What are the advantages of investing in government schemes?

Government savings programs provide tax benefits under Section 80C of the Income Tax Act of 1961 and offer higher returns compared to traditional term deposits.

Which government scheme is ideal for investment?

The government offers various investment schemes customised for different needs, all of which are risk-free and serve specific purposes. Based on your investment goals, you can choose the most suitable scheme.

Which savings scheme has the highest interest rate?

The Sukanya Samriddhi Yojana (SSY) boasts the highest interest rate at 8.2% as of 26th April 2024.

Which scheme is optimal for tax savings?

The government offers multiple investment schemes that enable tax savings on investment, interest, maturity amount, or a combination of these. Notable options include the Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), Sovereign Gold Bonds (SGB), and Senior Citizen Savings Scheme (SCSS).

Government Schemes to Invest in India in the Year 2024

India offers a diverse landscape for financial planning, and for those seeking stability and security, government investment schemes hold significant importance. These schemes are designed to meet various financial goals, from retirement planning to child education. Backed by the government, they offer attractive benefits such as guaranteed returns, tax exemptions, and long-term security. As these schemes are gaining popularity every day, here is a list of the best government schemes to invest in India in 2024.

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Best Government Investment Schemes in India

Here is a list of some of the best government saving schemes that an investor can look forward to in the year 2024:

Government Saving Schemes	Current Interest Rate	Lock-in period	Minimum Limit (Investment)	Maximum Limit (Investment)
Atal Pension Yojana (APY)	Variable	Till Retirement	₹43 (monthly)	Depends on chosen pension amount
Post Office Monthly Income Scheme	7.40%	5 years	₹1,000	₹9 Lakhs (Single Account)
Kisan Vikas Patra (KVP)	6.90%	115 months (approx)	₹1,000	No maximum limit
National Pension Scheme (NPS)	7.1%	65 years	₹500 (Tier I)	No maximum limit
National Savings Certificate (NSC)	6.80%	5 years	₹1,000	No maximum limit
Public Provident Fund (PPF)	7.10%	15 years	₹500	₹1.5 Lakhs in a financial year
Senior Citizens Savings Scheme (SCSS)	7.40%	5 years	₹1,000	₹30 Lakhs
Sukanya Samriddhi Yojana (SSY)	8.20%	21 years (girl’s age)	₹250	₹1.5 lakhs (per Financial Year)

Let us see the features and benefits of each scheme in detail.

Atal Pension Yojana (APY)

Atal Pension Yojana is specially designed for the unorganized sector of Indian society. It was launched with the objective of providing financial corpus to underprivileged senior citizens. APY is completely regulated by the PFRDA (Pension Fund Regulatory and Development Authority). APY targets individuals in unorganized sectors, such as gardeners, helpers, and workers, enabling them to meet daily expenses and secure their future adequately.

Eligibility Conditions and Other Restrictions
- The age of the employer should range between 18 to 40 years
- Guaranteed monthly pension between ₹1,000 to ₹5,000 upon reaching 60 years of age, depending on your chosen contribution amount.
- Must have a savings bank account or post office savings bank account
- Contributions can be made on a monthly, quarterly, and semi-annually basis
- Tax benefits can be availed under Section 80CCD of the Income Tax Act, 1961
- Banks must gather an extra sum for late payments, with the fee ranging from a minimum of ₹1 per month to ₹10 per month, based on the following scale:
  - ₹1 per month for contributions up to ₹100 per month.
  - ₹2 per month for contributions from ₹101 to ₹500 per month.
  - ₹5 per month for contributions between ₹501 to ₹1000 per month.
  - ₹10 per month for contributions exceeding ₹1001 per month.
Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme (POMIS) is a low-risk government investment scheme. It offers investors a fixed monthly income on their deposit. As of April 2024, the interest rate for POMIS is 7.4% per annum.

Eligibility and Restrictions:
- Who can invest:
  - a single adult
  - Joint Account (up to 3 adults)
  - a guardian on behalf of a minor/person of unsound mind
  - a minor above 10 years in his own name.
- Minimum investment: ₹1500 (initial deposit).
- Maximum investment: ₹9 lakh (single account) or ₹15 lakh (joint account).
- Minimum amount: In multiples of ₹1000/-
- Closure: Account closure after 5 years requires submitting the prescribed application form and passbook to the relevant Post Office.
Kisan Vikas Patra (KVP)

Kisan Vikas Patra (KVP) is a government savings scheme offered by the Indian post office since 1988. Designed to promote long-term financial discipline, the scheme has a tenure of approximately 115 months (9 years and 5 months), during which a one-time investment doubles upon maturity, with a minimum investment of ₹1,000 and no upper limit. KVP is a low-risk option for investors seeking guaranteed returns and capital protection as it is completely government-backed.

Eligibility Conditions and Other Restrictions
- KVP currently offers a fixed interest rate of 7.5% (as of April 26, 2024).
- The scheme has a pre-defined maturity period of 115 months (approximately 9.5 years).
- KVP is now open to all resident Indians, including minors (through a guardian).
- You can invest a minimum of ₹1,000 in multiples of ₹100. There's no maximum limit.
- PAN card proof is required for investments over ₹50,000, and for deposits exceeding ₹10 lakh.
- KVP doesn't offer tax deductions, but the interest earned is exempt from Tax Deducted at Source (TDS) upon withdrawal.
- Early encashment is allowed with a penalty.
- Hindu Undivided Family (HUF) and Non-Resident Indians (NRIs) are not eligible.
National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a voluntary, market-linked government savings scheme. It helps you build a retirement corpus through regular contributions throughout your working life. NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), which ensures transparency and security in the scheme.

