Saving Schemes India 2024

What are Saving Schemes India?

• Savings schemes are investment solutions that help people meet their financial objectives over time. The Government of India, private/public sector banks, and financial institutions launch these initiatives.
• The interest rate for these savings schemes in India gets set by the government or banks and is adjusted regularly.
• You can utilize the money you save through these schemes for emergencies, retirement, further education, children’s education, marriage, job loss, debt repayment, and other purposes.

List of Savings Schemes India

Savings Scheme	Rate	Tax Deduction on principal?	Interest Taxable?
Post Office Savings Account	4.0%	No	Yes
Post Office Recurring Deposit	6.7%	No	Yes
Post Office Monthly Income Scheme (POMIS)	7.4%	No	Yes
Post Office Time Deposit (1 year)	6.9%	No	Yes
Post Office Time Deposit (2 year)	7%	No	Yes
Post Office Time Deposit (3 year)	7%	No	Yes
Post Office Time Deposit (5 year)	7.5%	Yes	Yes
Kisan Vikas Patra (KVP)	7.5%	No	Yes
Public Provident Fund (PPF)	7.1%	Yes	No
Sukanya Samriddhi Yojana (SSY)	8.2%	Yes	No
National Savings Certificate	7.7%	Yes	No
ELSS (Equity Linked Savings Scheme)	Market Linked	Yes	Yes
NPS (National Pension Scheme)	Market Linked	Yes	Yes
Tax Saving FDs	8.25%*	Yes	Yes
Senior Citizens’ Saving Scheme (SCSS)	8.2%	Yes	Yes

Types of Saving Schemes India

When looking for savings schemes in India, you have various choices. Many get sponsored by the government, while others by the RBI and SEBI. A handful of these schemes also offer income tax exemptions or deductions. Below is a list of some of these savings plans:

Post Office Savings Account: 

• The post office savings account functions as a conventional savings account but provides a slightly more favorable interest rate. It not only assures safety but also offers the convenience of making partial or complete withdrawals with short notice, proving valuable during financial emergencies. 
• The post office savings scheme account stands out for its secure and predictable returns, making it an apt choice for risk-averse investors and senior citizens seeking a reliable income source with limited exposure to risk.
• The interest rate associated with this scheme is 4%, valid for both individual and joint account holders. Moreover, interest earnings up to Rs 10,000 are exempt from taxation.

• Interest rate: 4%
• Tenure: No fixed tenure
• Minimum Investment: The minimum investment amount required to open a Post Office Savings Account varies depending on the type of account. For a regular savings account, the minimum initial deposit was typically Rs. 500, and subsequent deposits could be made in multiples of Rs. 10.
• Maximum Investment: None
• Deduction on Principal: No 
• Tax on interest: The interest earned on a Post Office Savings Account is taxable as per the individual’s applicable income tax slab rates. 

Post Office Recurring Deposit:

•  One of the most favored options among various post office saving schemes is the post office recurring deposit (post office RD). This scheme is particularly well-suited for individuals with modest investable funds, as it can be initiated with just Rs 10 per month and subsequent deposits in increments of Rs 5. 
• The scheme imposes no upper limit on the invested amount. This scheme offers an annual interest rate of 6.50%. Moreover, it provides considerable flexibility—depositors can make partial withdrawals of up to 50% of the total balance after a year. Additionally, you have the option to extend the investment tenure by another 5 years upon its conclusion. 
• The RD is also transferable between different post offices, supports joint account openings, and even permits the convenience of opening multiple accounts.

• Interest rate: 6.7%
• Tenure: 5 years
• Minimum Investment: The minimum monthly deposit required to open a Post Office RD account varies and is typically in multiples of Rs. 10. The minimum deposit amount depends on the specific terms and conditions set by the Post Office at the time of account opening.
• Maximum Investment: None
• Deduction on Principal: No 
• Tax on interest: Yes, interest is taxable.

