4 Best Government's Saving Schemes

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          Just think you have a safe deposit box where you keep a side a part of your income or saving amount and earn interest on it. Yes, it is government saving scheme. 
           
          Government saving scheme are launched to strengthen the financial stability of the people. All the schemes are known for their long term benefit as well as tax exemption. These schemes are consider to be safe and secure. In this post, I have choosen 4 best schemes which I think are good to invest in. 

1. PUBLIC PROVIDENT FUND (PPF)           
          It is a long term investment with the objective to mobilize small saving in a form of investment, coupled with a return on it. It is also called saving-cum-tax saving investment.
  • Eligibility: Any Indian citizen can invest in PPF. NRIs and HUFs are not eligible. One citizen can open one PPF account only.
  • Rate of interest: Currently it is 7.1% p.a. It is revised every quarter. Interest in PPF account is calculated monthly on the lowest balance between close of the 5th day and last day of every month.
  • Maturity period: The maturity period is 15 years which can be extended in blocks of 5 years.
  • Investment limit: It allows minimum investment of Rs.500 and maximum investment of Rs. 1.5 lakh for each financial year. You can deposit lump sum amount or in installations (maximum 12 installations are allowed).
  • Deposit frequency: You need to deposit once every year.
  • Withdrawal rules:
  • Loan against PPF: You can take loan against PPF account between 3rd and 5th year. The loan amount can be maximum of 25% of the balance at end of 2nd year.
  • Taxation: It is designated as EEE (Exempt, Exempt, Exempt) investment. This means that the principle amount invested, interest earned and maturity amount are tax free. 

2. NATIONAL SAVING CERTIFICATE (NSC)         
          It is fixed income investment as well as tax saving investment that can be purchased from any post office.
  • Eligibility: Any Indian citizen can invest in NSC. NRIs and HUFs are not eligible.
  • Rate of interest: Currently, the rate of interest is 6.8% p.a. It is revised by government in every quarter.
  • Maturity period: The maturity period is 5 years.
  • Investment limit: The minimum amount to be invested in NSC is Rs. 1000 while there is no maximum limit.
  • Power of compounding: Interest gets compounded and reinvested by default. 
  • Premature Withdrawal: Generally, one cannot exit the scheme early but in exceptional cases such as death of investor or with a court orders, they can exit.
  • Loan against NSC: NSC are accepted as collateral or security for secured loan in banks and NBFCs. In such cases, a transfer stamp is put on the certificate and transferred to the banks while disbursing loan. 
  • Taxation: Principle amount invested up to the Rs. 1.5 lakh is allowed for tax deduction under Section 80C. TDS is not applicable under the NSC. However, the interest earned on maturity is taxable.
  • Transfer of certificate: You can transfer from one post office to another or from one individual to another.
3. POST OFFICE TIME DEPOSIT (POTD) - 5 years
          They are similar to bank FDs. A term deposit can be placed for any of the 4 tenures - 1,2,3, and 5 years. Here I am discussing about 5 year POTD. 
  • Eligibility: Any Indian citizen can open POTD account. NRIs and HUFs are not allowed to open a account.
  • Rate of interest: Currently, it is 6.7% p.a. for 5 years. It is revised by government in every quarter.
  • Maturity Period: The maturity period is 5 years which can be extended upon its maturity.
  • Investment limit: The minimum amount to be invested in POTD is Rs. 200 and there is no maximum limit.
  • Premature Withdrawal: You can withdraw funds even before its maturity. The only condition is that minimum 6 months have been passed from the date of first deposit. If you withdraw fund between completion of 6 months and 1 year, the interest rate applicable are post office saving account rates. And if you withdraw after 1 years than interest rate applicable is 1% less than the interest rate you booked the POTD.
  • Loan against POTD: You can get loan against POTD.
  • Taxation: The deposit made for 5 years POTD is eligible for tax benefit while interest earned on amount is taxable.
  • Transfer of POTD: It is easily transferable from one post office to another post office.

4. SUKANYA SAMRIDDHI YOGANA (SSY)
          It is a saving scheme as a part of Beti Bachao, Beti Padhao Campaign for the benefit of girl child. It can be opened by a parent of girl child below the age of 10.
  • Eligibility: SSY account is open by the parents of girl child who has not attain the age of 10 years. One account is allowed for single girl child and maximum two account for family for each girl child.
  • Rate of interest: Currently, the rate of interest is 7.6% p.a. It is revised by government in each quarter. 
  • Maturity Period: The maturity period of SSY is 21 years from the date of account opening.
  • Investment Limit: The minimum amount to be invested in SSY is Rs. 250 and maximum amount allowed is Rs. 1.5 lakh for a financial year.
  • Deposit Frequency: You need to deposit Rs. 250 once in year. There is no limit on number of deposit either in a month or financial year.
  • Partial Withdrawal: The girl can have partial withdrawal (50% of the balance) after attaining the age of 18 years for higher education expenses. 
  • Premature Closure: It can be done by girl on attaining the age of 18 years for the purpose of marriage expenses. In some special case such as death of account holder or inability to continue the account, an account can be closed.
  • Loan against SSY: There is no option of availing a loan on the basis of balance available in SSY account.
  • Taxation: SSY investment are designated as a EEE investment. This means that the pricipal amount invested, the interest earned and maturity amount are tax free.
  • Transfer of SSY: It is easily transferable - from or to post offices, from or to banks and between post office and banks free of cost.

Few important things to note:
  • Investing in POTD and NSC in a given quarter will lock-in the rate in that quarter for the entire tenure of the saving scheme. However, for PPF and SSY, the revised rate is applicable in the concerned quarter and so on.
  • Nominee facility is available in each scheme and I request everyone to always add nominee in all the scheme you invest in.
  • The mode of deposit in above scheme can be cash, cheque or online transfer.
  • Above all scheme are for conservative investor with zero tolerance of risk and assured return.

My Personal Views:
          Finally, I would say, every girl child parent should invest in SSY scheme for good future of a girl. Since it provide attractive rate of interest with risk free status so it is one of the best scheme by government. And for others PPF is best option to invest in as it is tax saving and best long term investment.

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