Each investment alternative available in the market has its own set of opportunities, returns, challenges and risks. Investors invest in these alternatives according to their expectations, market conditions, risk appetite, etc. There are investors who want to play safe and may at times is also interested in getting tax benefits. For all such investors, investment in the government schemes is a perfect fit. However, most of these government schemes for investment require the investor to invest for a long period of time. Some of the top government schemes where one can invest are as follows:
- National Saving Certificate (NSC) – National Saving Certificate are one of the good options which are available at subsidized values and are also supported by government of India. Though it has a lock in period of 6 years but it is the secure investment technique. There is no upper limit of investment in this option but the minimum amount of investment is Rs. 100 and the investments are made in denominations of Rs. 100, 500, 1,000, 5,000 and 10,000. Upon investment in NSC, investor can claim tax deduction under section 80 C of Income Tax Act. The rate of interest is 8.5% which is compounded bi-annually, however, the interest is paid at the time of maturity only.
- Public Provident Fund (PPF) – As PPF is supported by Indian Government, it is entirely secure for investor to invest in it. One can start investing in PPF with a minimum amount of Rs. 500 and can invest up to Rs. 1, 00,000 in one financial year. Upon investment, investor can claim tax deduction under section 80 C of Income Tax Act. The returns from PPF are also tax free. However, the waiting time in this case is 15 years.
- Senior Citizens Savings Scheme – The investments are locked in for a period of 5 years but it offers a rate of return of 9.3%. The investment in this scheme is eligible for tax deduction under section 80 C but the interest earned from the investment is taxable. An individual can open only one account. All investments are to be made in the multiple of Rs. 1,000. An individual can invest maximum Rs. 15 lakhs in this scheme.
- Monthly Income Scheme (MIS) – One can invest maximum of Rs. 4, 50,000 in single account and for joint account the maximum limit of investment stands at Rs. 9 lakhs. MIS account is can be opened with post office. The rate of return is 8.4% per annum which is payable monthly in multiples of Rs. 1,500. The maturity period is 5 years.
- Post Office Savings Account – A person can open this account with a post office for a minimum of Rs. 20. The account can be opened by depositing only cash. Without cheque facility, the minimum balance that has to be maintained is Rs. 50. However, if the account is opened with Rs. 500 then the cheque facility will be available. But in that case, the person needs to maintain minimum balance of Rs. 500 in his account. The rate of interest on deposits is 4% per annum. Up to Rs. 10,000, interest amount is tax free.
5 Year Post Office Recurring Deposit Account – A recurring deposit account with post office can be opened in multiples of Rs. 5 with a minimum of Rs. 10. There is no maximum limit of investment. The rate of interest earned is 8.4% per annum which is compounded quarterly.
Post Office Time Deposit Account – A term deposit account can be opened with post office on a minimum deposit of Rs. 200 and will further be in multiples of Rs. 200. There is no maximum limit of investment in this account. Interest rate for 1 to 4 years deposit is 8.40% while for a term deposit for 5 years is 8.50%. Though the interest is payable annually but is calculated quarterly. Nomination facility is available in this account. You can also transfer your term deposit account from one post office to another.
Kisan Vikas Patra – The amount of investment is doubled in this scheme in 8 years 4 months, i.e. 100 months. The scheme is available in denominations of Rs. 1,000, 5,000, 10,000 and 50,000. Lock in period is 2.5 years after which the KVP certificate can be encashed.
Sukanya Samriddhi Account – Minimum investment in this case is Rs. 1,000 and can go up to Rs. 1, 50,000 in one financial year. Guardian can open one account individually for a maximum of two daughters.
Pension Scheme – Any Indian citizen, who may be a resident or non-resident in the age group of 18-60 years can join NPS. The only negative point in NPS is that there is no guarantee of returns.