Post Office Time Deposit: 

This is similar to a bank fixed deposit (FD). A Post Office Time Deposit Account (POTD) requires a minimum deposit of Rs 200 and has no maximum limit. The interest rates are as follows:

• Interest rate: 6.90% – 7.50%
• Tenure: 1, 2, 3, and 5 years
• Minimum Investment: Rs 200
• Maximum Investment: None
• Deduction on Principal: No (except tax-saver deposit with post office)
• Tax on interest: Yes

Kisan Vikas Patra (KVP): 

• The Kisan Vikas Patra certificate system is provided by Indian post offices. The current rate of interest for the Q2 FY 2023-24 is 7.5% p.a., compounded annually. The minimum contribution required for the plan is Rs.1000, with no upper limit. The amount invested in the plan doubles over 112 months. 
• Individuals can add nominees to the system, and the certificate can be moved from one person to another and from one post office to another. Individuals may also encash the certificate after 30 months from the day it was issued.

• Interest: 7.5%
• Tenure: 124 months ( 10 years and 4 months)
• Minimum Investment: Rs. 1000
• Maximum Investment: None
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in KVP. 
• Tax on Interest: Interest earned from KVP is subject to taxation.

Public Provident Fund (PPF): 

• The Public Provident Fund (PPF) plan is one of the country’s most popular and secure investing alternatives. Donations to the plan, as well as the interest earned by the contributions, are tax-deductible under Section 80C of the Income Tax Act. The plan may be created at post offices and banks, and it lasts for 15 years. 
• Individuals may extend the scheme’s tenure by an additional 5 years. As of August 2023, the Ministry of Finance has maintained the existing interest rate of 7.10% per annum for PPF accounts for the current quarter. Individuals must make a bare payment of Rs.500 and a max contribution of Rs.1.5 lakh to the plan each year.

• Interest: 7.10%
• Tenure: 15 years
• Minimum Investment: The minimum investment amount required to open and maintain a PPF account is Rs. 500 per financial year. 
• Maximum Investment: The maximum investment limit for a PPF account is Rs. 1.5 lakh per financial year.
• Tax Deduction on Principal: There is tax deduction available on the principal amount invested in PPF. 
• Tax on Interest: Interest earned on PPF is not subject to taxation.

Employees’ Provident Fund (EPF): 

• Companies employing more than 20 workers are obligated to contribute to the EPF system. Both the employee and the employer contribute 12% of the employee’s basic income and Dearness Allowance (DA) to this program.
• The EPF program also offers the flexibility for employees to withdraw funds for various purposes including medical emergencies, constructing a home, purchasing a house or land, repaying home loans, and more.
• For the fiscal year 2023-2024, the interest rate for the Employees’ Provident Fund (EPF) has been set at 8.15%. It’s worth noting that the EPFO determines the interest rate on an annual basis, reflecting the evolving financial environment.

•  Interest: 8.15%
• Tenure:  The tenure of an EPF account is typically linked to the duration of an individual’s employment. 
• Minimum Investment: Employees are typically required to contribute a minimum of 12% of their basic salary and dearness allowance (DA) to their EPF account. The employer’s contribution is also a minimum of 12% of the employee’s basic salary and DA.
• Maximum Investment: None
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in EPF. 
• Tax on Interest: Interest earned on EPF is not subject to taxation.

Sukanya Samriddhi Yojana Account (SSY):

•  Sukanya Samriddhi Yojana (SSY) is an endeavor designed to ensure a secure future for girls. The interest rate for the fiscal year 2023-2024 has now been set at 8%.
• Creating an SSY account is possible through either post offices or banks. Within a given year, contributions to the plan can range from a minimum of Rs. 1000 to a maximum of Rs. 1.5 lakh. 
• A commitment of 14 years of contributions is required from the account holder, and the scheme reaches maturity after a period of 21 years. A noteworthy feature is the ability to transfer SSY accounts from one bank to another, adding a level of flexibility to the scheme.

