Saving schemes are plans where you put aside money regularly to build savings for future needs or goals. These savings will help you during emergencies, at the time of job loss, or after retirement. The lock-in period and interest rates for these schemes, decided by the government or banks, are regularly updated.
Scheme
Interest Rate
Tax Deduction
Minimum Investment (monthly in INR)
National Saving Certificate (NSC)
7.7% p.a.
Up to Rs. 1.5 lakh
under Section 80C
1000
Senior Citizen Saving Scheme (SCSS)
8.2% p.a.
Up to Rs. 1.5 lakh
under Section 80C
1000
Recurring Deposits (RD)
3.5% - 6.7% p.a.,
based on bank
No tax deduction
100
Post Office Monthly Income Scheme (POMIS)
7.4% p.a.
No tax deduction
1500
Public Provident Fund (PPF)
7.1% p.a.
Up to Rs. 1.5 lakh
under Section 80C
500
Kisan Vikas Patra (KVP)
7.5% p.a.
No tax deduction
1000
Sukanya Samridhi Yojana (SSY)
8.0% p.a.
Up to Rs. 1.5 lakh
under Section 80C
250
Voluntary Provident Fund (VPF)
8.15% p.a.
Up to Rs. 1.5 lakh
under Section 80C
No minimum
Employees Provident fund (EPF)
8.15% p.a.
Up to Rs. 1.5 lakh
under Section 80C
12% of the employee's salary (Basic + DA)
National Pension Scheme (NPS)
10% p.a. to 15.33% p.a., based on the lock-in period and asset class
Up to Rs. 1.5 lakh
under Section 80C
Or
10% of the employee's salary (Basic + DA)
under Section 80 CCD(1)
1000
Seeking guaranteed long-term returns with tax benefits? NSC offers secure growth over 5-10 years, perfect for retirement planning. There is no maximum limit for investing; one can make an initial investment of Rs 100. Taxpayers can avail of tax benefits under 80C of the Income Tax Act of 1961. However, it is not suitable for short-term needs; also, you cannot benefit from rising interest rates during the tenure.
Minimum Investment
Rs. 1000
Investment period
5 Years
Rate of Interest
7.7% p.a.
Tax Benefits
Up to Rs. 1.5 lakh under Section 80C
Withdrawal Facilities
Premature withdrawal allowed after 1 year with penalty
Pros
Cons
Low-risk and granted returns
Nomination is only for death, not maturity, which can cause inheritance hurdles
You can choose a tenure that suits your goals
SCSS is a Post Office savings scheme, a type of government-backed retirement benefits programme. Indian senior citizens can invest a lump sum in the scheme, individually or jointly, and get access to regular income along with tax benefits.
Minimum Investment
Rs. 1000
Investment period
5 Years, Can be extended for another 3 years
Rate of Interest
8.2% p.a.
Tax Benefits
Up to Rs. 1.5 lakh under Section 80C
Withdrawal Facilities
Premature withdrawal allowed after 1 year with a penalty (1-1.5% of the total deposited amount)
Pros
Cons
High-interest rates for seniors
Only open to individuals above 60 years
Simple investment option
You can choose to receive monthly interest payments
Banks and post offices offer recurring deposit schemes in India allowing investors to save a fixed amount of money every month for a fixed tenure and earn interest on it. However, compared to other schemes, returns might be lower, but the flexible tenures (6 months to 10 years) and low minimum investments make it a good choice for those seeking a good regular saving option with a short-term to long-term lock-in period.
Minimum Investment
Rs. 100 per month
Investment period
6 Months to 10 Years
Rate of Interest
3.5% - 6.7% p.a., based on bank
Tax Benefits
No tax deduction
Withdrawal Facilities
Premature withdrawal allowed after 3 years with penalty (0.5% of premature withdrawal of Deposit.)
Pros
Cons
Flexibility in choosing the investment amount and lock-in period
Premature withdrawal reduces your overall returns.
