Saving schemes are investment options to grow your money safely and meet your financial goals. The best savings schemes will help you quickly turn your savings into investments and let you invest for a long period. These schemes help you channel your income regularly towards investments, even in small amounts.
Choosing the best saving scheme will also help lower the annual tax liabilities. Saving schemes include bank deposits, post office schemes, and investments like NSC, KVP and Sukanya Samriddhi Yojana. You can invest money in equity-related or debt-related schemes, or you can invest in fixed deposits, traditional insurance plans and online savings and investment plans, etc.
Saving schemes are financial instruments launched by the Government of India (or public/private banks) to help you achieve your financial goals over a particular period. Different saving schemes have different purposes, and they vary in their investment horizons, interest rates, and tax benefits. Choosing the best saving and investment scheme online means you have to assess your risk appetite and financial affordability.
The returns from the best saving and investment schemes in India are secured since most of them are backed by the Government of India. It is a low-risk investment option that provides you good returns. The interest rate of saving and investment schemes changes from time to time and is decided by the government. The government revises the rates every three to six months.
When you decide to invest in saving schemes, there are several options you can choose from depending on your financial needs and your goal duration.
|Sr No||Saving Schemes||Interest Rate offered|
|1||National Saving Certificate (NSC)||6.80%|
|2||Senior Citizen Saving Scheme (SCSS)||7.40%|
|3||Recurring Deposits (RD)||6 -7%|
|4||Post Office Monthly Income Scheme (POMIS)||6.60%|
|5||Public Provident Fund (PPF)||7.10%|
|6||Kisan Vikas Patra (KVP)||6.90%|
|7||Sukanya Samridhi Yojana (SSY)||7.60%|
|8||Atal Pension Yojana||NA|
|9||Voluntary Provident Fund (VPF)||8.50%|
|10||Employees Provident fund (EPF)||8.50%|
|11||Pradhan Mantri Jan Dhan Yojana||2% above base rate not exceeding 12%|
|12||National Pension Scheme (NPS)||5-12% (Depends on the investment performance )|
National Saving Certificate is a government-backed saving scheme designed to offer you guaranteed returns along with a tax-saving option. This saving scheme has a lock-in period of 5 years and you can invest accordingly in the NSC. Prominent features of this scheme are:
The SCSS is designed keeping in mind the unique needs of senior citizens of India (individuals above 60 years of age). Individuals who have retired early or have opted for Voluntary Retirement Scheme (VRS) and between 55 and 60 years are also eligible for this best saving and investment plan. Features of this scheme are:
Also Read - Form 15G & 15H
Recurring deposits are simple saving schemes that let you save a fixed sum regularly. RDs are the best saving options for meeting your short and medium-term financial goals.
Post Office Monthly Income Scheme or POMIS is a deposit scheme with monthly interest pay-out. This saving scheme will give you a higher interest on the deposit. It is one of the best savings schemes in India if you have a low-risk appetite. The process of investment is very simple. Once you invest in POMIS, you start receiving fixed monthly income in your savings account.
Public Provident Fund or PPF has been one of the best saving schemes in India and one of the first retirement saving schemes for the self-employed. PPF offered the same retirement saving benefits available to organised sector employees, to the self-employed and unorganized sector workforce.
You can invest in Kisan Vikas Patra online or by visiting your nearest post office. This saving scheme is very popular since on maturity you receive an amount double of your investment. Features of this saving and investment scheme are:
Sukanya Samriddhi Yojana is a saving scheme launched by the Prime Minister of India to encourage the parents of a girl child in India to save and secure the child’s future. You can open an account for your girl child aged below 10 years.
Atal Pension Yojana is a saving scheme by GOI aimed at ensuring the financial safety of citizens in old age. The scheme is aimed at ensuring retirement security for the workers of the unorganised sectors and micro and small business owners. This retirement saving scheme has received more than 2 crore subscriptions by the end of FY 2019-20.