•  Interest: 8.2%
• Tenure:  The tenure of the Sukanya Samriddhi Yojana account is typically 21 years from the date of opening the account. This means that the account matures after 21 years.
• Minimum Investment: Rs. 1000
• Maximum Investment: Rs. 1.5 lacs
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in SSY. 
• Tax on Interest: Interest earned on SSY is not subject to taxation.

National Savings Certificate (NSC): 

• The NSC plan is one of the most well-known in India. Because the plan is supported by the Indian government, it offers guaranteed returns and tax breaks. Individuals can engage in the plan at post offices for five years. The scheme’s interest rates are set by the Indian government quarterly. 
• The scheme’s interest rate for 2023 is 7.70% per annum.
• The interest earned is aggregated yearly. The minimum contribution required for the plan is Rs.100, and there is no restriction on the amount that can be contributed. Individuals are entitled to tax advantages on their contributions to the plan under Section 80C of the Income Tax Act. Individuals may also transfer the certificate to the name of another individual. It, however, can only be done once.

• Interest: 7.70%
• Tenure: 5 years
• Minimum Investment: Rs. 1000
• Maximum Investment: No upper limit on the maximum investment amount.
• Tax Deduction on Principal: There is no tax deduction available on the principal amount invested in NSC. 
• Tax on Interest: Interest earned on National Savings Certificates (NSC) is subject to taxation.

Equity Linked Savings Scheme (ELSS): 

It is categorized as a mutual fund that features an impressively short lock-in period of only 3 years. This scheme allocates a minimum of 80% of its assets to equity (stocks), presenting an enhanced compounding potential over the long term, setting it apart from other tax-saving alternatives.

• Interest: Not known. But it offers returns ranging from 12% to 15%.
• Tenure: 3 years
• Minimum Investment: The minimum investment requirement varies across different fund houses.
• Maximum Investment: No upper limit on the maximum investment amount.
• Principal Deduction: Principal deduction is permissible under section 80C, up to Rs 1.5 lakh.
• Tax on Interest: Interest is subject to a 10% tax rate for Long-Term Capital Gains (LTCG). Dividends earned are taxable at a 10% rate, attributed to dividend distribution tax.

National Pension System (NPS): 

• The National Pension System (NPS) offers individuals a regular monthly income after they retire. Employees can participate in this plan by making a modest additional contribution. Upon retirement, employees receive a lump sum payout along with a portion that is provided as a monthly pension. 
• In the fiscal year 2023-2024, the NPS interest rate is set within the range of 9% to 12%. This feature significantly enhances its appeal as an investment option, especially for those seeking to build a strong financial base for the future and secure their retirement years with confidence.

• Interest:9%-12%.
• Tenure: The tenure of the National Pension System (NPS) can vary significantly from a minimum of a few years to several decades, depending on your age at entry, your chosen retirement age, and your contribution period. But the maturity period is 60 years.
• Minimum Initial Investment: The minimum contribution for the Tier I NPS account is set at Rs. 500, while the Tier II NPS account requires a minimum contribution of Rs. 250.
• Maximum Investment: No limit
• Principal Tax Deduction: There is a tax deduction on principal
• Tax on Interest: The interest earned is exempt from taxation

Atal Pension Yojana (APY): 

• The primary objective of this initiative is to provide support to individuals living in poverty. This scheme also serves as a valuable resource for those working within the informal sector who are seeking government assistance.
• Participants contribute a modest amount to the system, which in turn provides them with a pension upon reaching retirement age. It’s important, however, for individuals to maintain active savings accounts to fully avail of the benefits of this program.
• The Atal Pension Yojana is open to citizens aged between 18 and 40 years. Contributions must be consistently made to the plan for a minimum of 20 years. While the required contributions are kept at a minimum, it’s worth noting that higher contributions will result in a more substantial pension payout.
• It’s also important to mention that individuals who opt for the Atal Pension Yojana are not eligible to participate in any other concurrent savings scheme.

