakh
– The aggregate of all withdrawals and transfers in a month from the account exceeds Rs. 10,000
- Failure to submit Aadhaar number within the specified period of 6 months and PAN within the specified period of 2 months will lead to the account becoming inoperational till the time Aadhaar number and/or PAN is submitted to the accounts office
Note: We have taken this information from The Gazette of India. To read more, visit https://egazette.nic.in/WriteReadData/2023/244822.pdf