Saving Schemes in India

Saving Schemes in India

In terms of their popularity, the following Government of India saving schemes lead the pack,

National Saving Certificate (NSC) and National Saving Scheme(NSS)

Consistently, two of the most well followed and popular saving schemes in India, NSC and NSS offer great security alongside robust reliability in terms of returns. The primary features and benefits of these schemes are as follows-

Features of National Saving Certificate

1. No maximum limit for investment with 0% tax deduction at source.
2. Impressive interest rate at 8.50% (NSC-VIII issue) and 8.80% (NSC-IX issue).
3. Tax savings per 80C of Income Tax Act for investments in excess of Rs.1,00,000 per annum.
4. Very attractive returns, a nominal investment of Rs.100 will yield Rs.234.35 in 10 years.
5. These certificates can be transferred from person to another once through the lifetime of the certificate.
6. The tenure of an NSC portfolio is 5 and 10 years for the NSC VIII Issue and NSC IX Issue respectively.
7. The interest accumulated annually is reinvested in line with the provisions of Section 80C of IT Act. Interest compounded on a half-yearly basis.
8. Can be used as collateral when applying for a bank loan.

Features of National Saving Scheme

1. Income tax exemption on principal amount as well as earned interest upto Rs.9,000.
2. Interest compounded annually.
3. Cannot be pledged as security when applying for any bank loan.
4. Impressive interest rate of 9% per annum.
5. The tenure of an NSS portfolio is four years.

Public Provident Fund (PPF)

A potent financial instrument that is tuned at savings in general and tax savings in particular, the PPF concept was floated by the National Savings Institute, Finance Ministry of India, in 1968. The PPF scheme offers a plethora of features and benefits that make it a popular option in its class.

1. Interest rate of 8.70% p.a is compounded annually.
2. Minimum yearly investment of just Rs.500 to a maximum of Rs.1,50,000.
3. The maturity period of a PPF account is 15 years. However, this can be extended for upto 5 additional years.
4. A maximum of 12 deposits can be made in a financial year. Lump sum payments are also an option.
5. Joint accounts aren’t possible, plus, PPF accounts cannot be closed before the maturity period.
6. PPF accounts can be moved from one bank/post-office to another.
7. Accumulated interest is completely tax free.
8. PPF accounts save tax under Sec. 80C of the IT Act.
9. Applicant can avail loan with the PPF account as collateral from the 3rd financial year.

Post Office Saving Scheme

In the Indian context, the legendary Indian Postal system has always played a key role in helping inculcate the habit of financial savings amongst the Indian public. The local post office is seen as more approachable (especially amongst the semi-urban and rural folks) and more customer friendly in terms of higher returns and limited inherent procedures. The Post Office Saving Schemes include a plethora of products that offer the reliability associated with a government run savings portfolio, and the full-scale treatment that is characteristic of most high-end saving and investment schemes in India. A fair list of such products are as follows-

1. Post Office Savings Account
2. 5 Years Post Office Recurring Deposit Account
3. Post Office Time Deposit Account
4. Post Office Monthly Income Account Scheme
5. Senior Citizens Saving Scheme
6. 15 Years Public Provident Fund Account
7. National Savings Certificates (NSC)- 5 Years NSC (VIII Issue) and 10 Years NSC (IX Issue)
8. Kisan Vikas Patra (KVP)
9. Sukanya Samriddhi Account

Senior Citizen Saving Scheme (SCSS)

This saving scheme option is exclusive to senior citizens in India. Ideally, the applicant must be 60 years or more but those between the ages of 55-60 years, are retired or have opted for VRS, can also apply, provided that the account is opened within one month of the receipt of their retirement benefits. The salient features of SCSS are as follows-

1. Interest rate of 9.3% p.a, payable on any of the following dates in an year- 31st March, 30th June, 30th Sept and 31st December.
2. The tenure of a SCSS portfolio is 5 years.
3. The applicant can make only one deposit into the account. This amount should be in multiples of Rs.1,000 and must not exceed a maximum of Rs.15 lakhs.
4. The account can be transferred from one post office/bank to another.
5. The SCSS account can be closed prematurely, provided the applicant shells out 1.5% of the deposit amount in the first year and 1.0% of the deposit amount in the second year.
6. Post the maturity of the account, the tenure can be extended for a further 3 years. After completing 1 year of this extension period, the account can be prematurely closed without any deductions.
7. TDS is deducted at source on the accumulated interest if the latter exceeds Rs.10,000 p.a.
8. SCSS accounts save tax as per the Section 80C of the Income Tax Act, 1961.

Kisan Vikas Patra (KVP)

First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows-

1. The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months).
2. KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000.
3. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit.
4. KVPs are available at all departmental post offices across India.
5. These certificates can be prematurely encashed after 2 ½ years from the point of issue.
6. KVPs can be transferred from one individual to another and from one post office to another.