• Interest: An annual interest of 1% gets compounded.
• Tenure: The tenure or duration of the APY varies based on when a subscriber joins the scheme and the age at which they start making contributions. 
• Minimum Initial Investment: The minimum investment amounts under the Atal Pension Yojana (APY) are determined based on the age of the subscriber at the time of joining the scheme and the desired pension amount. 
• Maximum Investment: The maximum investment amounts under the Atal Pension Yojana (APY) are determined based on the age of the subscriber at the time of joining the scheme and the desired pension amount. 
• Principal Tax Deduction: No tax deduction on principal
• Tax on Interest: The interest earned is exempt from taxation

Pradhan Mantri Vaya Vandhana Yojana (PMVVY): 

It is a pension scheme administered by LIC, designed for individuals who are 60 years & above. This scheme guarantees a fixed monthly return of 8% annually (equivalent to 7.4% per annum) for a span of 10 years. Investors also have the flexibility to choose between monthly, quarterly, half-yearly, or yearly pension payouts.

• Interest: 7.40% p.a. 
• Tenure: 10 years
• Minimum Initial Investment: Rs 1000
• Maximum Investment: Rs 15 lakh
• Principal Tax Deduction: Eligible for tax deduction
• Tax on Interest: The interest earned is exempt from taxation

Senior Citizens Savings Scheme: 

• The Senior Citizens Savings Scheme (SCSS) was introduced to provide support for individuals aged 60 and above. Moreover, those falling within the age range of 55 to 60 who have opted for the Voluntary Retirement Scheme (VRS) can also avail themselves of the benefits offered by the SCSS. 
• This scheme operates with a duration of 5 years and boasts an interest rate of 8.2% p.a. for the fiscal year 2023-24. To become a participant, individuals need to make a minimum deposit of Rs. 1000, while the upper investment limit is set at Rs 15 lacs.
• Participants also have the flexibility to transfer their SCSS accounts between post offices and banks. Notably, contributions made to this scheme are eligible for tax deductions under Section 80C of the Income Tax Act.

•  Interest: 8.2%
• Tenure: 5 years
• Minimum Investment: Rs. 1000
• Maximum Investment: Rs. 15 lacs
• Deduction on Principal: No, there is no principal deduction.
• Tax on Interest: Yes, interest is taxable.

Pradhan Mantri Jan Dhan Yojana:

• The PMJDY Account holders are entitled to a life cover of INR 30,000 and accidental insurance coverage of Rs. 1 lakh in case of unforeseen events. An overdraft facility of up to Rs. 5000 is extended to account holders, applicable to a single account per individual. 
• Applicants enjoy seamless access to pension and insurance policies. Account holders can earn interest on their deposited funds. Scheme beneficiaries are eligible for direct benefit transfers. It offers an interest rate of 4%.
• Applicants enjoy seamless access to pension and insurance policies. Account holders can earn interest on their deposited funds. Scheme beneficiaries are eligible for direct benefit transfers. It offers an interest rate of 4%.

• Interest: 4%
• Tenure: No fixed tenure 
• Minimum Investment: None
• Maximum Investment: None. 
• Deduction on Principal: No, there is no principal deduction.
• Tax: The interest earned under PMJDY was eligible for exemption from income tax under Section 80TTA of the Income Tax Act, up to a certain limit. The applicable limit for this exemption was ₹10,000 per financial year for individual taxpayers.

Voluntary Provident Fund (VPF): 

• Workers have the option to willingly enroll in the Voluntary Provident Fund (VPF) scheme. Unlike the EPF system, where only 12 percent of the basic salary is permitted for contribution, employees have the opportunity to channel their entire basic income into the VPF plan.
• Contributions to the VPF program accrue interest at a rate of 8.15% per annum.
•  This provision offers employees the chance to further enhance their savings with an attractive interest rate.

• Interest: 8.15%
• Tenure: 15 years 
• Minimum Investment: None
• Maximum Investment: None. 
• Deduction on Principal: No, there is no principal deduction.
• Tax: Interest earned on an employee’s contributions to VPF remains tax-free for amounts up to ₹2.5 lakh annually. For government employees, this threshold extends to ₹5 lakh. However, any interest accrued on employee contributions (including VPF) exceeding ₹2.5 lakh will be subject to taxation as income from other sources.

