The new tax regime may reduce the lure of tax exemption, but crores of investors in the country still have faith in government small savings schemes. This is the reason why the amount deposited in the National Small Savings Fund (NSSF) has reached ₹ 2.17 lakh crore till January 10 during the financial year 2025-26. This figure is about two-thirds of the budget estimate for the entire year, which has given a big relief to the government.
Generally, the highest investment in small savings schemes is seen in the March quarter, when people invest a large number of money in PPF, Sukanya Samriddhi Yojana and other schemes to save tax. In such a situation, officials are hopeful that the total collection of NSSF in the current financial year may exceed the initial target.
Big relief to the government
The central government is getting the direct benefit of this amount coming in more than the budget estimate. More deposits mean that the government will have to borrow less from the market. This is why the government has reduced its offtake from NSSF to ₹3.43 lakh crore for 2025-26, which is less than the revised estimate of ₹4.12 lakh crore for the last financial year. The government aims to limit fiscal deficit to 4.4% in the next financial year, from 4.8% a year ago.
New tax regime ineffective
It is noteworthy that in the last budget, the new tax regime was made more attractive, after which about 75% of the taxpayers have shifted to this system. In the new tax regime, there is no tax exemption on small savings, whereas in the old tax system, investment amount up to ₹ 1.5 lakh is available under Section 80C. Despite this, the pace of investment in small savings schemes did not slow down.
attraction of higher interest
Officials say that the main reason for this is the attractive interest rates. In the last one year, RBI has reduced the repo rate by 125 basis points, which has put pressure on bank FD interest rates. In contrast, PPF is getting 7.1% interest and Sukanya Samriddhi Yojana is getting 8.2% interest. The rates of schemes like Senior Citizen Savings Scheme, National Savings Certificate and Kisan Vikas Patra are also attracting investors.
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