Sukanya Samriddhi Account

A premier saving scheme offering from the Indian Ministry of Finance, the Sukanya Samriddhi Yojana (SSY) Accounts are aimed at ensuring a bright future for the girl children in India. This ambitious and resourceful scheme was launched by the honourable Prime Minister of India, Mr. Narendra Modi, and has quickly emerged as a popular savings scheme that aims to provide financial backing for a girl child’s varied, lifelong aspirations. The thoughtful features of this scheme are as follows-

1. Attractive interest rate at 9.2% p.a. This is infact one of the highest rates of interest in its class.
2. Account can be opened at any departmental post office or authorized banks in India.
3. The opening amount for the SSY account is Rs.1000. Thereafter, deposits can be made in multiples of Rs.100. The minimum deposit into the account must amount to Rs.1000, the maximum limit is Rs.1,50,000 per year.
4. The SSY account attains maturity in 21 years from the date of issue. However, the account holder is expected to pay into the account for a total duration of 14 years.
5. A SSY account can be transferred from one post office/bank to another, anywhere in India.

Atal Pension Yojana

Named after one of India’s most popular erstwhile Prime Ministers, the Atal Pension Yojana is aimed squarely at the weaker sections of the society as well as those individuals who can benefit from a government sponsored welfare program. The central premise of this scheme is to provide the pension option to individuals who are working in the unorganized professional sectors and aren’t covered by any regular pension plans. Applicants pay a very low premium and enjoy the fruits of a robust and reliable pension plan. The salient features of the Atal Pension Yojana are as follows-

1. Citizens of India between the age groups of 18-40 years can apply.
2. The applicant is expected to regularly pay premiums for a minimum duration of 20 years. Since most individuals step into the pension years at the age of 60- the upper limit for application is set at 40 years.
3. The applicant must have an active savings bank account.
4. The applicant must not have subscribed to any other statutory social security schemes.
5. Actual pension amount depends on the tenure of premium payment. The higher number of premiums paid, the higher will be the payable pension amount.

Employee Provident Fund (EPF)

Administered by the Employees' Provident Fund Organisation (EPFO), the Employee Provident Fund (EPF) targets Indian workers through a system of compulsory monetary contribution into a specified ‘provident fund’ account that will act at a later date as their retirement fund, or could also be treated as emergency funds for unforeseen or planned financial requirements. In essence, the employer and employee each contribute 12% of the latter’s salary amount into this provident fund account on a monthly basis. EPF is one of the shining success stories when it comes to government sponsored saving schemes in India with massive popularity and vast implementation.
The interest rate applicable on the amount accumulated in the EPF account is decided by the government and has traditionally ranged between 8-12% of the funds maintained in the account. The interest is credited to the concerned account on the 1st April each year. The EPFO office sends annual reports through the employer that the concerned employee can use to get clear bearings on the amount accumulated in his/her account. Also, EPF related information can be sourced from the EPFO’s official website.

National Pension System (NPS)

The retirement years are always fraught with great change and slowing down of the usual pace of life. This is the time when sources of income may be limited due to the individual’s advancing age and/or the unavailability of income options that suit said individual’s capabilities. The National Pension System aims to negate such scenarios- offering retired individuals the security of a regular income (pension) thanks to small investments made to this pension fund while they were gainfully employed. The subscriber enjoys the lump sum amount, broken down through an annuity plan, and served on a monthly basis as the regular income.
The NPS scheme is available to employees of state and central government organizations, employees of corporate and MNC entities, individuals as well as workers from the various unorganized sectors. The contribution to the NPS account, when speaking of employees from the central/state government organizations, is 10% deduction from said employee’s monthly salary appended with an equal contribution from the government. In other cases, the applicant must treat the NPS as any other long term savings instrument and action the requisite, timely investments. Naturally, the National Pension System is one of the enduring favorites when it comes to long term saving schemes in India.

Voluntary Provident Fund (VPF)

The term ‘voluntary’ signifies willingly or doing something when guided by their own free will. The concept of Voluntary Provident Fund (VPF) draws on this, wherein the subscriber willingly contributes upto 100% of their basic salary and dearness allowance into their respective Employee Provident Fund (EPF), instead of the usual 12%. The reservoir for such funds is the concerned employee’s EPF account, meaning, any activity concerning the employee’s VPF will impact the EPF portfolio too, and vice versa. For the financial year 2014-15, the VPF account doles out an interest rate of 8.75% on the accumulated funds.

Deposit Scheme for Retiring Govt Employees

This scheme is particularly targeted to benefit retiring public sector employees. A simple savings scheme that draws on its ease of registration, documentation and terms to draw a massive following. An account of this nature can be opened with a locally payable cheque, DD, etc, alongside a certificate from the employer that indicates the nature of retirement benefits that are applicable to the prospective applicant. The interest accrued will be paid from the date of deposit to 30th June/31st December of said year, followed by half-yearly payments as of 30th June or 31st December. The depositor cannot make any withdrawals during the first year of the account’s existence- the same can be accomplished anytime after completing the first year from the point of account creation.http://atyfbnrsocialwelfare.blogspot.fr/2016/04/saving-schemes-in-india.html