Post Office Monthly Income Scheme (POMIS): 

• While resident individuals are eligible to invest in this scheme, it’s also accessible to minors. In fact, minors aged 10 and above are allowed to manage their accounts. While depositors can open multiple accounts within this monthly saving scheme, the cumulative amount across all accounts shouldn’t surpass Rs 4.5 lakh. 
• The scheme offers an interest rate of 7.4% and the advantage of liquidity, allowing investors to withdraw the deposited amount starting one year from the initial deposit.
• However, it’s important to note that withdrawals made between 1 and 3 years incur a penalty of 1%, and withdrawals made after 3 years also carry a 1% penalty. The monthly interest received is considered part of the taxable income. Nonetheless, both the monthly interest and the deposit amount are exempt from TDS.

• Interest: 7.4%
• Tenure: 5 years 
• Minimum Investment: Rs 1500
• Maximum Investment: Rs. 3 lacs for minors, Rs. 9 lacs for single individual accounts, and Rs. 15 lacs for joint accounts. 
• Deduction on Principal: No, there is no principal deduction.
• Tax: Interest is taxed.

Tax Saving FDs:

• Fixed deposits designated for tax savings are qualified for deductions per IT Act Section 80C, allowing for annual investments up to Rs 1.5 lakh to be deducted from your taxable income. To illustrate, if you invest Rs 1 lac in a tax-saving FD and fall into a 20% tax bracket, your savings would amount to Rs 20,000. 
• These tax-saving fixed deposits come with a lock-in period of a minimum of 5 years and can be initiated at any public or private sector bank or post office. The interest disbursed on these FDs is subject to taxation based on your applicable marginal tax rate. 
• Tax-saving FDs present a suitable investment option for individuals seeking assured returns with minimal risk exposure. The entry requirement for tax-saving FDs is a minimum investment of Rs 100. While there is no upper limit for investment, tax deductions are applicable solely to contributions of up to Rs 1.5 lacs per year.

• Interest: The interest rate varies from bank to bank. Currently, it ranges between 6.% and 7.6%.
• Tenure: 5 years 
• Minimum Investment: Rs 100 is the minimum investment.
• Maximum Investment: No maximum investment
• Deduction on Principal: Yes, there is a principal deduction.
• Tax: Interest is taxed at a flat rate.

Reasons to Invest in Savings Schemes India?

Saving schemes are crucial for individuals in a country and, consequently, for an economy for the following reasons:

• Safety: Saving your hard-earned money in savings plans can help you safeguard it for future requirements. Keeping liquid money on hand may not be safe.
• Retirement Funds: Saving money in long-term savings plans regularly will help you develop a retirement corpus. When you start saving at an early age, you will get rewarded with a large corpus that you may utilize after retirement to live a comfortable life.
• Long-Term Benefits: Because most schemes employ compound interest to calculate interest, long-term investments may yield incredible profits. These plans have a minimum lock-in time of five years and a maximum lock-in length of 60 years. Compounding returns with long-term investments will yield interest on interest, resulting in a large sum at maturity.
• Tax Savings: Many savings plans include one or more types of tax benefits, such as tax deductions, exemptions, or both. Section 80C of the Income Tax Act allows for a tax deduction on investments of up to Rs.1.5 lakh in particular schemes. Another set of schemes exempts the investment, interest earned, and maturity amount.
• Prevent Unwanted Costs: When you have all your money at your disposal, you may wind yourself spending it on things you don’t need. Investing the surplus that exists after meeting the essential costs in a proper saving program, on the other hand, will assist prevent spending on unneeded products and services.

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FAQ’S

Which saving scheme gives the highest interest?

Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Senior Citizens Savings Scheme (SCSS) give interest rates that are greater than FD rates. SCSS also provides a tax benefit under Section 80 C for yearly donations up to Rs 1.5 lakh.

Which scheme of saving is better?

Post Office Monthly Income Scheme (MIS) is one of the best saving schemes India for you to invest.