Small savings schemes: Pay heed to return, taxation, and lock-in

Returns of some schemes remain unchanged throughout the tenure, but can fluctuate in the case of others

The financial year ended on a happy note for fixed-income investors, with the government raising interest rates on small saving schemes (SSS) such as National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), Senior Citizens Saving Scheme (SCSS) and post-office term deposits. The return offered by the Public Provident Fund (PPF), however, remained unchanged. Do the hikes make SSS attractive, especially at a time when debt funds have lost the indexation benefit on long-term capital gains?

“Small savings schemes have certainly become more attractive after the recent hikes in interest rates. They look even more attractive now that debt mutual funds