National Savings Scheme - NSS

The National Savings Scheme offers a secure and flexible option for investors seeking long-term returns. Individuals can contribute a fixed amount monthly for a period of five years, with the option to extend for an additional five years. This scheme caters to investors of all financial backgrounds as there is no maximum investment limit. This attractive feature allows individuals to accumulate significant savings and generate substantial returns over time.

Types of National Saving Schemes

1. For regular investors

1. Post Office Recurring Deposit account

• Interest rate: The interest rate for Post Office Recurring Deposit is 6.7% per annum (as of December 2023).
• Minimum investment amount: Minimum monthly deposit of Rs. 100.
• Maximum investment amount: No maximum limit.
• Lock-in period: The Recurring Deposit account has a lock-in period of 5 years.
• Eligibility: Any individual (single or joint) can open an RD account; in the case of a minor, a guardian can open on his/her behalf.
• Withdrawal: Premature withdrawal is allowed after 3 years, subject to certain conditions.

2. Public Provident Fund

• Interest rate: PPF offers an interest rate of 7.1% per annum (as of December 2023).
• Minimum investment amount: A minimum of Rs. 500 annually.
• Maximum investment amount: The maximum limit is Rs. 1.5 lakh per annum.
• Investment tenure: PPF has a lock-in period of 15 years, extendable by another 5 years.
• Eligibility: Any Indian resident, a guardian representing a minor, can open a PPF account.
• Withdrawal: Partial withdrawals are allowed from the 7th year onwards, and complete withdrawal is permitted only after maturity.
• Tax: Eligible for deduction under Section 80C of the Income Tax Act.

3. Kisan Vikas Patra

• Interest rate: KVP offers an interest rate of 7.5% (as of December 2023) compounded annually.
• Minimum investment amount: A minimum amount of Rs. 1,000.
• Maximum investment amount: No maximum limit.
• Lock-in period: KVP has a lock-in period of 2.6 years.
• Eligibility: Any individual (single or joint), a guardian representing a minor
• Withdrawal: After the completion of tenure, in case of death of the account holder or when ordered by court.
• Tax: Does not offer any tax benefits under Section 80C.
  

4. National Savings Certificate

• Interest rate: NSC offers an interest rate of 7.7% per annum (as of December 2023).
• Minimum investment amount: A minimum investment of Rs. 1,000.
• Maximum investment amount: No maximum limit.
• Lock-in period: NSC has a lock-in period of 5 years.
• Eligibility: A single adult or a guardian representing a minor.
• Withdrawal: Premature withdrawal is not allowed; the investment matures after 5 years but there are certain exceptions.
• Tax: Eligible for deduction under Section 80C of the Income Tax Act.

2. For senior citizens

1. Senior Citizens Saving Scheme (SCSS)

• Interest rate: As of December 2023, the annual interest rate is 8.2% per annum.
• Minimum Investment amount: You can start with a minimum investment of Rs. 1,000.
• Maximum Investment amount: The maximum investment allowed is Rs. 30 lakh.
• Lock-in period: The scheme has a tenure of 5 years, which can be extended by 3 more years.
• Eligibility: Any individual aged 60 years and above are eligible, retired civilian employees, retired defence employees are also eligible with certain conditions.
• Withdrawal: Premature withdrawal is allowed, subject to certain conditions.
• Tax: Eligible for deduction under Section 80C of the Income Tax Act.

2. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

• Interest rate: The PMVVY offers an annual interest rate of 7.4%.
• Lock-in period: The scheme provides an assured pension for a duration of 10 years.
• Eligibility: Senior citizens aged 60 years and above can participate in this scheme.
• Withdrawal: Pensions are disbursed quarterly, although other options (monthly, half-yearly, yearly) are available.
• Tax: Eligible for deduction under Section 80C of the Income Tax Act.

3. For girl child

1. Sukanya Samriddhi Yojana

• Interest rate: As of December 2023, the interest rate is 8.0% per annum.
• Minimum investment amount: You can start with a minimum investment of Rs. 250 per annum.
• Maximum investment amount: The maximum allowed investment is Rs. 1.5 lakh per annum.
• Lock-in period: There is no lock-in period once a girl reached the age of 18 or passed 10th standard.
• Eligibility: Parents or legal guardians can open an SSY account for a girl child who has not yet attained the age of 10 years.
• Tax: Eligible for deduction under Section 80C of the Income Tax Act. Interest earned is tax free under the Income Tax Act

Additional read: Indira Gandhi National Old Age Pension Scheme

Comparison of popular National Savings Schemes

Benefits of the National Savings Schemes

1. Assured returns: NSS provides a guarantee of returns on investment, offering a predictable and stable income stream. This assurance appeals to investors looking for financial security and a reliable source of income.
2. Safety: As a government-backed scheme, NSS prioritises the safety of investors’ funds by giving fixed interest rates that is revised periodically. This security is especially appealing to risk-averse individuals, ensuring that their investments are protected from financial uncertainties.
3. Tax benefits: NSS comes with attractive tax benefits, allowing investors to optimise their tax liabilities. This tax efficiency enhances the overall appeal of NSS, making it a tax-friendly investment option for individuals.

Additional read: Saving Scheme for Girl Child

Conclusion

National Savings Scheme (NSS) in India offers secure and beneficial savings options for all individuals, including regular investors, senior citizens, and girl child. With attractive returns, safety features, and tax benefits, NSS plays a crucial role in the financial system. Understanding the specifics of each scheme is vital for informed financial planning.

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