Eligibility Conditions and Other Restrictions
- Open to all Indian citizens (resident or non-resident) between 18-65 years old.
- Any Indian resident, as well as NRIs, can avail of the benefits of the scheme.
- NPS offers Tier I and Tier II accounts. Tier I is for retirement savings and has restrictions on withdrawals. Tier II acts like a regular savings account with more flexibility.
- NPS offers flexibility in asset allocation choices (Auto choice and Active choice) to the holders
- A ceiling of ₹1.5 lakh can be exempted from taxation under this scheme
- You have the flexibility to choose a Pension Fund Manager (PFM) who will manage your NPS account.
- At maturity, you can withdraw up to 60% of the corpus amount as a lump sum. The remaining 40% has to be used to purchase an annuity that will provide you with a regular pension income.
National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a government-backed fixed-income investment scheme available through post office branches. It targets small to mid-income investors, offering a dual benefit of savings and tax savings. It's designed to encourage individuals to invest their savings while also providing tax benefits under Indian tax laws.

Eligibility Conditions and Other Restrictions
- There is no age limit for the scheme holder.
- The scheme holder should be an Indian citizen.
- NRIs can not invest.
- Minor can be added as a nominee by the scheme holder.
- The minimum contribution that can be made towards the scheme is ₹100, and the maximum has no limit.
- Tax benefits up to ₹1.5 lakhs can be availed under Section 80C of the Income Tax Act, 1961.
- The current interest rate on NSC is 7.7% per annum (as of April 2024), reviewed quarterly by the government.
- Premature withdrawals are not allowed in general conditions.
Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a long-term government investment scheme. PPF was launched with the aim to promote small investments by providing reasonable returns. Currently, the interest rate of PPF is 7.1%, and is a popular choice for individuals seeking secure savings and tax benefits.

Eligibility Conditions and Other Restrictions
- Any Indian citizen can open a PPF account.
- The account can be opened on behalf of a minor as well
- PPF accounts can be operational online as well.
- Minimum deposit required each year is ₹500. You can invest a maximum of ₹1.5 lakh per financial year.
- The current rate of interest is 7.1%
- Deposits made towards PPF qualify for tax deduction under Section 80C of the Income Tax Act.
- Premature withdrawals can be made, but with some regulations
- Aadhar card needs to be linked with the bank account to open a PPF account
- It comes with a lock-in period of 15 years
- Partial withdrawals can be made starting from the 7th year.
- Loan facility is available from the 3rd financial year up to the 6th financial year.
Senior Citizens Savings Scheme (SCSS)

The Senior Citizens Savings Scheme (SCSS) is a government-backed retirement program designed for senior citizens in India, aged 60 and above. SCSS accounts can be opened individually or jointly at Post Office branches or authorized banks. With a recent update in Budget 2023, the maximum deposit limit has been raised from ₹15 lakhs to ₹30 lakhs, making it an attractive option for those seeking regular income, safety, and tax-saving benefits

Eligibility Conditions and Other Restrictions
- Must be 60 years or above.
- Individuals between 55 and 60 who are retired under schemes like superannuation, VRS, or special VRS can also apply.
- NRIs and Hindu Undivided Families (HUFs) are not eligible.
- The current interest rate of the SCSS is 7.4% per annum.
- The account can be opened at any bank or post office.
- Premature closure is allowed under certain conditions, but a penalty may apply.
- Only a one-time investment is allowed per account.
- The minimum investment amount is ₹1,000.
- Maximum of ₹30 lakhs can be deposited under the scheme.
- The account can be transferred from a post office to bank or visa versa as per convenience.
- Tax benefit of up to ₹1.5 lakhs can be availed under Section 80C of the Income Tax Act, 1961.
Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) is a government investment scheme launched in India specifically for the girl child. It aims to promote girl child education and empower their financial future. Currently, SSY offers an attractive interest rate of 8.2% per annum (as of April 26, 2024).

Eligibility and other restrictions:
- Age: An account can be opened for a girl child up to 10 years old.
- Number of Accounts: Only one account can be opened per girl child.
- Guardians: A parent or legal guardian can open and manage the account.
- Deposit Period: Deposits can be made up to 15 years from the account opening date.
- Minimum Deposit: A minimum of ₹250 needs to be deposited initially, with subsequent deposits in multiples of ₹50.
- Maximum Deposit: The maximum annual deposit is ₹1.5 lakh.
- Account Maturity: The account matures 21 years from the opening date.
Additional benefits of SSY include:
- Tax deductions under Section 80C of the Income Tax Act.
- Interest earned is exempt from Income Tax.

In The End!

There are many other schemes offered by the Government of India to protect the financial future of the residents of their country. Whether you're a young professional starting your career or nearing retirement, there's 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.

FAQs

What are the advantages of investing in government schemes?

Government savings programs provide tax benefits under Section 80C of the Income Tax Act of 1961 and offer higher returns compared to traditional term deposits.
Which government scheme is ideal for investment?

The government offers various investment schemes customised for different needs, all of which are risk-free and serve specific purposes. Based on your investment goals, you can choose the most suitable scheme.
Which savings scheme has the highest interest rate?

The Sukanya Samriddhi Yojana (SSY) boasts the highest interest rate at 8.2% as of 26th April 2024.
Which scheme is optimal for tax savings?

The government offers multiple investment schemes that enable tax savings on investment, interest, maturity amount, or a combination of these. Notable options include the Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), Sovereign Gold Bonds (SGB), and Senior Citizen Savings Scheme (SCSS).

†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. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). 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 01-12-2024

^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
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^^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).