Small Savings Schemes: Has the new tax regime dampened the craze for schemes like PPF and Sukanya Samriddhi? Recent data tells a different story. As of January 10, 2026, the National Small Savings Fund (NSSF) has accumulated ₹2.17 lakh crore, nearly two-thirds of this fiscal year’s target.
Surprisingly, while the new tax regime doesn’t provide any direct investment exemptions, Indian investors are increasingly relying on these government schemes over banks for safe and guaranteed returns. Market experts believe that falling fixed deposit (FD) interest rates and government protection have made these schemes a “superhit investment formula.”
Record Investments in NSSF
This money deposited into small savings schemes is a major boost not only for investors but also for the Government of India. When people invest in schemes like the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and the Post Office Monthly Income Scheme, the funds are deposited in the NSSF. Surplus funds in these schemes reduce the government’s need to borrow from the market to meet its needs, thereby keeping the fiscal deficit under control.
The government has set a target of raising ₹3.43 lakh crore from the NSSF for the financial year 2025-26. Last year, this figure was ₹4.12 lakh crore. The government aims to reduce the fiscal deficit to 4.4% of GDP, and this significant investment in small savings schemes is fuelling its efforts to achieve this goal.
New Tax Regime vs. Small Savings
The last budget introduced several concessions to make the new tax regime more attractive. According to officials, approximately 75% of taxpayers have now adopted the new tax regime. It’s worth noting that the new system doesn’t offer the ₹1.5 lakh deduction under Section 80C. Yet, why haven’t people opted out of these schemes?
The biggest reason behind this is the difference in interest rates. Over the past year, the RBI has significantly cut interest rates by 1.25%, significantly reducing bank FD rates. In contrast, the interest rates on government savings schemes remain quite attractive. Furthermore, amid stock market volatility, the Indian middle class still prioritizes guaranteed returns. The risk of investment loss in government schemes is zero, which gives investors peace of mind.
Why are these schemes safe
People use schemes like PPF and Sukanya Samriddhi not only as tax-saving tools, but also for larger goals like children’s higher education, marriage, and retirement. The high interest rates offered for the future of daughters under the Sukanya Samriddhi Yojana and the magic of compounding in PPF keep investors engaged for a long time.
Furthermore, the Senior Citizen Savings Scheme (SCSS) remains a strong and secure source of regular income in old age. Even though the 80C deduction is not available in the new tax regime, the maturity amount and interest earned from these schemes (especially in PPF and SSY) are still tax-free or subject to very low tax. This tax-free status is attracting investors.