Low minimum investment encourages regular savings habits
Do you need a steady monthly income scheme after retirement? POMIS delivers just that, along with guaranteed returns. The scheme has a tenure of 5 years and provides a fixed monthly income to investors, making it ideal for retirement income generation.
Minimum Investment
Rs. 1500
Investment period
5 years
Rate of Interest
7.4% p.a.
Tax Benefits
No tax deduction
Withdrawal Facilities
Premature withdrawal allowed after 1 year with a penalty (2% of the deposited amount)
Pros
Cons
Government-backed, safe, and reliable option
The maximum investment limit is Rs. 4.5 lakhs
Easy to understand and manage
PPF is a long-term tax-saving investment option in India. It has a tenure of 15 years, offering tax benefits under Section 80C of the Income Tax Act of 1961. The long lock-in period and limited flexibility in withdrawals could be drawbacks. At the same time, the guaranteed high returns and long-term tax benefits make it a powerful choice for retirement planning.
Minimum Investment
Rs. 500
Investment period
15 years, Can be extended for another 5 years
Rate of Interest
7.1% p.a.
Tax Benefits
Up to Rs. 1.5 lakh under Section 80C
Withdrawal Facilities
Partial withdrawal allowed after 5 years with penalty (1% reduction in the interest rate)
Pros
Cons
Tax-free maturity
Long lock-in period with limited liquidity
Competitive interest rates for long-term investment
KVP is a government-backed savings scheme that doubles a one-time investment in approximately 9.5 years (115 months). The scheme is designed to encourage long-term financial discipline in people. The scheme provides guaranteed returns to the investors, making it an ideal choice for rural investors seeking attractive compounding returns and guaranteed maturity value.
Minimum Investment
Rs. 1000
Investment period
It doubles one-time investment in a period of approx. 9.5 years
Rate of Interest
7.5% p.a.
Tax Benefits
No tax deduction
Withdrawal Facilities
Premature withdrawal allowed after 2.5 years without penalty and after 1 year with penalty
Pros
Cons
Grows your money significantly over time
Interest is fully taxable
No maximum limit for investment
Flexible denominations available
SSY is another best tax-saving investment option in India that helps parents save money for their girl child's education or marriage. The scheme has a tenure of 21 years and offers tax benefits under Section 80C of the Income Tax Act of 1961.
Minimum Investment
Rs. 250
Investment period
21 years from the account opening
Or
Upon her marriage after attaining 18 years
Rate of Interest
8.0% p.a.
Tax Benefits
Up to Rs. 1.5 lakh under Section 80C
Withdrawal Facilities
Partial withdrawal allowed after attaining 18 years Or
After 15 years of Account opening on payment of a penalty of Rs.50 per default year
Pros
Cons
Guaranteed returns
Only available for girl children
High-interest rates
Looking for a fixed deposit scheme in India to boost your retirement corpus by contributing beyond mandatory EPF? The voluntary Provident Fund (VPF) is another good option for salaried individuals seeking higher long-term returns. With the VPF scheme, you make a voluntary contribution to your provident fund account that also offers up to 1.5 lakh tax benefits.
Minimum Investment
No minimum
Investment period
5 Years
Rate of Interest
8.15% p.a.
Tax Benefits
Up to Rs. 1.5 lakh under Section 80C
Withdrawal Facilities
Withdrawal is allowed within 5 years, but the deduction will be liable to tax
Pros
Cons
Transferable between jobs, ensuring continuity
No employer contribution
You can choose your contribution percentage
EPF is a government-backed retirement benefits programme offering guaranteed returns and government contributions. The scheme is mandatory for salaried individuals who earn less than Rs. 15,000 per month, and others who earn more than 15,000 per month can stay in the scheme voluntarily.
Minimum Investment
12% of the employee's salary (Basic + DA)
Investment period
100% withdrawal allowed when the subscriber reaches the age of 58 years
Rate of Interest
8.15% p.a.
