Government schemes offer secure returns, tax benefits, and long-term growth. In 2025, top schemes like PPF, SSY, SCSS, and NPS continue to be popular choices amongst the masses. These schemes suit different financial goals, from retirement savings to child education. With government backing, they ensure low risk and steady returns. Let us explore the best government schemes to invest in this year.
Top performing plans˜ with High Returns**
Invest ₹10K/month & Get ₹1 Crore# on Maturity
Here is a list of some of the best government saving schemes that an investor can look forward to in the year 2025:
| Scheme Name | Current Interest Rate | Lock-in Period | Min. Investment | Max. Investment |
|---|---|---|---|---|
| Atal Pension Yojana (APY) | 8.00% | Till age 60 | ₹1,000/year | Varies by pension amount |
| Post Office Monthly Income Scheme (POMIS) | 7.40% | 5 years | ₹1,000 | Varies by account type |
| Kisan Vikas Patra (KVP) | 7.50% | 115 months (approx.) | ₹1,000 | No limit |
| National Pension Scheme (NPS) | 9-15% (market-linked) | Till retirement | ₹500/month | No limit |
| National Savings Certificate (NSC) | 7.70% | 5 years | ₹1,000 | No limit |
| Public Provident Fund (PPF) | 7.10% | 15 years | ₹500/year | ₹1.5 lakh/year |
| Employees' Provident Fund (EPF) | 8.25% | Till retirement | Varies | No limit |
| Senior Citizens Savings Scheme (SCSS) | 8.20% | 5 years | ₹1,000 | ₹15 lakh |
| Sukanya Samriddhi Yojana (SSY) | 8.20% | Till girl's marriage/21 yrs | ₹250/year | ₹1.5 lakh/year |
| Post Office Savings Account (SB) | 4.00% | No lock-in | ₹500 (varies) | No limit |
| National Savings Recurring Deposit (RD) | 6.70% | Varies (min. 6 months) | ₹100/month | No limit |
| National Savings Time Deposit (TD) | 6.90%-7.50% (by tenure) | 1-5 years | ₹1,000 | No limit |
| Mahila Samman Savings Certificate | 7.50% | 2 years | ₹1,000 | ₹2 lakh |
| RBI Floating Rate Saving Bonds | 8.05% | 7 years | ₹1,000 | No limit |
| Municipal Bonds | 6-10% (varies) | Varies | Varies | Varies |
*Important Note: Interest rates are subject to change. **yr: year.
Let us see the features and benefits of each scheme in detail.
The Atal Pension Yojana (APY) is a government-backed pension scheme aimed at providing a fixed monthly pension to workers in the unorganized sector. It encourages individuals to save for their retirement systematically.
Pension Benefits: Offers guaranteed monthly pensions ranging from ₹1,000 to ₹5,000.
Government Contribution: The government contributes to your pension for the first 5 years, if eligible.
Age of Enrollment: Open for individuals between 18-40 years of age.
Tax Benefits: Contributions are eligible for tax deductions under Section 80CCD(1).
Flexible Contribution: Contributions are based on the age at which you join and the desired pension amount.
The Post Office Monthly Income Scheme (POMIS) offers guaranteed monthly income for investors, providing a steady flow of income. This is a risk-free, fixed-income investment option.
Interest Payments: Earns monthly interest, currently at 7.4% per annum.
Risk-Free Investment: Backed by the government, offering safety of principal.
Tenure: Fixed 5-year maturity period.
Taxation: Interest is taxable, but no TDS is levied for accounts earning interest below ₹10,000 annually.
Premature Withdrawal: Allowed after 1 year with a penalty.
Kisan Vikas Patra is a fixed-income investment scheme that doubles the invested amount at a specific maturity period.
Doubling Investment: Your investment doubles at the maturity period of 112 months.
Risk-Free: Guaranteed returns backed by the government.
Transferable: Can be transferred from one post office to another.
Taxation: Interest is taxable, and no TDS is applicable.
Liquidity: Premature withdrawals are allowed after 2.5 years with some penalty.
The National Pension Scheme (NPS) is a government-backed retirement scheme that offers tax benefits and helps build a retirement corpus.
Pension Options: Provides flexibility to choose between equity, corporate bonds, and government securities.
Tax Benefits: Deductions under Section 80CCD(1) and 80CCD(2). Additional tax benefits of up to ₹50,000 under Section 80CCD(1B).
Age of Enrollment: Open to citizens between 18-70 years.
Partial Withdrawals: Allowed after 3 years for specific purposes like children’s education.
Mandatory Annuity: At least 40% of the corpus must be used to buy an annuity at retirement.
National Savings Certificates (NSC) offer a safe and government-backed investment with fixed returns, suitable for tax-saving purposes.
Interest Rate: Currently at 7.7% per annum, compounded annually.
