From PPF to NSC, best government savings schemes with their salient features

There are various savings schemes available for investment, offered by both the government as well as public sector financial institutions. These savings schemes cater to a wide range of individuals and encourage people to invest for various goals in life such as children’s education, marriage, retirement, etc.

There are also a variety of savings schemes to cater to a wide range of investors based on their risk profile. Some of the popular government savings schemes include Public Provident Fund (PPF), National Savings Certificate (NSC), Post Office Savings Account, Post Office Time Deposit, Post Office Recurring Deposit, Post Office Monthly Income Scheme (POMIS), Kisan Vikas Patra (KVP).

Most of these government savings schemes are popular among investors as they are reliable, low risk and secure. Experts say some of these are ideal for long-term wealth creation. As these investment options are not impacted by market volatility, they are considered as safer investment options, especially for the conservative investor. Some of these investment options come with a lock-in period and inflation-beating returns. Along with that, to keep up with the rising costs and inflation, the interest rates are revised quarterly or half-yearly on some of these savings schemes.

Public Provident fund (PPF) – Any individual can make a minimum investment of Rs 500 per year, and up to a maximum investment of Rs 1.5 lakh per year. The interest rate earned by the investor is 7.1 per cent p.a. compounded annually. Investors also get a tax deduction of up to Rs 1.5 lakh.

National Savings Certificate (NSC) – One can make a minimum investment of Rs 1000, with no upper limit. The interest rate earned by the investor is 6.8 per cent p.a. compounded annually. A tax deduction can also be claimed on the deposit made up to Rs 1.5 lakh.

Post Office Savings Account – Any resident individual can start with a minimum investment of Rs 500, with no upper limit of investment. The interest rate offered is 4 per cent p.a. The interest earned with a post office savings account is tax-free.

Post Office Time Deposit – An individual can make a minimum investment of Rs 1000, with no cap on maximum investment. The interest rate offered is 5.5 per cent for the first 3 years, and 6.7 per cent for a deposit tenure of 5 years. Tax deduction under Section 80C of the Income Tax Act, 1961 offered up to 5 years on deposit.

Post Office Recurring Deposit – One can make a minimum investment of Rs 100, with no upper limit. The deposit can be made by an individual alone or jointly. The interest rate offered is 5.8 per cent. The interest is taxable, with no deduction on deposit.

Post Office Monthly Income Scheme (POMIS) – One can make a minimum investment of Rs 1000 with a maximum of Rs 4.5 lakh in a single account and Rs 9 lakh in a joint account. The interest rate offered is 6.6 per cent per annum payable monthly. The interest is taxable, and no deduction is allowed on deposits.

Kisan Vikas Patra (KVP) – An individual can make a minimum investment of Rs 1000, with no upper limit. The interest rate offered is 6.9 per cent p.a. compounded annually. Interest tax, the amount received on maturity exempted. With this investment option, the amount invested doubles in 10 years and 4 months (124 months).