Best Saving Schemes in India
Saving schemes are an important part of the economy and a working community because with this they can have clean planning of how their monthly earnings can be utilized. Most of the people who are earning do not have enough knowledge with regard to how their money should be planned such that their future is kept secured in their hands.
There are multiple savings schemes set by the Government of India, banks, and also financial institutions which would allow individuals to make small contributions on a monthly basis and earn a good amount of money in the future or in the long run.
The major point of discussion of this article is the savings scheme available in the market and investing in the same.
What is a Savings Scheme?
It is not always easy for individuals with a monthly income to reach their financial goals in a pre-determined amount of time. This is major because, if they hold the earned money in their hand, they might end up spending this on unnecessary things which when coupled at the end would result in a huge amount of money. But if the individual invests or contributes this money to various account schemes introduced by the Government of India, banks, or financial institutions then they would be able to earn the financial goal by taking small baby steps towards the same.
And this is what saving schemes are meant for. The amount which is resulted from long-term contributions to these savings schemes can be used for various emergencies, child education or marriage, retirement, or even the meeting of huge debts made or when faced by a difficult situation.
Benefits of investing in Saving Schemes
The investment in savings schemes would provide the individual with the following benefits namely:
Safe and Secure:
The savings schemes introduced by the Government of India are one of the safest modes or schemes which can be easily adopted by individuals for parking their money for the future. The schemes assure the individual with a feasible risk-free interest earning on the savings made by the individual. This helps you make good earnings for the future.
Fund for Retirement:
Savings schemes which are majorly introduced by the Government provide you a source for retirement benefits. When the savings are started from a small age, you can earn a huge amount of corpus fund for the retirement age making the same safe again.
Benefits earned on a Long-term basis:
The saving schemes work on a compound interest basis. So, the interest which gets compounded year by year shall fetch the investing individual with a huge return after the long term, this means there will be interest earned on interest. The lock-in period of these investment schemes is a minimum of 5 years. But the maximum of this shall only be extended to the attaining of 60 years by the investing individual.
Saving tax:
Many of the saving schemes also provide individuals with tax benefits. This may be in the form of exemption from tax or tax deduction or even both. Some of this provides the individual with a deduction of up to INR 1.5 Lakhs under section 80 C of the Income Tax Act.
Control of Expenses:
The saving schemes help individuals have control placed on their spending habits. This is because, as they are making contributions to the savings scheme taken by them, they would not be having extra money left on hand which would again reduce the amount of money left with them that can be spent on unwanted things.
Different Savings Schemes Available in India
Public Provident Fund (PPF)
This is one of the most known, popular, and used by many companies as well individuals for saving a part of their money for the future. It is a government-backed long-term tax-free savings scheme to which the company’s with more than 100 employees should be making contributions on behalf of their employees. The contribution shall be made by both the employee and employer. The money which was deposited into this can be claimed as a deduction while computing the tax liability and the interest earned from such account shall be tax-free. The lock-in period of this saving scheme is 15 years and can be extended in the block of 5 years once the lock-in period expires. The compound interest on such a scheme is 7.1% per annum (p.a). The minimum investment to be made is INR 500 while the maximum is INR 1.5 Lakhs during a year.
National Savings Certificate (NSC)
This again is a government-backed saving scheme that guarantees a return for the investing individual. The investment in NSC can be made by an individual visiting the nearest post office. The lock-in period of such scheme is 5 years with the current interest rate of 6.8% p.a. The interest rate shall be reviewed and also may be revised every quarter by the Government Authority. But the same shall stay the same during the tenure of purchase. The investment can be claimed as deduction under section 80C which shall not hold any limit and can be done in accordance with the will of the individual. The interest which shall be compounded annually and paid to the individual on maturity shall be taxable, hence the same should be added to the total taxable income of the individual.
Post Office Investment Scheme (Monthly Basis)
These are one of the most minimal schemes available for investment and savings by individuals. The process for gaining such savings is simple and easy as it functions similar to a simple savings bank account. The minimum amount with which the investment can be started is INR 1,500 which may extend up to INR 4.5 Lakhs.
The interest income earned can be above a rate of 6% and can be subscribed to only by the citizens of India. But it shall be noted that the interest income earned on the investment made in this account shall not be eligible for any tax deduction. And their various different schemes available to the individuals under this.
Atal Pension Yojana
This is majorly brought in for helping people or individuals who are belonging to the BPL or are Below Poverty Line. The individuals working in the unorganized sector are the major target here as they are in need of ample support from the Government of the country. The contribution made to the scheme is very low but the same assures a pension receipt for such individuals after their retirement.
The individual opting for this scheme should be having an active savings account and be between the age of 18 and 40 years. The minimum duration for contributing to this scheme is 20 years. And if they have opted for this scheme, they cannot opt for any other savings scheme and the increase in contribution will help them earn a high amount of pension on retirement.
Voluntary Provident Fund (VPF)
This saving scheme is opted for on a voluntary basis. The contribution made to this will be the entire amount of basic salary earned by an individual. This is one major difference that is held by VPF from PPF. In PPF the contribution amount shall be limited to 10% of the basic salary.
Kisan Vikas Patra (KVP)
This is a scheme which is offered by the post offices situated in India. The rate of interest income earned on this scheme would be more than 7% and contribution should be made over a period of 112 months, which is more than 9 years. The minim contribution to be made shall be INR 1,000 while there is no limit specified for the maximum contribution to be made. There can be nominees added to the scheme and also be transferred from one post in India to another. The individual can also encash the certificate of KVP after 30 months of receipt or issue of such certificate.
Senior Citizens Saving Scheme (SCSS)
This was a savings scheme that was brought with an intention to help citizens of India who are above the age of 60 years. The citizens who have opted for VRS (Voluntary Retirement Scheme) and are between the age of 55 years and 60 years can also adopt this scheme. The duration limit of this scheme is 5 years, with the rate of interest above 8%. There is also tax deduction available under section 80C of the Income Tax Act on contributions made to this scheme.
Sukanya Samriddhi Yojana Account (SSY)
This is a scheme that allows individuals to save money for their girl child such that it can be used after attaining maturity for the education or marriage of such child. It can be opened with banks or post offices. This will allow earning of interest at the rate which is above 8%. The minimum amount of contribution to be made shall be INR 1,000, while the maximum to be made shall be about INR 1.5 Lakhs. The maturity period shall be 21 years.
It should be noted that this is not an exhaustive list and there shall be various other schemes that are available to an individual. It should be analyzed properly with respect to all the available schemes before any decision is made and this article is only discussing some of the easily accessible and simple saving schemes.