Tenure: 5 years, with fixed interest payouts at maturity.
Tax Benefits: Eligible for deductions under Section 80C up to ₹1.5 lakh.
Transferability: This can be transferred between individuals, excluding minor transfers.
Fixed Returns: Guaranteed returns, ideal for conservative investors.
The Public Provident Fund (PPF) is a long-term, risk-free savings scheme that offers tax-free returns, making it an ideal choice for retirement planning.
Interest Rate: Currently 7.1% per annum, compounded annually.
Tenure: 15 years, extendable in blocks of 5 years.
Tax Benefits: Contributions are eligible for deductions under Section 80C.
Interest Taxation: Interest earned is tax-free.
Partial Withdrawal: Permitted after 6 years for specific purposes.
The Employees’ Provident Fund (EPF) is a retirement savings scheme for salaried employees, where both the employer and employee contribute to the fund.
Employer Contribution: The employer contributes an equal share (12%) of your basic salary.
Interest Rate: Currently at 8.15% per annum.
Tax-Free: Interest earned and the corpus are tax-free if withdrawn after 5 years of continuous service.
Compulsory Participation: Mandatory for employees of companies with more than 20 employees.
Loan Facility: EPF allows loans against the corpus for specific purposes like home purchase.
The Senior Citizens Savings Scheme (SCSS) is a government-backed savings scheme providing senior citizens with a guaranteed monthly income.
Interest Rate: Currently 8.20% per annum, paid quarterly.
Eligibility: Available for individuals aged 60 years or above.
Tax Benefits: Eligible for tax deductions under Section 80C.
Tenure: 5 years, with a 3-year extension option.
Liquidity: Premature withdrawals are allowed with penalties.
Sukanya Samriddhi Yojana (SSY) is a government scheme aimed at securing the future education and marriage expenses of a girl child.
Interest Rate: Currently 8.20% per annum, compounded annually.
Eligibility: Only for girls under the age of 10.
Tax Benefits: Contributions are eligible for deductions under Section 80C.
Tenure: 21 years or until marriage after the age of 18.
Partial Withdrawals: Allowed after the girl turns 18 for education.
The Post Office Savings Account offers simple, government-backed savings with easy deposit and withdrawal options.
Interest Rate: 4% per annum, compounded quarterly.
Minimum Balance: ₹500 required to maintain the account.
Liquidity: Unlimited withdrawals allowed.
Tax Benefits: Interest earned is eligible for deduction under Section 80TTA (up to ₹10,000).
Safety: Deposits are backed by the government, ensuring complete safety.
The National Savings Recurring Deposit allows individuals to invest small amounts regularly, ensuring disciplined savings with fixed returns.
Interest Rate: 6.70% per annum, compounded quarterly.
Tenure: 5 years.
Monthly Deposits: Must deposit a fixed amount every month.
Premature Withdrawal: Allowed with penalties after one year.
Taxation: Interest earned is taxable.
National Savings Time Deposit is a fixed deposit scheme offering guaranteed returns for those seeking a safe, long-term investment.
Interest Rate: 6.90% - 7.5% per annum for 1, 2, 3, 5 year terms, compounded quarterly.
Tenure: Available for 1, 2, 3, and 5 years.
Interest Payment: Interest is paid quarterly.
Premature Withdrawal: Allowed with penalties.
Taxation: Interest is taxable, and TDS is applicable if interest exceeds ₹10,000 annually.
The Mahila Samman Savings Certificate is a new initiative designed to empower women, offering guaranteed returns and tax-free interest.
Interest Rate: Currently 7.5% per annum, compounded quarterly.
Eligibility: Available to Indian women and girls.
Tenure: 2 years.
Tax Benefits: Interest earned is tax-free.
Flexibility: Allows flexibility in investment amounts for women investors.
Floating Interest Rate: The interest rate is revised every six months, currently at 8.05% (as of January 2025).
Tenure: Fixed 7-year maturity period.
Guaranteed Returns: Backed by the Government of India, ensuring safety.
Interest Payout: Paid half-yearly (no cumulative option).
Taxation: Interest earned is taxable as per the investor's income tax slab.
Municipal Bonds are debt securities issued by municipal corporations to fund infrastructure projects, offering returns with relatively low risk.
Interest Rate: Varies between 6-8%, depending on the issuer.
Tenure: Typically 10-15 years.
Tax Benefits: Some municipal bonds may offer tax exemptions under Section 10.
Marketability: These bonds can be traded in secondary markets.
Safe Investment: Lower risk compared to corporate bonds.
There are many other schemes offered by the Government of India to protect the financial future of the residents of their country. Whether you are a young professional starting your career or nearing retirement, there is a government scheme customised to your needs. An investor needs to analyze all the aspects before making any future investment to safeguard the finances of themselves and their family.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Past 10 Years' annualised returns as on 01-03-2025
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
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