New Delhi: Small savings schemes such as the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are widely known for their tax benefits. But their value goes well beyond just saving on taxes — even under the new tax structure in India, these government-backed plans play an important role in disciplined long-term saving and financial planning.
Small Savings: More Than Just Tax Perks
Many investors assume schemes like PPF and SSY are only worth considering if they reduce taxable income. That used to be true mainly under the old tax regime, where deductions under Section 80C could lower your taxable income. But even with the shift to the new tax system, these tools remain relevant because they are designed to help individuals build long-term savings goals, not just cut tax bills.
What These Schemes Offer
Here’s what makes small savings schemes attractive — even for taxpayers who don’t need deductions:
1. Safety and Government Backing
Plans like PPF and SSY are backed by the Government of India, so your capital is secure and guaranteed. This makes them suitable for conservative investors and those saving for long-term goals.
2. Predictable Returns
Unlike market-linked products such as equities or mutual funds, small savings schemes pay a fixed rate of interest, reviewed quarterly by the government. This predictability helps you plan your finances with confidence.
3. Long-Term Wealth Building
These schemes encourage saving over extended periods — for example, PPF has a 15-year lock-in, and SSY matures over 21 years. Over time, compound interest helps you grow a substantial corpus for retirement, children’s education, or other major life goals.
Understanding Key Schemes
Here’s a quick look at what some of the popular small savings plans offer:
Public Provident Fund (PPF): A long-term savings option where you can deposit up to Rs 1.5 lakh per year. The interest and maturity proceeds are tax-free, making it a secure retirement or emergency corpus builder.
Sukanya Samriddhi Yojana (SSY): Designed for the financial security of a girl child, SSY offers higher interest rates and tax-free maturity — making it a strong choice for parents and guardians saving for future expenses.
Other Small Savings Options: National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS), and Post Office deposits are also part of the government’s small savings ecosystem and serve different investment timelines and financial goals.
Why Investors Should Still Pay Attention
Even without the lure of tax deductions under the new tax regime, small savings schemes remain useful because they:
Encourage routine saving habits.
Offer secure, government-guaranteed returns.
Complement higher-risk investments like stocks or mutual funds.
Can be tailored to specific financial goals such as retirement, education or child welfare.
In fact, financial planners often suggest blending small savings schemes with other investments to build a balanced portfolio that withstands market fluctuations while delivering steady long-term results.
Bottom Line
Small savings schemes aren’t obsolete just because of tax rule changes. They remain relevant tools for disciplined and secure long-term saving. Whether you are planning for retirement, your child’s education, or simply a solid financial foundation, PPF, SSY, and similar instruments still have an important role to play in your portfolio — not merely as tax-saving vehicles, but as smart, purpose-driven savings options.
