Small Saving Schemes in India: Invesment Options |

Table of Contents

What are Small Saving Schemes?

Small Savings Schemes are a group of financial instruments intended to motivate people to save regularly at any age.
They are popular as they provide returns higher than bank fixed deposits, sovereign guarantee and tax benefits.

Who manages the Small Saving Schemes?

Central Government manages these schemes.
Since 2016, the Finance Ministry has been reviewing the interest rates on small savings schemes on a quarterly basis.
All the money received under various schemes are pooled in the National Small Savings Fund.
The money in the fund is used by the Centre to finance its fiscal deficit.
Note : Fiscal Deficit : Government spends for the development of the country, but when it spends more than its revenue, then it is called fiscal deficit. Fiscal means government revenue and deficit is insufficient.

What are the different saving schemes?

The schemes can be grouped under three heads –

Post office deposits
Savings certificates and
Social security schemes

Sno.	Name of the Scheme	Maturity Period	Interest rate	Features
1.	Post Office Saving Account	No period prescribed	7.1%	Minimum Rs. 500/- & No maximum limit. Interest up to Rs. 10000/- is tax free.
2.	National Savings Recurring Deposit Account	5	5.8	Minimum Rs. 100/- per month. No maximum limit. Can be prematurely closed after three years from the date of opening of the account. Can also be extended after maturity with/without deposit.
3.	National Savings Time Deposit Account	1/2/3/5 Year	6.7 for 5years	Minimum Rs. 1000/- and in multiples thereof. No Maximum Limit. Interest calculated on quarterly basis and payable annually. Tax rebate under Sec-80C of I.T. Act is available in 5 Year TD Account.
4	National Savings (Monthly Income Account) Scheme	5	4%	Minimum Rs. 1000/- & in the multiple thereof. Maximum Rs. 4.5 Lakhs in Single Account and Rs. 9 Lakhs in Joint. Interest payable every month. Can be prematurely closed after completion of one year from date of opening of account.
5	Senior Citizen Savings Scheme	5	7.4	Minimum Rs. 1000/- & in the multiples thereof with maximum of Rs. 15 Lakhs. Interest payable quarterly. Can also be prematurely closed. Account can be extended on maturity. Income tax rebate under sec.80C of IT Act is available.
6	National Saving certificate (VIII issue)	5	6.8	Minimum Rs. 1000/- and no maximum limit. Tax rebate under sec-80C of IT Act is available.
7	Kisan Vikas Patra	variable	7 % for 123 months	Minimum Rs. 1000/- and no maximum limit. Money doubles on maturity. Can be prematurely encashed after 2 ½ years at prescribed rates.
8	Public Provident Fund Scheme	15	7.1	Minimum Rs. 500/- & Maximum Rs. 150000/- in a F.Y. Tax free interest. Income tax rebate under sec.80C of IT Act is available. Facility of withdrawal and loan is available after prescribed period. Can also be prematurely closed subject to conditions. Account can be extended in block period of five years.
9	Sukanya Samriddhi Account	21	7.6	Minimum Rs. 250/- & Maximum Rs. 150000/- in a F.Y. Tax free interest. Income tax rebate under sec.80C of IT Act is available. 50% of balance can be withdrawn for higher education after attaining the age of 18 years or passing tenth standard, whichever is earlier.

What is National Small Saving Fund (NSSF)?

All deposits received under National Saving Schemes are credited to the National Small Saving Fund (NSSF).
It is a public account established w.e.f 1.4.1999.
All withdrawals by the depositors are made out of the accumulations in the fund.
The balance in the fund is invested in special securities of the state and Central Governments as per the norms decided by the central Government from time to time.
With effect from 1.12.2011, minimum 50% of the net collections in a State or Union Territory with legislature are being invested in special securities issued by the concerned State or Union Territory Government securities or lent to other Union/ or agencies fully owned by the Central Government.

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