All about Investment in National Savings Scheme – initiative by Government covered 10 schemes – with Author’s recommendations
The national saving scheme (NSS) in India is a scheme regulated by the Ministry of Finance and operated and managed by the Department of Post, India. This article delves into the specifics of ten schemes covered by the National Savings Institute, providing insights and expert recommendations to aid investors in making informed decisions.
Analysis of India’s National Savings Schemes
| Types of National Savings Scheme | Minimum Deposit | Maximum Deposit | Deduction of Interest u/s | Maximum Deduction Limit | Rate of Interest (till 31.3.2024) | Tenure | Recommended (Yes/No) |
| Post Office Savings Account | Rs. 500 | No Limit | 80 TTA | Rs. 10,000 | 4.00% | Not Defined | >No, as inflation rate is much higher than the interest rate
>It should be used for maintain liquidity only as withdrawal can be done at any time. |
| National Savings Recurring Deposit Account (RD) | Rs. 100 | No Limit but should be in multiple of Rs. 10 | No Tax Benefit available | 6.70% | 5 years | > No, as it has low interest rate as it matches to inflation rate only.
>There is no tax benefit available under this scheme >Also, there is lock in period of 1 to 3 years. |
|
| National Savings Time Deposit Account
(Time Deposit) |
Rs. 1,000 | No Limit but should be in multiple of Rs. 100 | 80C | Rs. 1,50,000 | 6.90% | 1 year | >Yes, it has high liquidity and better interest with low tenure.
>It can be closed after 6 months. >However, tax benefit is available only in case of 5-year time deposit. |
| 7.00% | 2 Year | ||||||
| 7.10% | 3 Year | ||||||
| 7.50% | 5 Year | ||||||
| Nationals Savings (Monthly Income Account) Scheme | Rs. 1,000 | Rs. 9 Lakhs in single account
Rs. 15 Lakhs in Joint account |
No Tax Benefit available | 7.40% | 5 years | > National Savings Time Deposit A/c is a better option as compared to this as-
>it has maximum limit and has no tax benefit. >It has penalty of 1% to 2% in case of premature withdrawal.
|
|
| Senior Citizen Savings Scheme (SCSS) | Rs. 1,000 | Rs. 30 Lakhs | 80C | Rs. 1,50,000 | 8.20% | 5 Years
(can be extended to 3 more years) |
>Yes, it has low risk rate with high interest rate (more than FD)
>Also, it has tax benefits under Income Tax >It is recommended to those who are looking for long term investment as this scheme also attracts penalty on premature withdrawals. |
| National Saving Certificate (VIII issue) | Rs. 1,000 | No Limit but should be in multiple of Rs. 100 | 80C | Rs. 1,50,000 | 7.70% | 5 years | >Yes, as it also has tax benefits and if you are looking for long term investments.
>Individual can get loan by pledging the NSC >No Premature withdrawal except death/forfeiture by pledgee/order of court. |
| Kisan Vikas Patra | Rs. 1,000 | No Limit but should be in multiple of Rs. 100 | No Tax Benefit available | 7.50% | 10 Year and 4 Months | >Not highly recommended, as other schemes have much extra benefit.
Extra Benefits of KVP- -KVP can be transferred from one person to another and from one post office to another. -KVP can be encashed after 2 and half years from the date of investment.
-Money Doubles on Maturity. |
|
| PPF Scheme | Rs. 500 | Rs. 1,50,000 | Interest is exempt | 10 | 7.10% | 15 Years | >Yes, as withdrawal is permissible after 7th FY.
>Loan Facility is available. >PPF account is not subject to attachment under any order or decree of a court of law. >It also provides tax benefit to individual. |
| Deposit in PPF Account | 80C | ||||||
| Sukanya Samriddhi Account (Only for girl child under the age of 10 years) | Rs. 250 | Rs. 1,50,000 | Interest is exempt | 10 | 8.20% | 21 Years | >Yes, as it has highest interest rate which secure the future of your girl child.
>It also provides tax benefit to individual >Premature withdrawal is available. |
| Deposit in PPF Account | 80C | ||||||
| Mahila Samman Savings Certificate 2023 | Rs. 1,000 | Rs. 2,00,000 | No Tax Benefit available | 7.50% | 2 Years | >It is limited period scheme for girls without any age limit.
>It is available from April 2023 to March 2025. |
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I hope above details are helpful to you while taking decision for investment for the FY 2023-24 or for the upcoming FY 2024-25.
Conclusion: All the above schemes containing various terms and conditions that can be accessed through the NSS website (https://www.nsiindia.gov.in/ ) but investment decision can only be taken after considering various aspects of the situation like ROI, Tenure, Liquidity, tax planning etc.
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Author Bio
Very god article , Bhavna
Bhawna Ma’am, I am a serving Superintendent of Customs, Central GST & Central Excise at Surat. Can you please connect with me on Facebook & LinkedIn. I found your article concise & Precise. Can you please send me its pdf copy to rajesh.motiramani@gmail.com. With thanks & warm regards, Rajesh Uttam Motiramani (Mobile Number +91 9408953512)