The year 2020 has shown a downward trajectory on the interest rates of the fixed deposits offered by the banks. The Reserve Bank of India has slashed down the repo rate by 5 times this year. A majority of the banks such as HDFC bank, ICICI bank and SBI has also slashed down the rates of their fixed deposits. People who fall in the range of 1 year to 10 years tenure of FD will receive less than 5.5% interest from state bank of India. The fall in the interest rates on the fixed deposits can prove to be financially stressful for many people.
In-order to get out of this stressful situation, there are five government schemes that are there to deliver better interest rates on the investments to sustain a better and healthy life style.
PPF (Public Provident Fund)
The tax free savings scheme of the government is the PPF ( Public Provident Fund). In this scheme the interest is ser by the government in every quarter and is paid by the government accordingly. The interest rate in the first quarter from January to March was 7.9 % and from 1st April to 31st June 2020 is 7.1%.
Who are eligible to apply for the PPF scheme?
- An individual who is basically a resident of India can open the PPF account.
- NRI’s cannot open the PPF account. But before becoming a NRI if you have opened the PPF account then you can continue your account.
- Guardians can also open the PPF accounts for their children.
- Opening of the multiple accounts or the joint accounts is not allowed.
What amount do you need to invest in your PPF account?
The minimum contribution must be Rs 500 and Maximum is Rs 1.5lakh.
Sukanya Samrudhi Yojna
Sukanya Samrudhi Yojna is a small fixed deposit scheme for the girls. It provides the maximum tax benefits for the account holder of this scheme. This scheme provides the maximum tax benefits under section 80C of the income tax act.
What are the eligibility criteria for the Sukanya Samrudhi Yojnaa?
- The age of the girl child must not be more than 10 years.
- The girl child must be the citizen of India.
- Not more than two girls are allowed to open the account in a family.
How much you need to invest in this Yojna?
The minimum amount you need to invest is Rs 1000 and the maximum amount you can invest is Rs 1.5 lakh in a particular financial year. These are the basic criteria for this Yojnaa. The scheme will mature once the girl completes her 21 years of age.
Senior Citizen Savings Scheme
Senior citizen savings scheme is basically government backed savings scheme this is being offered for the residents of India who are aged above 60 years. This scheme matures after 5 years from the date of opening the account. If you want you can extend the tenure up to 3 years. The SCSS interest rate from April to June has been set 7.4% for the deposit.
Who can opt for this scheme?
- The scheme is being available for any individual resident whose age is 60 years and above.
- Individuals who have attained the age of 55 years but less than 60 years old are also eligible provided that they have retired under superannuation and the VRS rules.
- Retired defense personnel are also eligible for this scheme.
- NRI’s or Person of Indian Origin cannot open the SCSS scheme.
- HUF( Hindu Undivided Family) members are also not allowed to open account under this scheme.
Tax benefits of this scheme:-
- Investment of the senior citizen qualifies the income tax benefits up to Rs 1.5 lakh under section 80C of the income tax act 1961.
- Interest earned more than 50000 in a fiscal then SCSS is fully taxable.
Investment you need to make in this scheme
Depositors can make a minimum investment of Rs 1000 and maximum of Rs 15 lakh in SCSS scheme.
Vyaya Vandan
Life Insurance Corporation offers this scheme and it ensures a guaranteed payout for a specified rate for a period of 10 years. This scheme also provides the death benefits in return for the purchase price of the nominee. The interest of 7.4 % the policy holder will receive.
Eligibility criteria and other conditions for this scheme:-
- Minimum age is 60 years.
- Maximum age there is no limit.
- The term of the policy is for 10 years.
NSC (National Savings Certificates)
The National Savings certificates is a fixed investment income where anyone can open their account in Post offices. The guaranteed payout of the interest is possible for this scheme. Currently at the rate of 6.8% the NSC offers interest rates to the pension holders.
Who must invest in NSC?
Anyone who wants a safe investment for the taxes in order to earn a steady income can opt for this scheme. It ensures guaranteed interest rates and the capital protection.
Hence, from the above information, it has become clear that which government schemes are better than FD’s of bank.
