Savings Schemes are investment opportunities for people offered by the government and other public-sector institutions. These savings initiatives were created to encourage robust saving and investing practices. This is also a method of increasing the flow of money into the Indian economy.
Some popular small savings plans that provide deductions under Section 80C include the Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), National Savings Certificate (NSC), Senior Citizens Savings Scheme (SCSS), and five-year post office time deposits. Below are the salient characteristics, limitations, and tax advantages that they offer:
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Sukanya Samriddhi Account (SSA): This scheme has the highest compounded annual return rate of any modest savings product, at 8.2 per cent. You can start investing with as low as Rs 250, but the maximum is Rs 1.5 lakh. The interest is also tax-free. A parent of a girl under the age of 10 can open this account to save for her schooling. He or she can keep depositing for the next 15 years. However, it will mature only when the girl child reaches the age of 21; the proceeds can also be revoked entirely if the girl marries after the age of 18.
Senior Citizens Savings Scheme (SCSS): This scheme has a five-year lock-in period and is available to investors over the age of 60. The highest deposit amount is Rs 30 lakh, with a minimum of Rs 1,000. Under section 80C, these deposits are eligible for deductions up to a total of Rs 1.5 lakh.
National Savings Certificate (NSC) – VIII issue: These instruments, which are now less popular than they once were, have a five-year tenure. The minimum amount to deposit is Rs 1,000. Currently, they provide a 7.7 per cent interest rate, compounded annually but paid at maturity. Additionally, premature closure is not permitted, except under limited circumstances such as the death of the account holders, forfeiture by a pledgee (a gazetted officer), or court order.
Public Provident Fund (PPF): This avenue, which is popular among both paid and self-employed individuals, offers an interest rate of 7.1 per cent, which is subject to quarterly evaluations by the finance minister. One can begin with a minimum commitment of Rs 500 per financial year, with a maximum of Rs 1.5 lakh. It has a 15-year maturity period (excluding the fiscal year in which the account is opened), however early withdrawals are permitted. It can be prolonged for another five years when it approaches maturity.
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Time deposits that last five years: There are one, two, three, and five-year terms available for the national savings time deposits. Under section 80C, deductions are allowed for the five-year time deposit. A deposit of at least Rs 1,000 is necessary. It offers a 7.5 per cent interest rate at the moment. Should an early closure occur, the interest rate will be two percentage points lower than the rate that corresponds to the tenure.
The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Readers are advised to check with certified experts before making any investment decisions.