Withdrawals from APY are allowed only under the following circumstances:
Voluntary Provident Fund is one of the best monthly saving schemes for employees not subscribed to EPF. You can make an additional contribution of up to 100% of your basic salary and dearness allowance over and above your contribution to the EPF. You get an interest rate of 8.5% (at present) on your investment in this saving scheme.
Loan facility is available from the account in case of emergency, or else you can withdraw the money from this account for:
Employees Provident Fund or EPF is a long-term saving scheme that offers financial security post-retirement. Both employer and employee contribute 12% of the monthly salary to the PF account. The interest rate in this scheme is 8.5%. Contribution to this scheme is eligible for tax deduction under Section 80C.
Your monthly EPF contribution is divided under the following heads towards different objectives:
Pradhan Mantri Jan Dhan Yojana is a saving scheme tailor-made for people who have just starting their financial journey. The account holder can make use of the scheme for reinvestment. PMJDY is highly suitable for people below the poverty line because they don't have to maintain any minimum balance in their accounts. As part of this saving and investment scheme, they receive accidental insurance of Rs 1 lakh and a life cover of Rs 30,000.
National Pension Scheme or NPS is an initiative by the Central Government that aims to give a reliable and secure source of monthly income after retirement. National Pension Scheme is considered one of the best monthly saving schemes in India.
You can easily register online by visiting the portal and opening an account using your AADHAR details. Your employer contributes an amount that is equal to your contribution.
Saving schemes are an important vehicle to channelise your regular savings to build for your future. Various saving schemes in India resolve different challenges of your financial planning . For example, plans like ULIP, NPS, PPF, etc. help you build wealth over time. On the other hand saving schemes like SCSS, Post Office Monthly Income Scheme, pension plans, etc. help you turn your wealth into a stable stream of income.
You can also invest in saving schemes to reduce your income tax liability. However, you should always keep your financial goals in mind while selecting a savings scheme for investment.
|Saving Schemes||Eligibility||Investment Tenure||Investment Amount||Tax Savings|
|National Saving Certificate (NSC)||Indian Citizen & Resident||Min & Max: 5 Years||Min: Rs 100 Max: No Limit||Only investment is exempt|
|Senior Citizen Saving Scheme (SCSS)||Indian Residents
60 years or above
55+ if on VRS
50+ for Defence Personnel
|Min & Max: 5 years + 3 year extension||Min: Rs 100 Max: No Limit||Only investment is exempt|
|Recurring Deposits (RD)||Any Indian Resident or NRI||Min & Max: 12 months to 120 months||Min: Rs 500 Max: No limit||No exemption|
|Post Office Monthly Income Scheme (POMIS)||Resident Indians only||Min & Max: 5 years||Min: Rs 1000 Max: Rs 4.5 lakhs (individual a/c) Rs 9 lakhs (joint account)||No exemption|
|Public Provident Fund (PPF)||Resident Indians Only||Min & Max: 15 years + 5 years ext. (no limit)||Min: Rs 500 p.a. Max: Rs 1.5 lakhs p.a.||Investment, accrued interest & maturity all are exempt|
|Kisan Vikas Patra (KVP)||18 years+ Indian Residents||Min & Max: 124 months||Min: Rs 1000 Max: No Limit||Only investment is exempt|
|Sukanya Sammriddhi Yojana (SSY)||Parents/ Guardians of a girl child below 10 years of age||Min & Max: Until the girl child attains majority, up to 21 years||Min: Rs 500 p.a. Max: Rs 1.5 lakh p.a.||Investment, accrued interest & maturity all are exempt|
|Atal Pension Yojana||Indian Citizens between 18 to 40 years of age||Min & Max: 60 – entry age||Min: Rs 42 p.m. Max: Rs 1318 p.m.||Investment, accrued interest & maturity all are exempt|
|Voluntary Provident Fund (VPF)||Salaried Employees in India||Min & Max: Age at retirement – entry age||Min: Voluntary Max: 100% of salary||Investment, accrued interest & maturity all are exempt for notified VPF scheme|
|Employees Provident fund (EPF)||Salaried Employees in India||Min & Max: Age at retirement – entry age||Min: 12% of Salary Max: 100% of salary||Investment, accrued interest & maturity all are exempt|
|Pradhan Mantri Jan Dhan Yojana||Indian Residents without another Bank Account||Min & Max: No limit||Min: Zero balance Max: up to Rs 1 lakh||No tax benefits, but no TDS as well|
|National Pension Scheme (NPS)||Indian Citizens between 18 – 70 years||Min & Max: 60 – entry age, can continue till 70 years of age||Min: Rs 500 p.a. Max: No Limit||Investment exempt, maturity value exempt up to 60% of fund value|
The best saving and investment schemes in India, as we have seen, are financial instruments that help you achieve your financial goals by investing in instruments that give fixed and guaranteed returns. On the other hand, saving plans are a life insurance plan that also helps achieve your short and long-term goals and provides insurance coverage.
