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7 Best Conservative Deposit Plans That Make Money Work For You And Save Taxes Too

investment

oi-Shubham Kumar

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If you are looking to park your savings away from the stock market, there are many fixed income investment options to choose from. Some of these fixed income investments also offer tax benefits under Section 80C of the Income Tax Code, 9161. However, not all of them can be available to everyone because some are intended for seniors or retired investors. However, there are a few safe financial instruments that come with guaranteed interest income and in some of them, there is a government guarantee as well. Here is a list of 7 fixed income investment options that you can choose to set your savings, earn a stable income and also save on taxes.

1 - Sukanya Samridhi Yojana (SSY)

1 – Sukanya Samridhi Yojana (SSY)

  • A long-term, 21-year program called Sukanya Samriddhi Yojana (SSY) is designed to encourage savings for girls who are subsidized by the government.
  • Positioned as a government-sponsored scheme, SSY offers the highest level of basic income and interest protection.
  • Only a girl under the age of 10 can have an SSY account registered in her name. If the child is 5 years old, SSY maturation will not occur until the child is 25 years old.
  • Parental deposits are only required for the first fifteen years of the program, and for the last six years, although the scheme is still in operation, no deposits are required.
  • No one is allowed to leave the program early unless under medical conditions. A maximum of 50% of the funds of the previous year may be deducted for the continuation of the girl’s education after the girl reaches the age of 18 years.
  • The SSY may be closed in the event of a marriage as long as the girl is at least 18 years old.
  • SSY is a tax benefit investment because it qualifies for a tax benefit under Section 80C and even the interest earned is tax deductible.
  • The current interest rate is 7.6% per annum, payable at maturity.

2 - Pradhan Mantri Vya Vandana Yojana (PMVVY)

2 – Pradhan Mantri Vya Vandana Yojana (PMVVY)

  • The interest rate of the scheme will remain variable depending on the financial year in which the investment is made.
  • PMVVY is a government-subsidized ten-year pension scheme for retired adults aged 60 and over who want regular income from their investments.
  • The maximum investment in PMVVY is Rs 15,000 per senior citizen.
  • The age of the investor does not affect the pension in PMVVY.
  • For fiscal year (FY) 2022-23, PMVVY must provide a guaranteed superannuation of 7.40 percent per annum payable monthly.
  • This guaranteed pension rate must be paid for the full 10-year policy period for all policies purchased through March 31, 2023.

3 - Kisan Vikas Patra (KVP)

3 – Kisan Vikas Patra (KVP)

  • Under the Kisan Vikas Patra scheme, you will get the invested amount with guaranteed compound growth after the maturity period, regardless of market fluctuations. It is a safe way to save money.
  • A KVP certificate is only available at post offices and can be purchased by two adults, an adult for themselves, or an adult on behalf of an event.
  • To start investing in KVP, the minimum amount required is Rs. 1,000, and multiples of 100 rupees. There is no upper limit for the scheme.
  • Transfer of KVP from person to person and between post offices is allowed, there is a requirement for transfer.
  • In 124 months, the amount invested is doubled, and interest and principal are paid only at maturity.
  • Currently, KVP offers a compound annual return of 6.9%.

4. Seniors Savings Plan

4. Seniors Savings Plan

  • SCSS is a popular investment option for people over the age of 60.
  • A person who has retired or is registered with the VRS and is 55 or older but not yet 60 can also open an account, provided they do so within one month of receiving their retirement benefits and the account is not overrun for their retirement payments .
  • SCSS is provided for a period of five years. Although multiple accounts can be opened, the total opening limit is limited to Rs. 15 lakh.
  • Interest earned must be included in the individual’s “other sources income” and is fully taxable.
  • Within one year of the account due date, it can be extended for another three years.
  • Currently, the interest rate on SCSS is 7.4% per annum, payable quarterly, for the 2022-2023 fiscal year period.

5. Post Office Term Deposit (TD) Account

5. Post Office Term Deposit (TD) Account

  • A term deposit (TD) at a post office is similar to a fixed deposit at a bank.
  • Although post office term deposits are available for 1, 2, 3, and 5 years, only a 5-year savings period qualifies for a tax deduction under Section 80C of the tax benefits.
  • Although there is no upper limit, the annual tax advantage on investments in 5-year deposits is limited to Rs. 1.5 lakh.
  • Interest earned must be included in the individual’s “other sources income” and is fully taxable.
  • Only an annual interest option is available; Monthly and cumulative alternatives are not available.
  • The current interest rate on five-year Treasuries is 6.7% per annum (5 years), paid annually but computed quarterly.

6. National Savings Certificate (NSC)

6. National Savings Certificate (NSC)

  • No recurring contributions required for NSC; Only one payment is required for five years.
  • At maturity, a fixed amount is paid to the investor that was predetermined at the time of investment.
  • The minimum amount required to open an NSE is Rs. 1000 and multiples of Rs. 100 for more, there is no cap on the scheme. Any number of accounts can be opened under the system.
  • While it is important to note that deposits are eligible for the Section 80c benefit.
  • The current NSC interest rate is 6.8 percent per annum, compounded annually, but paid at maturity.

7. Fixed Deposit with Bank / NBFC

7. Fixed Deposit with Bank / NBFC

The common approach to generating fixed income has traditionally been through bank fixed deposits, however, NBFCs (Non-Bank Financial Corporations) are also making their way into the FD segment by offering a maximum 8.5 per cent interest on deposits depending on the NBFC & period. Currently, the interest rate is approximately 6.5% per annum for the majority of the term, depending on the bank and the term. Fixed Deposit is a reliable and reliable way to keep your capital earning a fixed rate of return while preserving your liquidity.

Story first published: Thursday, August 4, 2022, at 16:02 [IST]

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