Top Saving Schemes in India: Rates, Tenures, and Benefits

Saving schemes in India are investment opportunities provided by the government and various public sector financial institutions. These schemes are designed to encourage individuals to adopt healthy saving and investment habits.

In India, last year 40% of Indians invested in mutual funds and equity. Increasing the amount of money entering the Indian economy through this method is another advantage of investments in various saving schemes. You may take advantage of investment-like tax exemptions offered by some savings plans by using government-backed saving programs, which enable you to let money grow at a higher rate of interest.

Here are the best ten saving schemes in India for 2023, along with key characteristics that will assist you in saving money for your future requirements. If you’re thinking about investing in one, you may consider these.

What are Saving Schemes?

It is tricky to invest money in the right place. That’s why the Indian government has started many savings programs, where you can save money by investing in the best savings plan.

Saving schemes in India are tools that support people in achieving their monetary objectives over a specific time frame. Public/private sector banks, financial organizations, and the Indian government have introduced these programs.

The government or banks’ interest rates for these programs are adjusted regularly. The money you save via these plans can be used for various purposes, including debt repayment, retirement, further education for your children, marriage, and emergencies.

Importance of Saving Schemes in India

• Financial Security: Reliable savings for future needs like emergencies, retirement, and children’s education.
• Tax Advantages: Tax incentives reduce taxable income (e.g., PPF and NSC under Section 80C of the Income Tax Act).
• Competitive Interest Rates: Higher interest rates than regular savings accounts, aiding wealth accumulation.
• Long-term Savings: Encourages long-term savings for goals like buying a house or funding education.
• Minimal Risk: Low-risk investments, insulated from market fluctuations, ideal for conservative investors.
• Fosters a Saving Culture: Regular contributions cultivate a disciplined saving habit.

Popular Saving Schemes:

• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• Senior Citizens Savings Scheme (SCSS)
• Sukanya Samriddhi Yojana (SSY)

Why is it Essential to Invest in Saving Schemes?

For the following reasons, saving schemes in India are crucial for both a nation’s citizens and its economy:

1. Safety

Investing is essential for any unforeseen future. If you invest in savings schemes in India, your surplus money will be better protected for future requirements.

2. Funds for Superannuation

You may create a retirement corpus by regularly investing funds in India’s long-term savings schemes. Beginning to save early will pay off with a sizable capital that you can use after retiring.

3. Long-Term Gains

Investments for an extended time can yield incredible profits because most saving schemes in India employ the compound interest idea to calculate interest. The longest tie time for this plan is 60 years, with a minimum lock-in duration of five years. Long-term investment and compounding gains will result in enormous earnings at maturity.

4. Savings on Taxes

Several saving schemes offer tax savings in India in one form or another, including exemptions, reductions, or a combination of the two. For example, section 80C of the Income Tax Act permits specific plans to claim a tax exemption on investments up to Rs. 1.5 lakh. An additional group of programs provides a deduction for the deposit, interest paid, and balance due at maturity.

5. Eliminate Unnecessary Expenditure

Whenever you possess all your cash with you, there is a chance of buying things you don’t need. But, on the contrary, investing the extra money after you’ve paid your essential bills can aid you in saving money and prevent you from buying redundant objects and services.

Related: 7 Simple Money Management Tips

Advantages of Saving Schemes in India

Some of the benefits of savings schemes in India are:

• Saving schemes offer your family and loved ones much-required financial protection. In addition to the returns, you get from the saving schemes, this extra advantage of protection aids in a much more thorough financial security for your family.
• Investing money regularly can be challenging. Savings plans in India encourage you to develop the habit of financial investment routinely.
• Each person’s life purpose and aspirations are different. Different saving schemes in India also provide options for tenure and rewards and other options for money investment. You can adjust your investment strategy as per your own needs.
• Saving schemes in India provide the same tax advantages as other insurance coverage. Section 80C of the Income Tax Act allows you to receive an exemption for up to Rs 1.5 lakh of your subscription expenses.
• Many people and families might benefit from customized saving programs designed to help them achieve some of their most significant life objectives. Some savings plans are created as investment programs to assist you in completing the high academic priorities you might have intended for your kids.

