To uplift the income and financial standing of its citizens, time and again, the government keeps introducing different investment schemas in the country. These govt investment schemes are offered to everyone including men, women, working people, business class, rural and urban population and so on. However, it is up to the citizens to compare different plans and to opt for the one that caters perfectly to their needs so that they can enhance their cash flow to the highest extent.
The best benefit of opting for govt. investment schemes is that they are risk-free and hassle-free. The interested individuals can opt for any govt. plan through post offices across India as well as through banks. Most such government plans permit tax deductions and allow the investor to save money on income tax. So, it is advisable for investors to evaluate the different investment plans offered by the government before selecting the best one and gain maximum benefit.
financially secure your future and create wealth, it is crucial to thoroughly understand and analyse different investment instruments before making your investment decision. However, having in-depth knowledge about all the investment options could be challenging as financial institutions offer a plethora of financial instruments you can invest in. Most of us seek inflation-beating high returns with no or minimal risk to the investment. Unfortunately, risk and returns go hand-in-hand, and it is impossible to earn high returns without high risk.
If you are looking for zero to low-risk investment options to balance out your portfolio, the first thing that would come to your mind would be Bank Fixed Deposits. However, you should also consider investing in other instruments that are risk-free and may offer similar or even higher returns than Fixed Deposits. The Government of India offers several such investment options as follows:
1. Sukanya Samridhi Yojana (SSY)
2. National Pension Scheme (NPS)
3. Public Provident Fund (PPF)
4. National Savings Certificate (NSC)
5. Atal Pension Yojana (APY)
6. Pradhan Mantri Jan Dhan Yojana (PMJDY)
Table of Contents
Sukanya Samridhi Yojana (SSY):
The central government launched the ‘Sukanya Samridhi Yojana’ programme in January 2015 with an objective to promote the welfare of girl child. According to National portal of India, ‘Sukanya Samriddhi Yojana’ is a small deposit scheme for girl child. Recently, the minimum deposit for this account has been slashed to Rs. 250 from existing Rs. 1,000. This means that customers need to make a minimum annual deposit of only Rs. 250 in this account now. A natural/ legal guardian on behalf of a girl child can open ‘Sukanya Samridhi Yojana’.
Maximum number of accounts
A parent or guardian can open one account per girl child, and a maximum of two such bank accounts in the name of two girl children under Sukanya Samriddhi Yojana, said a release issued by Press Information Bureau (PIB). In case of twin girls as second birth, or if the first birth itself results in the birth of three girl children, three bank accounts can be opened in the name of three girl children, the release further said.
Interest on deposit
The interest rate on Sukanya Samridhi Yojana has been fixed at 8.1 per cent per annum for the September quarter. This rate, however, is revised every year by the government and is announced at the time of the Union Budget.
Tenure of the deposit
The account is valid for 21 years from the date of opening, after which it will mature and the money will be paid to the girl child in whose name the account had been opened. If the account is not closed after maturity, the balance amount will continue to earn interest as specified for the scheme from time to time. The account will also automatically close if the girl child gets married before the completion of the tenure of 21 years.
Maximum period up to which deposits can be made
Deposits can be made up to 14 years from the date of opening of the account. After this period the account will only earn interest as per applicable rates.
Withdrawal
Withdrawing money before the completion of the maturity period of 21 years – can only be made by the girl child in whose name the account has been opened after she attains the age of 18 years. 50 per cent of the balance lying in the account can be withdrawn at the end of previous financial year for the purpose of higher education or marriage.
Tax rebate
Tax exemption, as applicable under section 80C of the Income Tax Act, 1961 is one of the greatest advantages of the Sukanya Samridhi Yojana programme. In the latest Finance Bill, the scheme has been extended Triple exempt benefits i.e. there will be no tax on the amount invested, amount earned as interest and amount withdrawn.
Premature Closure
The account can be prematurely closed only under two circumstances. In case of the unfortunate death of the girl child (account holder), the parent or legal guardian can claim for the accumulated amount along with the interest accrued on the account. The balance would be immediately handed over to the nominee of the account.