Some of the best online saving and investment plans in India are offered by life insurance companies including Canara HSBC Life Insurance.
Following are the differences between the two:
|Feature||Saving Schemes||Saving Plans|
|Purpose||Secured returns||Good returns with life cover|
|Risk Level||Low||Depends on the type of product|
|Investment Tenure||Short to long term||Long term|
|Returns||Low to medium||Medium. Depends on the product|
|Fixed Returns||Yes||Not always|
Below are three easy and quick steps you can follow to find the best online saving and investment scheme in India:
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Small saving schemes are investment plans launched by GOI to promote savings and provide a venue for small savers to grow their money. These schemes are commonly offered by all Post Office branches and scheduled nationalized banks. These schemes usually do not deduct TDS on invested money.
Senior Citizen Savings Scheme (SCSS) and PPF are two of the best saving schemes for 60+ investors. SCSS allows lump sum investment of retirement benefits up to Rs. 15 lakhs for retirees aged 55 years. Both schemes offer a safe return on investments and tax savings on invested money.
Any Indian resident over 18 years of age can open a PPF account. There is no maximum age limit to open a PPF account which means even senior citizens can invest in PPF.
Yes, most savings schemes are transferable including NSC. You can transfer your NSC account from the current bank to any other bank (or post office) across India. Only when your NSC account has reached maturity, you are not allowed to transfer your account.
Yes, the interest you receive on NSC is taxable. Your investment in NSC is deductible under Section 80C of the Income Tax Act. The interest you receive every year is re-invested, and it comes under Income from Other Sources and hence taxable.
Employees saving plans are offered by an employer to their employees in which they can invest a part of their income for their short and long-term goals.
Ministry of Finance announces PPF interest rates every quarter. For the quarter of April-June 2021, the PPF account has an interest rate of 7.1% per year.
No, the interest rate may change from time to time for these schemes. Usually, the government updates the interest rate every 3 to 6 months.
There is a wide variety of saving schemes and you can choose one depending on your financial situation. Assess your financial milestones and how well you have been aligned to the goals, choose a scheme accordingly. You can also consider best saving plans to fulfil your financial and protection needs. Given below are some of the best saving schemes for investment in India-
There are a few saving schemes that offer tax exemption to the investors and they are:
Here are the top 5 popular small saving schemes available in India:
TERM Insurance PLAN
Life Cover till 99 years of age
Option to Block the premium rate and increase cover by upto 100% at the blocked rate
Option to avail monthly income post attaining 60 years of age
Option to receive total premiums paid in case of no claim
Tax Benefits as per applicable laws
Unit Linked Insurance Plan
8 funds and 4 portfolio strategies to invest
Loyalty additions and wealth booster
Return of Mortality Charge is available on Maturity under all three cover Options
Flexibility of switching between the fund options to take benefits of market movements or change in risk preference