Tax Benefits
Up to Rs. 1.5 lakh under Section 80C
Withdrawal Facilities
Partial withdrawal allowed after 5 years
Pros
Cons
Encourages long-term financial planning
Premature withdrawal is allowed only under certain circumstances
Secure interest in both your and your employer's contributions
Looking for a flexible, tax-saving investment scheme with potentially higher returns than fixed deposit schemes in India? NPS can be a good choice for you. It is open to all Indian citizens between the ages of 18 and 65 and offers tax benefits up to 1.5 lakh or 10% of the basic salary and DA.
Minimum Investment
Rs. 1000
Investment period
Until Retirement
Rate of Interest
10% p.a. to 15.33% p.a., based on lock-in period and asset class
Tax Benefits
Up to Rs. 1.5 lakh
under Section 80C
Or
10% of the employee's salary (Basic + DA)
under Section 80 CCD(1)
Withdrawal Facilities
Partial withdrawal allowed after 3 years
Pros
Cons
Offers higher returns over the long term
Fluctuations can impact returns significantly
High-interest rates
Security: Saving schemes provide a safe way to grow your money.
Regular Savings: Such schemes also encourage consistent savings over time.
Financial Goals: Helps achieve various goals like education, marriage, or buying a home.
Government Backing: Some schemes are backed by the government, ensuring reliability.
Interest Earnings: Earn interest on your savings, increasing your overall funds.
Flexible Options: Different schemes cater to diverse needs and preferences.
Tax Benefits: Certain schemes offer tax advantages, reducing your tax liability.
Low Risk: Generally, these schemes have lower risks compared to other investments.
Retirement Planning: Ideal for building a fund for a secure retirement.
Easy Accessibility: Provides easy access to your savings when needed.
Research: Look into various saving schemes offered by banks and financial institutions.
Compare Interest Rates: Compare the interest rates provided by different schemes.
Understand Lock-in Periods: Know the lock-in periods for each scheme before making a decision.
Consider Your Goals: Choose a scheme that aligns with your financial goals, whether it's for emergencies, education, or retirement.
Check Government Backing: Confirm if the government backs the saving scheme for added security.
Read Reviews: Look for reviews or opinions from others who have invested in the same scheme.
Consult Financial Advisors: Seek advice from financial advisors to make an informed decision based on your unique situation.
Feature
Saving Schemes
Investment Schemes & Saving Plans
Primary Goal
Preserve capital, earn low but guaranteed returns
Grow capital, potentially earn higher returns at higher risk
Risk Level
Low to no risk
Low to high risk, depending on the chosen scheme
Returns
Fixed, guaranteed interest rates
Potentially higher returns, but not guaranteed
Liquidity
Easy access to funds with minimal penalty
Access may be restricted with penalties for early withdrawal
Tax Benefits
May offer some tax benefits like interest deduction
Often offer tax benefits like EEE (Exempt-Exempt-Exempt)
Examples
Savings accounts, fixed deposits, post office monthly income schemes
Mutual funds, stocks, bonds, PPF, NPS, Kisan Vikas Patra
Best for
Short-term goals, emergency funds, low-risk tolerance
Long-term goals, building wealth, and higher risk tolerance
Whether you want to keep things safe, aim for growth, or find a mix of both, you have a bunch of options designed for different money goals. Just make sure to pick one that matches your goals, considering factors like how much risk you're comfortable with, how easy it is to access your money, and what kind of returns you're looking for. Stay tuned with us to explore more investment opportunities.
An Employee Saving Plan is a financial program provided by employers to help employees save and invest for their financial goals.
The Senior Citizens Savings Scheme (SCSS) is a government-based saving scheme that offers one of the highest interest rates.
Not all saving schemes are tax-free; taxation varies based on the scheme and its features.
Different fees, such as account maintenance charges, may be applicable to post office savings schemes.
The interest rate for saving schemes can be fixed or variable, depending on the type of scheme and its terms.
Author Name: Moumita Guin
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