In India, there are several savings schemes that act as investment options. Usually, they are created by the government and public financial institutions to encourage people to save and invest. In the past, many Indians kept their money at home. This led to poor wealth circulation. Consequently, several savings schemes were introduced, allowing people to grow their money at higher interest rates. Also, some savings schemes even offer tax benefits.

It is worth mentioning that these schemes are designed for wealth creation and achieving long-term goals like retirement, children's education, or marriage. Most savings schemes come with a lock-in period but offer stable returns. They are ideal for conservative investors. Additionally, their interest rates are adjusted periodically to keep up with inflation.

If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

 In this article, let’s check out the top 5 savings schemes you can consider in 2024:

• Savings schemes allow you to accumulate funds and claim tax deductions.
• Some popular savings schemes in India are tax-saver FDs, ULIPs, ELSS, NPS, and SSY.
• You can claim a maximum deduction of Rs. 1,50,000 under Section 80C of the Income Tax Act.

Tax saving FDs are low-risk savings schemes. They offer guaranteed returns calculated at a pre-determined interest rate. These FDs come with a lock-in period of 5 years, and you can start investing with as little as Rs. 100. The interest rates vary between banks and generally range from 6.50% to 7.25%.

One of the key benefits of this savings scheme is that the principal amount you invest is eligible for a tax deduction under Section 80C with a maximum limit of Rs. 1,50,000. However, please note that only the principal amount is tax-deductible. Any interest earned from this scheme is taxed according to your income tax slab.

Moreover, there is no maximum limit on how much you can invest, but the maximum tax deduction you can claim under Section 80C is limited to Rs. 1,50,000 in a financial year. If you invest more than Rs. 1,50,000, the additional amount will not qualify for tax deductions. Also, you cannot carry forward this excess investment to claim deductions in future financial years.

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.60% p.a.

ULIP is a special savings scheme that combines both investment and insurance. In this plan, you are required to pay regular premiums. A part of this premium goes towards life insurance, while the rest is invested in mutual funds. You can pick this mutual fund scheme as per your risk appetite and long-term goals. The minimum lock-in period for ULIP schemes is 5 years.

Just like tax-saving FDs, you can again claim the amount invested as a deduction under section 80C. Upon redemption, the maturity proceeds are taxable as equity-oriented mutual funds. After the latest announcements made in Union Budget 2024, the arising LTCG will be taxed at 12.5% with an exemption limit of Rs. 1,25,000 per financial year.

ELSS is a type of mutual fund that invests at least 80% of its assets in stocks. It has the shortest lock-in period among tax-saving investments, at just 3 years. Subject to the limit of Rs. 1,50,000, whatever you invest in ELSS is eligible for tax deduction under section 80C. The minimum investment amount varies by fund house, and there’s no upper limit on how much you can invest.

Upon redemption, the gains are classified as LTCG and will be taxed at 12.5% with an exemption limit of Rs. 1,25,000 per financial year.

It is a government savings scheme specifically designed to support the financial future of a girl child under 10 years of age. Parents or legal guardians can open up to two accounts, one for each girl child. The account matures after 21 years or when the girl gets married after turning 18.

A partial withdrawal of up to 50% of the invested amount is allowed when the child reaches 18, even if she’s not getting married. The scheme offers an interest rate of 8%, with a minimum investment of Rs. 250 per year and a maximum of Rs. 1,50,000 annually. The principal invested qualifies for tax deduction under Section 80C, and the interest earned is completely tax-free.

NPS is a savings plan. It provides a steady monthly income after retirement. While employed, individuals invest in the NPS. Later, upon retirement, the total amount accumulated is converted into an annuity plan which pays out regularly.

For government employees, 10% of their monthly income is deducted, with an equal contribution from the government. For MNC employees and unorganised sector workers, NPS functions like a long-term savings scheme. It helps them build a retirement fund that pays out after the scheme’s tenure ends.