Features:
• Gives highest Interest rate among all Post Office Small Savings Scheme. Current Interest rate is 8.5%
• Interest rate is revised periodically
• Maximum Deposit in 1 Year – 1.5 lakh
• Minimum Deposit in a year – Rs 250
• Can be opened only in the name of Indian Girl Child by parent or guardian
• Only one account per girl child and only two girl children in a family can open the SSA account
• Account matures after 21 years of opening or on marriage of girl child (age must be above 18 on marriage)
• 50% of account balance can be withdrawn for higher studies of the girl child (after age is 18)
• Parent or guardian cannot withdraw the amount and only the girl child can withdraw on maturity
• Sec 80C benefit for investments made in SSA account.
You can visit any major banks in india like SBI,HDFC,ICICI, to apply for the scheme.
Visit the official website to know more SSY “CLICK HERE“.
National Pension Scheme (NPS):
National pension scheme is the scheme which is operated by Pension Fund Regulatory and Development Authority (PFRDA) it is the safest and secure investment plan for retirement. Back than it was limited to only government employees but now any individual who is an Indian citizen can invest in NPS.
How NPS Works?
• Open an NPS account
• Tier I is your pension account and Tier II is your investment account. You can just open Tier I account and start investing
• If you want to manage your own asset allocation, then select Active Choice. Here you will get an option to allocate your money and to choose fund.
• In Auto choice, the allocation is done by the system based upon the chosen life cycle, i.e., Aggressive, Moderate or Conservative.
• Once in a year you can switch from Auto to Active or vice versa (If you want)
• Based upon the funds’ performance you will receive returns. For long term generally it is more than (12-15%)
Benefits:
1. Low to minimum risk
2. Minimum amount to invest is as low as 500/- Rs in the case of tier- 1 & 1000 Rs in case of Tier -2
3. You can operate from anywhere
4. If you wish to exit early you can exit after 10 years
5. Tier 2 gives you the option of investing in equity shares
6. You can withdraw your money partially
7. Tax benefits if you contribute up to 200000 Rs per year.
Here are some of the reasons that make NPS a great way to save for your retirement
• Not Easy for Exit
While NPS is a voluntary retirement saving product, its structure ensures that subscribers can’t easily exit the scheme. The Tier 1 account in NPS is rigid and you cannot withdraw your contribution till you reach at the age of 60 years. However, there is some form of liquidity as partial withdrawal.
This structure has been created to ensure maximum lock-in so that the money gets used for retirement. Further, on maturity; the redemption is structured to ensure there is a minimum sum used to buy an annuity, which in turn ensures an income stream in retirement. In this way, NPS compulsorily ensures subscribers use their retirement savings to create income streams in retirement.
• Professional management:
Professional management: All aspects of the NPS are regulated and overseen by the PFRDA (Pension Fund Regulatory and Development Authority). The PFRDA has authorised fund managers to manage the investments and also authorised annuity services providers. The tight regulations ensure professional management of investments as well as benefits.
• Choice of Investments
NPS offers two investment option to select from – Active and Auto choice. In the case of active choice, you can select your own asset allocation across government securities, corporate bonds, equity and alternate investment funds.
With auto choice, the asset allocation is automatically adjusted between government securities, corporate bonds and equity as per your age. There is also the flexibility to switch between the available two choices for free twice in a year. However, the maximum equity allocation can only be 75%.
• Tax Benefits
NPS offers tax advantage at the time of making contribution, on the gains you generate during the tenure of the NPS account and also when you make withdrawal at the time of Maturity.
This is known as EEE Tax benefits. Individual taxpayers can claim deduction on contributions under NPS for up to Rs 1.5 lakh in a financial year under Section 80C. Further, NPS subscribers can claim an additional deduction for investment up to Rs 50,000 in a financial year under Section 80CCD (1B) over and above the Rs 1.5 lakh deduction under Section 80C.
Similarly, on maturity, the entire amount is tax-free, although you will get only 60% of the accumulated corpus in your bank account. With the remaining 40% one has to buy mandatorily an annuity product, which provide you regular income for life time.
• Low-cost Structure
NPS is currently the most economical and tax-efficient retirement product available. Not only is it cost-effective and tax-efficient, it has features such as portability, flexibility of choice across assets and fund managers and is regulated by the PFRDA.