Government Saving Schemes

When searching for money-saving schemes in India, you have various choices. At the same time, some are governed by the RBI and SEBI, while the Indian state endorses others. A few of such programs also offer some form of income tax benefits or deductions. Some of the best saving plans in India are:

1. Public Provident Fund (PPF)

PPF is a popular savings scheme in India, appealing to all ages due to its secure nature. Contributions are tax-deductible under Section 80C, reducing tax liabilities. The scheme offers an 8% annual interest rate, tax-free. After 15 years, investors can withdraw funds or extend for five more years. The minimum contribution is Rs 500, with a maximum of Rs 1.5 lakh per year, which can be made in a lump sum or 12 installments. Contributions over Rs 1.5 lakh do not receive tax benefits or interest. Joint accounts are not allowed, but a nominee can be designated.

Salient features of PPF

• PPF allows you to borrow money upon the sum you put in PPF. In between the third and fifth years, this loan is available.
• The highest sum of money you may get is 25% of the year following the one during which the loan request was made.
• You may apply for a new loan once you fully pay the first credit in the sixth year.

2. Employees Provident Fund (EPF)

In Employee Provident Fund (EPF), an employed person deposits an identical monetary commitment to the Provident Fund (PF) account. The Employee Provident Fund Organization created the EPF. To enjoy their years of retirement without any stress, people might use EPF funds to assist them in preparing for their retirement ahead of time. In addition, these saving schemes in India assist the person in achieving their financial targets and handling unexpected situations.

Salient features of EPF

• In this investment program, the workers and the employers contribute 12% of the worker’s monthly pay to the PF account each month.
• The yearly rate of return on contributions made to the EPF system ranges from 8% to 12%.
• Each financial year on April 1, the earnings by the interest are deposited to the worker accounts.

3. National Pension System (NPS)

Some Central Government savings schemes provide a dependable supply of earnings upon superannuation. One of them is the National Pension System. Personnel of private companies in both organized and unorganized industries, as well as those working for state and federal governments, are eligible for the program. Comparable to other Saving Schemes in India, NPS covers other qualified salaried workers.

Salient features of NPS

• Indian nationals between 18 and 60 are eligible for the program.
• The employers will provide a share, and the employees will provide the same amount from their monthly income (including government employees).
• Government professionals must pay 14%, while all other individuals must pay 10%.
• By Section 80C, up to a maximum of Rs. 1.5 lakh, both the company’s and the worker’s contributions are tax-deductible. In addition, a further reduction of Rs.50,000 can be claimed by people who make a self-contribution.
• Account owners may withdraw up to 60% of the amount tax-free after retiring. After retiring, you get a monthly pension by purchasing an annuity with the remaining 40% of the money.

4. Sukanya Samriddhi Yojana

The Ministry of Finance, Govt. of India, has announced the Sukanya Samriddhi Yojana. This savings scheme was created primarily to safeguard the monetary stability of female children.

Salient features of Sukanya Samriddhi Yojana

• In comparison to specific alternative Saving Schemes in India, the Sukanya Samriddhi Yojana offers the maximum yearly interest rate of 8.1% on the original sum.
• The Sukanya Samriddhi Yojana account can be opened in India anywhere at the post office or approved bank.
• A person can open an account with a basic amount of Rs.1000 and the highest deposit of Rs.1.5 lakhs in a fiscal year.
• The account holder must make contributions to the fund up to a maximum duration of 14 years. The plan has a maturing period of 21 years from the day of inception.
• Throughout India, the SSY accounts may be moved from one post office or bank to another.

5. Atal Pension Yojana

Helping those living in adversity is the central goal of Atal Pension Yojana. The program is particularly advantageous to those who require government assistance financially and work in the informal economy.

After retirement, the plan holder pays the minimum premium and is eligible for a pension. You must have an existing savings account to avail the benefits of the program.

