New Delhi, July 23 -- After RBI cut repo rate by 100 basis points across three monetary policy meets in 2025, most banks have reacted by cutting their fixed deposits (FD) interest rates which now hover in the range of 5.5 to 6.5 percent per annum. In this backdrop, small savings schemes definitely give relatively higher returns to investors while also providing income tax benefit at the same time.

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Although the difference betweeninterest rates on FDs and post office schemes is minimal, the savings that accrue on account of income tax exemption is high. For example, when a depositor stands to earn 7 percent on fixed deposits and he falls in the tax rate of 20 percent (say), then after tax, histake home ...