For the initial subscription, you need to pay Rs 200 as Registration cost, and Rs 40 paid towards account opening cost. For the annual account maintenance, it would cost you about Rs 60-Rs 95 along with each transaction charges that would be about Rs 3.75.
Apart from this, you have to pay PFM (Pension fund manager) charges of 0.01% which is the lowest compared to all other investment options.
You can visit any major banks in india like SBI,HDFC,ICICI, to apply for the scheme.
Visit the official website to know more NPS “CLICK HERE“.
Public Provident Fund (PPF):
The Public Provident Fund is a savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits. Public Provident fund (PPF): PPF is a long-term debt investment option with a lock-in period of 15 years. Deposits made towards PPF accounts can be claimed as tax deductions.
You can open PPF account in Indian Post Office.
• Either you can open PPF account in government banks (SBI, Union Bank, PNB, IDBI Bank etc.) and some private regional banks (ICICI Bank and Axis Bank).
• You can also transfer your PPF account from post office to another post office, from one bank to another bank or from one bank to post office.
• You can also download the PPF account opening form (PPF account opening form) from the State Bank (SBI) website.
Post Office PPF Account Scheme:
• Who can open this account: – The best thing in this PPF scheme is that this account can be opened by any citizen of the country, whether it is a farmer or a Businessman, any citizen of the country can open this account.
• Age limit for PPF: – No age limit has been created for opening PPF account. You can also open PPF account in the name of your children.
• How many accounts can be opened: – Remember, you cannot open another PPF account in your name in whole life. Suppose if you ever get another PPF account from you, then the second PPF account will be closed and whatever will be deposited in it. There will not be any interest on it.
Top Reasons to Invest in PPF.
• Total Maturity amount is ‘TAX FREE’
• Middle withdraws option is available now.
• Premium amount depends on our capacity of cash flow of that month/year.
• Interest rate is high comparing to any other LIC policies. Even Interest rate may increase upon next 5 to 10 years
Rate of returns
The interest earned in PPF remains fixed for one quarter and is no longer guaranteed forever. It is actually benchmarked to the 10-year government bond yield and will be 0.25% higher than the average government bond yield. This rate will be declared every Quarter.
Tenure of PPF
It is a 15 years product with 16 years lock-in. The first year of investment is not counted for 15 years of maturity. If you have opened the PPF a/c on 15 July 2000, then 15 years tenure will start from the end of FY 2000-2001 i.e. 31st March 2001. The maturity date, in this case, would be 31st March 2016.
Closure of PPF account on Maturity/Premature withdrawal
Generally, you are not allowed to close the account before completion of 15 years except on death of the account holder in which case the money is paid to the nominee of the account holder. The government has recently modified the rules for premature closure of the PPF.
account in June 2016. With these rules coming into operation, you are allowed to close the account before completion of 15 years for specified purposes like serious ailments or life-threatening disease to the account holder, spouse or dependent children and parents after completion of five years. The same is also allowed to be closed for higher education of the account holder or the minor account holder. However, there is a penalty of 1% of the amount in such cases of premature closure of the PPF account.
Discontinued accounts:
You need to deposit a minimum of Rs 500/- per Financial Year, failing which the account will be termed as a discontinued account. Interest would, however, continue to accrue. You could regularize the account again by paying the penalty fee of Rs 50/- for each year of default along with subscription arrears of Rs 500/- per Financial Year.
Tax benefits of PPF:
offers multiple tax benefits. It offers Tax saving on deposit u/s 80C up to a maximum limit of Rs 1.50 lakh; also, the interest earned in PPF enjoys tax-free status.
You can visit any major banks in india like SBI,HDFC,ICICI, and Post office to apply for the scheme.
Visit the official website to know more PPF “CLICK HERE“.
National Savings Certificate (NSC):
National Saving Certificate (NSC) is the most popular saving scheme of the post office. Anyone can invest in this scheme. Then from whether profession he may be salaried, businessmen, farmer or others. The good thing is that it is much better than the FD of the bank or post office.
In this article I have explained what is NSC? What is its full form and meaning? Information about its rules and current interest rate is given. And also, how can it is better than other existing Tax Saving Options?
What is National Saving Certificate?