Salient features of Atal Pension Yojana

• The Atal Pension Yojana program accepts applications from individuals within the age group of 18 and 40.
• A threshold of 20 years must pass before investments in the plan.
• You need to contribute a minimal amount to the system, but if you deposit large amounts, a large amount will be available for the pension.
• People taking Atal Pension Yojana are not permitted to participate in any additional money savings schemes.

6. Voluntary Provident Fund (VPF)

Investing in a Voluntary Provident Fund is a discretionary option for working professionals. However, instead of merely being able to pay 12% of their primary income in the EPF plan, professionals within the VPF program are permitted to deposit their whole basic salary.

Salient features of VPF

• The Employees Provident Fund and Voluntary Provident Fund schemes would be impacted by any payments made to the latter.
• For the fiscal year (FY) 2018–2019, 8.65% p.a. in interest is produced from deposits paid to the plan.

7. Kisan Vikas Patra

By visiting your neighborhood post office, one can invest in the Kisan Vikas Patra, one of the wholly fixed small savings schemes. With a high interest rate of 6.9% per year, this small savings scheme has a 124-month term.

Your investment will have doubled when the ten years and four months (124 months) are through. These government investment schemes emphasize long-term deposits and are appropriate for risk-averse individuals with extra funds.

Salient features of Kisan Vikas Patra

• The minimum deposit is one thousand rupees.
• After 2.5 years, KVP provides assured yields and a preterm encashment alternative. Depending on shifts in interest rates, there is a chance that the maturity term will vary.
• Reducing or excluding the deposit or interest payments from taxes is impossible.
• When applying for bank loans, you may utilize the certification of these Saving Schemes in India as security.

8. Senior Citizens Savings Scheme

The Senior Citizen Saving Scheme (SCSS), accessible in recognized banks and post offices throughout India, aims to give elderly individuals over 60 a steady revenue.

For three types of individuals, this program is appropriate.

• Senior citizens who are 60 years or older can participate in this program.
• Superannuation earnings acquired in the following month of retirement are invested in SCSS by retired people aged 55 to 60 who chose the Voluntary Retirement Scheme (VRS) or Superannuation. It is one of the best 5-year savings plans.
• Ex-Army members who are 50 years of age or older are also eligible for this scheme.

Salient Features of Senior Citizen Savings Scheme

• This program offers an interest rate of 8.7%.
• It is a 5-year savings plan.
• The Senior Citizen Saving Scheme needs a minimum investment is Rs. 1000.
• The permissible highest investment is Rs.15 lakh.
• Tax deductions for the principal sum deposited are permitted.
• Earning via interest from this Saving Schemes in India is also tax-free.

9. National Savings Certificate

Indian nationals can acquire NSC from just about any post office. This saving option is favored by people seeking secure investment opportunities because the Govt of India supports them, carries minimal risk, and offers the benefit of tax savings.

Salient features of the National Savings Certificate

• This is a 5-year saving plan with an interest percentage set by the Ministry of Finance at 7-8% PA each fiscal year.
• These certificates are compound interest schemes in India with an 8% yearly interest rate 8% yearly for the fiscal year 2019–20.
• The lowest deposit amount must be Rs.100, but there is no upper restriction on the total deposit sum. However, only Rs. 1.5 lakh per year is eligible for tax relief under Section 80 C.
• Earnings via interest of saving schemes in India aren’t tax-exempt, which is an additional crucial thing to keep in mind.
• The investor is not given any interest payments; instead, they accrue in the bank. Thus, interest earned each year could be regarded as a sum that has been reinvested; as a result, it would qualify for a new deduction under Section 80C.

10. Post Office Savings Scheme

Several finance-based services, such as banking, insurance, and investments, are available through post offices in India. These money-saving schemes’ primary benefit is their constitutional guarantee or the fact that the state is behind them. Per Section 80C of the Income Tax Act, several post office savings schemes also provide tax advantages.

Salient features of Indian Post Office schemes

Here is the list of schemes offered by the Indian Post Office.

