Top 5 Savings Schemes in India

When you invest with the best savings policy, you can conveniently turn your savings into investments. These schemes allow you to channel your income towards investments by investing regularly, even in small amounts.

As a result of choosing the best savings plan in India, you can also lower your annual tax liability. Bank deposits, post office deposits, and investments such as NSC, KVP, and Sukanya Samriddhi Yojana are all the best savings schemes.

Keep reading to learn about India's top five saving schemes.

Five Best Saving Schemes in India

Listed below are the five best savings schemes in India.

1. Senior Citizens Savings Scheme

   Senior Citizens Savings Scheme (SCSS) is designed for Indian seniors over sixty years old. The scheme is also available to people between 55 and 60 who have retired early or opted for VRS. Here are the features of this scheme:
   • The minimum investment limit is ₹1000, and the maximum is ₹15 lakhs.
   • It is a 5-year investment but can be extended by three years if necessary. You can close your account after one year without penalty.
   • Invested funds will earn interest every quarter on the last day of the quarter.
   • You can deduct the amount you invest in SCSS, but you will be taxed on the interest you earn. TDS is applied to interest if the amount received exceeds ₹10,000 annually.

2. Public Provident Fund

   One of India's most popular savings schemes and one of the first retirement savings schemes for self-employed people is the PPF.
   • Anyone can open a PPF account, regardless of their age. PPF accounts are limited to one per individual investor. NRIs and HUFs cannot open PPF accounts.
   • You may withdraw the total amount after 15 years or a five-year extension period allowed following 15 years.
   • The total amount can be withdrawn after five years for medical expenses or education of the child.
   • Partial withdrawals are possible starting in the 6th year of account ownership (counted as Financial Years).
   • Once a year, you may withdraw up to 50% of your available balance at the beginning of one financial year.
   • The investment of money qualifies for a tax deduction under section 80C. PPF maturity values and partial withdrawals are tax-free.

3. National Savings Certificate

   NSC is a government-backed savings product that offers guaranteed returns and tax savings. A 5-year lock-in period applies to this saving scheme. This scheme is characterised by:
   • NSC investments will continue to earn the same interest rate. Governments review and fix interest rates quarterly. Currently, the NSC interest rate is 7.7%.
   • You can make investments up to ₹1.5 lakhs and claim a tax deduction under Section 80C. The maturity gain is taxable. Tax slabs determine interest rates.
   • Opening a joint account or buying a National Savings Certificate in your name is possible.
   • You can invest as little as ₹100 with an NSC investment, with no maximum limit.

4. Recurring Deposit

   • RD allows you to save a certain amount regularly. For short- and medium-term savings, RDs are the best option.
   • Post offices and banks offer RD accounts to any individual of any age.
   • No partial or premature withdrawals are allowed from recurring deposits. RDs can, however, be broken early for a penalty on interest rates.
   Interest on recurring deposits is taxed in the year it is accrued. Earning over ₹10,000 in a financial year will make it subject to TDS. RDs from the post office are tax-free.
   However, interest must be included if your taxable income exceeds the minimum exemption limit. For those under 60, the exemption is ₹2.5 lakhs, and for those over 79, it is three lakhs. A limit of ₹5 lakhs applies to individuals over 80.

5. Post Office Monthly Income Scheme

   POMIS is the best monthly savings scheme in India. Your deposit will earn a higher interest rate under this scheme. If you have a low appetite for risk, it's the best savings scheme in India.
   • Investments in the scheme can range from ₹1500 to ₹4.5 lakhs per individual.
   • If you open a joint account with two or three individuals, you can invest ₹9 lakhs.
   • You cannot deduct or exempt the amount you invest or the interest you earn. Additionally, you can open a joint account with two or three people and invest up to ₹9 lakhs.

Conclusion

You can invest your money in small savings schemes with little or no risk. Savings plans are, however, targeted at specific groups. Information on financial products matching your savings goals is essential to make informed investment decisions.

Start your savings today with any of PNB MetLife’s savings solutions.

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