Best Savings Schemes in India

Savings schemes are financial instruments launched by the Indian government and other financial institutions to foster healthy savings habits in people. These schemes encourage people to save more and make regular contributions to grow wealth over time. Depending on your financial goals and requirements, you can choose from various different savings schemes in India. This article sums up some of the best savings schemes in India to help you find your ideal savings match.

• NSC, tax-saver FDs, and ELSS funds are good savings options with manageable lock-in windows.
• Regular income seekers can opt for POMIS, while seniors can pick SCSS.
• The PPF and NPS schemes are ideal for those planning for retirement. 

Here’s a list of the best savings schemes in India:

National Savings Certificate (NSC)

National Savings Certificate is a government-backed savings scheme that offers guaranteed returns along with tax savings u/s 80(C). Investors can purchase National Savings Certificates from post office branches after familiarising themselves with the following features of NSC:

• Tenure: 5 years
• Minimum investment amount: Rs. 1,000
• Maximum investment amount: No maximum limit
• Interest rate: Currently, 7.7% (Q3 FY 2024-25). Interest rates change every quarter, and interest is compounded annually but payable only upon maturity.
• Tax benefit: Up to Rs. 1.5 lakhs u/s 80(C).

Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme is one of the best savings schemes for seniors in India. Senior citizens above the age of 60 years can invest in SCSS with a lump-sum deposit to earn steady returns at a fixed interest rate. Let’s review the features of SCSS investments:

• Tenure: 5 years; extension possible in blocks of 3 years
• Minimum investment amount: Rs. 1,000
• Maximum investment amount: Rs. 30 Lakhs
• Interest rate: Currently, 8.2% (Q3 FY 2024-25). Interest rates change every quarter.
• Tax benefit: Up to Rs. 1.5 lakhs u/s 80(C)

Post Office Monthly Income Scheme (POMIS)

POMIS is a small savings scheme introduced by the government of India to foster a savings habit among small and medium investors. This savings scheme offers competitive interest earnings and monthly interest payouts, which are beneficial to investors seeking regular income. Here’s an overview of the scheme’s features:

• Tenure: 5 years
• Minimum investment amount: Rs. 1,000
• Maximum investment amount: Rs. 3 lakhs for minor accounts, Rs. 9 lakhs for single accounts, and Rs. 15 lakhs for joint accounts
• Interest rate: 7.4% (paid monthly). Rates are revised every quarter
• Tax benefit: No tax benefits; interest earned is completely taxable as part of the investor’s net income

Public Provident Fund (PPF)

PPF is a long-term savings scheme designed to help Indian citizens plan for future financial security and retirement. As one of the best savings schemes in India, PPF offers premature withdrawal benefits, EEE taxation perks, as well as competitive and stable returns.

Let’s review the features of this savings scheme below:

• Tenure: 15 years
• Minimum investment amount: Rs. 500
• Maximum investment amount: Rs. 1.5 lakhs annually
• Interest rate: Currently, 7.1% (Q3 FY 2024-25). Interest rates are reviewed and revised every quarter, and interest is compounded annually but credited at the end of the year.
• Tax benefit: Up to Rs. 1.5 lakhs on the principle u/s 80(C). Investors can also claim tax benefits on the interest earned and the maturity corpus.

National Pension Scheme (NPS)

NPS is hailed as one of the best savings schemes in India, designed specifically with a retirement focus. NPS aims to ensure steady monthly income in the form of annuity for investors. The scheme allows investors to invest in market-linked instruments through active and auto-allocation options. It is open to employees from the public, private, and unorganised sectors. However, personnel from the armed forces cannot invest in the NPS. Investors can withdraw 60% of the corpus at maturity and use the remaining 40% to purchase an annuity for pension income.

 Here’s an overview of the features of the scheme:

• Tenure: Investors can run NPS investments until the age of 75 years
• Minimum investment amount: The minimum contribution when opening the account is Rs. 5,00 (tier I), and the minimum contribution per annum is Rs. 1,000
• Maximum investment amount: No restrictions
• Interest rate: NPS does not offer guaranteed returns. Returns are market-linked and depend on the performance of the selected funds.
• Tax benefit: Up to Rs. 1.5 lakhs u/s 80(C). Interest earned and maturity corpus (only the lump-sum component) are also eligible for tax exemptions.

Tax-saving FDs

Tax-saving fixed deposits are arguably one of the best savings schemes in India. Tax-saver FD is a term deposit account that offers income tax benefits u/s 80(C). Investors seeking low-risk options with guaranteed returns can opt for tax-saver FDs. However, tax-saver FDs come with a mandatory lock-in period of 5 years. You cannot access your investment or liquidate it during this lock-in window.

Let’s review the features of this tax-efficient savings scheme below:

• Tenure: 5 years
• Minimum investment amount: Rs. 100
• Maximum investment amount: No limits
• Interest rate: Interest rates vary from one lender to the next but generally range from 6%-8%.  
• Tax benefit: Up to Rs. 1.5 lakhs u.s 80(C)

Equity Linked Savings Scheme (ELSS)

An ELSS fund is an equity mutual fund scheme that offers the dual benefit of high returns and tax savings. ELSS funds lock in your investment for 3 years and invest 80% of their corpus in equity and equity-related assets for potentially high returns. Since equity markets tend to be volatile, ELSS investments may be good only for investors with a high-risk appetite.

Here’s a quick overview of the scheme to help you understand why it is one of the best savings schemes in India:

• Tenure: 3 years (lock-in)
• Minimum investment amount: Different for different fund houses. Most allow SIPs starting from Rs. 500.
• Maximum investment amount: No limit
• Interest rate: Interest rates and returns depend on the performance of the underlying equity assets of the scheme and market conditions.
• Tax benefit: Up to Rs. 1.5 lakhs u/s 80(C)

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In a nutshell, there are various savings schemes available in India to empower investors to build wealth, save taxes, and prepare for the future. While we have listed some of the best savings schemes in India, this list is not exhaustive. You can choose from various other savings schemes launched by the Indian government and commercial banks to maximise your savings potential and enjoy attractive returns on your investment.