• The Post Office Savings Account functions much like typical savings accounts at any other bank and may be moved across India from one post office to another.
• The National Savings Recurring Deposit Account assists modest and low depositors in building a reserve to support their future requirements. Investors can open an individual or joint account.
• By creating a National Savings Time Deposit Account, you can receive benefits for your investment in a 5-year post office term deposit. The Income Tax Act of 1961-Section 80C makes the transaction deductible.
• The National Savings Monthly Income Account program allows investors to make a set contribution and get a fixed monthly income. It is one of the simplest and best saving schemes in India.

Saving Schemes	Interest Rate	Investment Tenure	Minimum Investment Amount	Maximum Investment Amount	Tax Savings
Public Provident Fund	7.10%	15 years	Rs 500	Rs 1.5 lakh/year	Tax exemption
Employees Provident Fund	8.50%	58 years/age	12% of Basic Salary	Rs 2.5 lakh	Tax exemption
National Pension System	2%	60 years/age	Rs 1000	Rs 2 lakh	Investment exemption
Sukanya Samriddhi Yojana	7.60%	15 years	Rs 250	Rs 1.5 lakh/year	Tax exemption
Atal Pension Yojana	5%	5 years	Rs 1000	Rs 5000	Only investment exemption
Voluntary Provident Fund	8.50%	15 years	No minimum amount	Rs 2.5 lakh	Tax exemption
Kisan Vikas Patra	6.90%	10.5 years	Rs 1000	No maximum limit	Only investment exemption
Senior Citizens Savings Scheme	7.40%	5 years	Rs 1000	Rs 15 lakh	Only investment exemption
National Savings Certificate	6.80%	5 years	Rs 100	No maximum limit	Only investment exemption

Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme (POMIS) is a savings initiative supported by the government through India Post. It aims to deliver a consistent monthly income to investors, making it especially appealing for retirees and individuals in need of a reliable income source.

1. Interest Rate: Currently, the interest rate stands at 7.4% per annum.
2. Tenure: The scheme is set for a fixed duration of 5 years.
3. Investment Limits: The minimum investment is ₹1,000, while the maximum is capped at ₹9 lakhs for individual accounts and ₹15 lakhs for joint accounts.
4. Monthly Payouts: Investors receive interest payments on a monthly basis, ensuring a steady income flow.
5. Risk: This investment option is considered low-risk, as it is guaranteed by the Government of India.

This scheme is particularly advantageous for those seeking a trustworthy and secure investment avenue with consistent returns.

How to Find the Best Saving Scheme?

1) Purpose of Investment

Before investing in money-saving schemes, know what is the main purpose of your investment. You can start by asking questions like how much you want to invest and for how long. Also, decide beforehand whether you want tax benefits on your investment or not.

2) Shortlist the Saving Schemes

After defining your objective now list the different and best savings schemes accordingly. You must stick to that saving scheme till the return of the money.

3) Look for Maximum Return Schemes

When choosing savings schemes in India, your main objective should be to get maximum growth on your invested money. Also, see whether those plans offer tax benefits or not. If your main objective of the investment is to save tax then invest only in those govt savings schemes which offer tax benefits.

Invest in Saving Schemes in India

There is a wide range of savings schemes in India that you can choose from for investment. Investment options increased with the support of the government, public/private banks and authorized financial firms. All these schemes guarantee both capital protection and an excellent rate of growth. While selecting savings schemes in India, consider the various interest rates, tax treatment and lock-in time options. There are many big and small savings schemes that you can use to avail income that suits you perfectly.

Conclusion

In conclusion, numerous saving schemes are available, each designed to accommodate different risk appetites and investor profiles. Since all these options are backed by the government, they offer both capital protection and the potential for attractive returns. When choosing the right scheme, consider factors such as interest rates, tax implications, and lock-in periods. To maximize your wealth growth, you might also explore a mix of the top savings schemes available.

Frequently Asked Questions (FAQ’s)

Here are some related resources:

• National Saving Certificates (NSC): Secure Financial Growth
• What is PPF? Investing for Your Future
• How To Invest Money For Beginners
• The Ultimate Guide to Finding Your PF Number: Everything You Need to Know