Post office savings scheme comparison

Which post office scheme actually pays most

A post office savings comparison shows what one amount becomes in every small savings scheme, ranked by the return left after tax rather than by the rate on the poster. On Rs 1,00,000 at a 30% slab, a general investor's best post-tax return is PPF, at 7.1% a year, even though NSC advertises 7.7% and two other schemes advertise 8.2%.

The headline rate decides almost nothing here. Two things decide it: whether the scheme compounds its interest or pays it out, and whether the taxman takes a third of it.

The 8.2% that returns less than 7.7%

SCSS and the Monthly Income Scheme pay interest out on a schedule instead of compounding it, so their money grows in a straight line while the others curve. SCSS pays every quarter, MIS every month, and neither adds that interest back to the principal.

Run Rs 1,00,000 for five years and the gap is plain. NSC at 7.7% compounded annually reaches Rs 1,44,903. SCSS at 8.2% returns Rs 1,41,000, being the original lakh plus five years of simple interest at 8,200 a year. The scheme with the higher rate hands back Rs 3,903 less.

That is not a flaw in SCSS. It is built to pay a pensioner a quarterly income, and a scheme you draw on cannot also compound. The mistake is reading its rate as though it competes with a scheme that does.

The time deposit is the quiet winner of that table. It carries a lower rate than NSC and still edges ahead, because compounding four times a year beats compounding once.

What tax does to the ranking

PPF and Sukanya Samriddhi Yojana are EEE, meaning the deposit is deductible, the interest is untaxed as it accrues, and nothing is taken at maturity. Every other scheme here adds its interest to your income, where it meets your slab.

At 30%, that is close to a third of the return. NSC's 44,903 of interest over five years becomes 31,432 after tax, so the effective return falls from 7.7% a year to about 5.6%. PPF keeps all of its 7.1%. The gap between the best and worst headline rate in this whole set is 1.5 percentage points; the tax slab moves the answer by more than that on its own, which is why a comparison that stops at the rate is worse than no comparison.

Set the slab to zero and the order changes again. That is the point of making it an input rather than an assumption.

The schemes most tables show you anyway

Two of the highest rates are not available to most people. SCSS requires you to be 60 or above, or 55 and retired on superannuation. Sukanya Samriddhi requires a girl child under 10, and the account is opened in her name.

Both sit at 8.2%, and both sit at the top of nearly every comparison table on the internet regardless of who is reading it. This tool asks which ones you can open and leaves the rest out, because a scheme you are not eligible for is not an option you are weighing, it is a number that makes the list look better than your actual choice.

Why the ranking is a rate, not a rupee figure

These schemes do not run for the same length. A time deposit is 5 years, KVP is 115 months, PPF is 15 years, Sukanya Samriddhi runs to 21. Rank them by maturity value and you have ranked them by how long your money is locked away, which tells you nothing about which one works harder.

So the comparison uses the effective post-tax return a year: take what you actually keep at the end, divide by what you put in, then unwind it over the tenure. A 15-year PPF and a 5-year NSC become comparable numbers. The tenure is still printed next to each one, because 21 years is a real commitment and no single figure should hide it.

Where the rates come from

The Department of Economic Affairs sets these rates quarterly and announces them in the last week of the preceding quarter. For Q2 FY 2026-27, the quarter running 1 July to 30 September 2026, every rate was left unchanged. That is the ninth consecutive quarter without a change, which is long enough that an article from 2024 will still quote the numbers correctly.

What this does not cover

The recurring deposit is missing on purpose. It takes a monthly payment, where every scheme above takes one deposit, so dropping it into this table would compare two different things. It pays 6.7% this quarter, the lowest of the set.

Beyond that, this compares a clean lumpsum held to maturity. It does not model the yearly deposits a PPF account usually receives, partial withdrawals, the premature-exit penalties each scheme sets, TDS thresholds on interest, or the 80C ceiling of Rs 1,50,000 that several of these schemes share and quietly compete for. Rates change quarterly and your slab is your own. Treat the figures as a structured way to compare, and for a decision that commits real money, run it past a qualified financial adviser or a chartered accountant.

Frequently asked questions

Which post office scheme gives the highest return? It depends on your tax slab and on which schemes you can actually open. On a Rs 1,00,000 lumpsum at a 30% slab, a general investor's best post-tax return is PPF at 7.1% a year, because its interest is never taxed, while NSC at a higher 7.7% headline drops to about 5.4% a year after tax. Senior citizens can open SCSS and parents of a girl under 10 can open SSY, and both carry an 8.2% headline.

Why does NSC beat SCSS over five years despite the lower rate? Because SCSS pays its interest out every quarter and never compounds it, while NSC compounds annually and pays at maturity. On Rs 1,00,000 over five years, NSC at 7.7% reaches Rs 1,44,903 while SCSS at 8.2% returns Rs 1,41,000, the principal plus five years of simple interest. The headline rate is higher and the money is lower, which is the single most useful thing this comparison shows.

What are the current post office interest rates? For Q2 FY 2026-27, the quarter running 1 July to 30 September 2026, the Department of Economic Affairs left every rate unchanged for the ninth consecutive quarter. SCSS and SSY pay 8.2%, NSC 7.7%, KVP and the 5-year time deposit 7.5%, the Monthly Income Scheme 7.4%, PPF 7.1% and the 5-year recurring deposit 6.7%.

Which post office schemes are tax free? PPF and Sukanya Samriddhi Yojana are EEE, meaning the deposit qualifies for a deduction, the interest is not taxed as it accrues, and the maturity value is not taxed either. Every other scheme here adds its interest to your income and taxes it at your slab, which at 30% removes close to a third of the return, more than the entire gap between the best and worst headline rate.

Why does this hide some schemes? Because you cannot open them. SCSS requires you to be 60 or above, or 55 and retired on superannuation, and SSY requires a girl child under 10. Both carry the joint-highest 8.2% rate and both sit at the top of most comparison tables regardless of who is reading, which makes the comparison look better than the one actually available to you.

Is the recurring deposit included? No, and that is deliberate. The 5-year recurring deposit takes a monthly payment rather than a lumpsum, so putting it in the same table as a one-time deposit would compare two different things. It pays 6.7% for this quarter, the lowest of the small savings set.

Sources

• National Savings Institute, small savings schemes and current rates
• Business Today, small savings rates left unchanged for the July to September 2026 quarter
• ReckonBox PPF calculator, for the yearly-deposit version of the same account
• ReckonBox NSC calculator, for the compounding detail behind the figure above