NSC means National Saving Certificate it comes under the Small Saving Schemes of the Government of India. These are in the form of certificates with a value of 100, 500, 1000, 5000, 10000. You can buy them by paying the price recorded on them. After 5 years, you can redeem these certificates.
You are then refunded by adding the interest made on them along with your deposit. The sum assured under NSS is paid to the investor upon maturity, and the interest rate is compounded annually. The scheme also offers tax benefits of up to Rs.1.5 lakh under Section 80C of the Income Tax Act Note.
The scheme originally had two types of certificates – NSC VIII Issue and NSC IX Issue. The government discontinued NSC IX Issue in December 2015. So, only the NSC VIII Issue is open for subscription currently.
Benefits of National Saving Certificate
The main advantages of NSC are as follows
• Facility even in remote areas as NSC certificates are mainly found in post offices now-a-days the government is serving the services of post offices from city to villages. With the presence of post offices in far flung areas, it is very easy for everyone to get NSC. Due to the introduction of the Core Banking Service in most post offices, there has also been a facility to buy them and redeem them anywhere.
• Also available for a minimum of Rs 100 investment a good thing related to NSC is that you can buy NSC for just Rs 100 also and any limit above by adjusting them according to your capacity.
• Yes, it must be noted that tax exemption will be available only to NSCs with an amount up to Rs 1.5 lacs. You can buy NSC of 1.5 lakhs every year to get more tax rebate.
Interest rate More than Fixed Deposits
The government is currently paying 6.8% (from 1st April 2020) interest in NSC. Which is much better than the 6.7% post office FD interest rate. If you compare it with the FD of banks, then you will see a lots of benefit.
Benefits:
• Tax benefit – Yes (Up to Rs 1.5 lakh under section 80c)
• Maturity – After 5 years
• Interest Rate – 6.8%
• There is no maximum limit on the purchase of NSCs.
• The certificates earn a fixed interest, which is currently at the rate of 7.6% per annum. They add this interest back to the investment and compound it annually.
• This scheme is a secure and low-risk product.
• These certificates can be pledged for taking loans from banks.
You can visit any major banks in india like SBI,HDFC,ICICI, and Post office to apply for the scheme.
Visit the official website to know more NSC “CLICK HERE“.
Atal Pension Yojana (APY):
Atal Pension Yojana was launched by Prime Minister of India Sh. Narendra Modi on May 09, 2015. This scheme was launched along with 2 other insurance schemes i.e., Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). Atal Pension Yojana is a social security scheme.
However, the scheme is not just open for the unorganized sector. All citizens of India within the age group of 18 to 40 years and having a valid savings/bank account can take the benefit of investing in this scheme.
Atal Pension Yojana is based on a defined contribution and guaranteed pension system. It means that the Subscriber will have to decide the pension amount he wishes to receive at retirement and accordingly set the frequency of contributions based on his age and income.
The most important advantage of APY is the Guaranteed Pension Benefit:
An APY subscriber has three guaranteed pension benefits:
• Life time guaranteed pension between Rs. 1,000 to Rs. 5,000 (as decided by the Subscriber)
• Same amount of life long pension to spouse after Subscriber’s death
• Nominee will get Rs. 1.7 lakh to Rs. 8.5 lakh after death of spouse
Government Backed Pension Scheme: APY is backed by the Government of India and is regulated by Pension Fund Regulatory Authority of India (PFRDA). So, Subscribers interests are safeguarded as the Government assures the pension payments.
Auto Debit Functionality:
One of the most important conveniences of the scheme is the auto debit functionality. The monthly contribution amount is directly debited from the linked bank account of the beneficiary. This ensures discipline of investment is set for regular corpus accumulation and provides ease of investing.
Frequency of Contributions:
A Subscriber based on his income and convenience can decide the frequency of contributions to his/her APY account – Monthly, Quarterly or half yearly.
Flexibility to Increase/Decrease Contributions:
As we have mentioned earlier, the pension amount a Subscriber will receive at retirement, is determined by their contributions. In APY, the Subscriber has the flexibility to change the pension amount and make larger or smaller contributions based on their financial capacity or convenience.
