Public Provident Fund

  • The PPF account or Public Provident Fund scheme is one of the most popular long-term saving-cum-investment products, mainly due to its combination of safety, returns and tax savings.
  • Investors can use the PPF as a tool to build a corpus for their retirement by putting aside sums of money regularly, over long periods of time (PPF has a 15-year maturity, and the facility to extend the tenure). With its attractive interest rates and tax benefits, the PPF is a big favourite with a small saver.

Features of PPF

  • Maximum Investment permitted – You can invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000 in a financial year.
  • Tenure – A PPF has a minimum tenure of 15 years. You can extend it in blocks of 5 years if you wish.
  • Loan – You can take a loan on your PPF account between the 3rd and 5th year and make partial withdrawals after the 7th year for emergencies only.

National Pension Scheme

National Pension System (NPS) is a retirement benefits scheme introduced by the Government of India to facilitate a regular income post-retirement for all subscribers. PFRDA (Pension Fund Regulatory and Development Authority) is the governing body for NPS.

Features of NPS

  • Returns/Interest – A portion of the NPS goes to equities (this may not offer guaranteed returns). This scheme has been in effect for over a decade, and so far has delivered 8% to 10% annualised returns. In NPS, you are also allowed the option to change your fund manager.
  • Risk Assessment – There is a cap in the range of 75% to 50% on equity exposure for the National Pension Scheme. The equity portion will reduce by 2.5% each year beginning from the year in which the investor turns 50 years of age.
  • Tax Efficiency – There is a deduction of Rs 1.5 Lakhs to be claimed for your investment and for the investment done by your employer under section 80C.

Senior Citizen Savings Scheme (SCSS)

SCSS is for individuals between the age of 55 to 60 who want to park their Retirement Funds. The interest is credited quarterly in a savings account maintained with the same post office. The investment in SCSS qualifies for deduction under Section 80C up to a maximum of Rs.1.5 lakh. The interest earned annually is taxable. But, the senior citizens can claim a deduction of up to Rs.50,000 under Section 80TTB.

Features of Senior Citizen Savings Scheme

  • The account shall be opened with a minimum deposit of one thousand rupees or any sum in multiple of one thousand rupees not exceeding Rupees Fifteen lakhs.
  • The depositor may extend the account for a further period of three years after the maturity period of five years.
  • The deposit made at the time of opening of the account shall be paid on or after the expiry of five years or after the expiry of eight years where the account was extended from the date of the opening of the account.
  • Multiple withdrawals from an account shall not be permitted.

National Savings Certificate (NSC)

 National Savings Certificate is government-backed security that provides guaranteed returns along with a tax saving option. The lock-in period for the scheme is five years. Tax deductions can be claimed on the investment up to Rs.1.5 lakh under Section 80C.

Features of National Savings Certificate (NSC)

  • Minimum investments: The minimum amount that a certificate can be purchased for is Rs.100. The different denominations that the certificate can be purchased for are Rs.10,000, Rs.5,000, Rs.1,000, Rs.500, and Rs.100.
  • Maturity tenure: 5 years and 10 years are the two maturity periods of the scheme that individuals can choose from.
  • Loans against NSC: The NSC can be used as a security or collateral and can be provided to banks to avail loans.
  • Nominations: Family members including minors can be added as nominees by the investor. In case the investor passes away during the tenure of the scheme, the nominee will be able to inherit the scheme

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