Saving Certificates
The National Savings Certificate is a fixed-income investment program offered by the Government of India that is simple to open at any post office. It is a savings bond program that entices participants, mainly low- to middle-income investors, to invest while reducing their income tax liability under Section 80 C. The National Savings Certificate and the Kisan Vikas Patra are under the category of savings certificates.
- The National Saving Certificate: After five years, the National Savings Certificate matures and begins to pay interest at a rate of 6.8% annually. Every year, the scheme automatically reinvests the interest that has been earned. In accordance with Section 80 C of the Income Tax Act, the NSC is also eligible for tax savings. The minimum deposit is in multiples of Rs. 100 and is set at Rs. 1000. There is no upper bound.
- Kisan Vikas Patra: Introduced by India Post in 1988 to facilitate people to invest in a long-term savings plan. The Kisan Vikas Patra, available to everyone, doubles your initial investment after 124 months, resulting in an annualized return of 6.9%. There is no maximum investment amount; the minimum is Rs 1000. Its original purpose was to help farmers save money over the long term, hence the name. It is now accessible to everyone.
Small Savings Instruments
Small Savings Schemes are a collection of savings instruments run by the federal government. It aims to encourage all residents, regardless of age, to save consistently. They are well-liked because they offer perks such as a sovereign guarantee, tax advantages, and returns that are typically higher than bank fixed deposits. The Finance Ministry has reassessed the interest rates for modest savings plans. The interest rates have been reviewed every three months since 2016. The National Small Savings Fund collects all deposits made through different small savings programs. The central government uses the funds to pay for its budgetary deficit. Small savings programs are created to offer the public secure and alluring investment options while simultaneously mobilizing funds for development.
The programs can be divided into social security programs, savings certificates, and post office deposits.