Summary of Atal Pension Yojana
1. A Pension Scheme for unorganized sector workers.
2. Min and Max age of entry under Atal Pension Yojana is 18 years and 40 years.
3. Pension will start at the age of 60 years.
4. Premature withdrawal is allowed only in case of a death of a beneficiary or terminal disease.
5. Depending on the contribution of a beneficiary, under Atal Pension Yojana there is a guaranteed pension of Rs 1,000 to Rs 5,000 per month in the multiples of 1000’s.
6. Monthly contribution to Atal Pension Yojana is allowed
7. In case of discontinuation of payment:
After 6 months, account will be frozen
After 1 years, account will be deactivated
After 2 years, account will be closed
8. The beneficiary should not be covered under statutory social security scheme of Govt of India.
9. The subscriber can opt for nomination facility.
You can visit any major banks in india like SBI,HDFC,ICICI to apply for the scheme.
Visit the official website to know more APY “CLICK HERE“.
Pradhan Mantri Vaya Vandana Yojana (PMVVY):
Prime Minister Vaya Vandana Yojana was introduced with the objective to provide monthly pensions to senior citizens while protecting their investments from falling interest rates.
Individuals above the age of 60 can subscribe to the scheme and it has a term of 10 years. After three years of investment, subscribers are allowed to avail of a loan against PMVVY. You should know that the pension ceiling in the scheme is decided based on the subscriber’s family and their aggregate income.
The basic idea behind PMJDY was/is to provide basic banking facilities to the poorest of poor. As our PM pointed out in his inaugural speech on 28th August 2014 that it is being launched for the purpose of removing “financial untouchability”, it has multiple benefits for the unbanked:
• Firstly, they get to have a bank account, which in itself is a huge achievement;
• Secondly, the account holders can maintain the accounts with zero balance which is another incentive for them to open accounts;
• Then on, all the subsidies, grants, pension etc will be directly credited to their accounts thereby removing all the middleman in between;
• There is an accident insurance cover of Rs. 1 lac for each Rupay card holder (the card comes bundled along with the account);
• A life insurance cover of Rs. 30000 is also provided to the beneficiary; An overdraft scheme of Rs. 5000 is also being worked out and is expected to roll out in the coming months.
Benefits:
• Banking the unbanked: As many as 65% of adult citizens of India still live without bank account. The giant scale of the scheme holds the potential to cover huge chunk of these people.
Only on launching day, 1.5 Crore accounts were opened. These accounts can bring unbanked people into formalized financial system where they can avail wide range of financial services like savings, credit, remittances and insurance. They can break free from trap of moneylenders who often charge usurious interest rates for short term credit.
• Targeting households: The earlier financial inclusion scheme (2011) focused on and targeted villages. This scheme is one step ahead and targets directly households.
• Technology backed banking: National Payment Corporation of India (NPCI) has a huge role to play in this ‘financial and technological inclusion’. All banks and telecom operators have been suggested to collaborate greatly to provide quick mobile banking facilities to these beneficiary households.
Not only smartphones but even ordinary phones of beneficiaries would be able to perform tasks like balance inquiry and money transfer. This is in line with Mr. Modi’s emphasis on technology backed governance be it allocation of natural resources or integration of financial systems.
• Indianization of payment methods: The scheme with its provision of Rupay debit card is a clear indication for promotion of Indian payment cards as against Master or Visa. This is in line with our PM’s ‘Make in India’ approach. With this, a huge number of financial resources would be geared towards Rupay backed systems.
• Plugging leakages: The cash transfers to bank accounts would become possible and beneficiaries can avail social scheme benefits directly into their accounts. With this, marketization of subsidies can be prevented.
• CASA for the banks: The banks (mainly cash strapped PSBs) would be able to avail huge amount of current and savings account deposits. These are the low-cost money which, given the high interest rates, banks can greatly benefit from.
• Systematic approach: The fundamental scheme approach focuses in first phase on savings and credit (insurance given is free here) and in second phase on micro insurance and pension. This is an important feature aimed at avoiding any sort of clutter at any sort of clutter at any level – household, bank or administration.
You can visit any major banks in india like SBI,HDFC,ICICI, and Post office to apply for the scheme.
Visit the official website to know more PMVVY “CLICK HERE“.
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