Some of the best government schemes to invest are:
- Public Provident Fund (PPF): This is a tax-free savings scheme that offers attractive interest rates and sovereign guarantee. Individuals can invest up to Rs 1.5 lakh per year in their PPF account and claim tax benefits under section 80C of the Income Tax Act.
- National Savings Certificate (NSC): This is a fixed income investment scheme that can be opened at any post office. The interest rate is compounded annually and paid at maturity. The investment amount and the interest earned are eligible for tax deduction under section 80C.
- Sukanya Samriddhi Yojana (SSY): This is a savings scheme for the girl child that offers a high interest rate and tax benefits. The account can be opened for a girl child below the age of 10 years and matures after 21 years or on her marriage, whichever is earlier. The deposits and the withdrawals are exempt from tax under section 80C and section 10(11A) respectively.
- Senior Citizens Savings Scheme (SCSS): This is a savings scheme for senior citizens above the age of 60 years that offers a regular income and tax benefits. The interest rate is payable quarterly and is subject to TDS. The investment amount is eligible for tax deduction under section 80C up to Rs 1.5 lakh.
- Pradhan Mantri Vaya Vandana Yojana (PMVVY): This is a pension scheme for senior citizens above the age of 60 years that offers a guaranteed return of 7.4% per annum for 10 years. The pension amount is payable monthly, quarterly, half-yearly or yearly as per the choice of the subscriber. The investment amount is exempt from GST and the pension income is taxable as per the slab rates.
- Sovereign Gold Bond Scheme (SGBS): This is a scheme that allows investors to buy gold in paper form and earn interest on it. The bonds are issued by the Reserve Bank of India on behalf of the government and have a tenure of eight years with an exit option after five years. The interest rate is 2.5% per annum payable semi-annually. The capital gains on redemption are exempt from tax if held till maturity.
- Kisan Vikas Patra (KVP): This is a savings scheme that doubles the investment amount in a specified period of time. The interest rate is compounded annually and varies depending on the maturity period. The investment amount is not eligible for tax deduction but the interest earned is tax-free.
- Atal Pension Yojana (APY): This is a pension scheme for unorganized sector workers that provides a fixed monthly pension of Rs 1000 to Rs 5000 after the age of 60 years. The contribution amount depends on the age and the pension amount chosen by the subscriber. The government also co-contributes 50% of the subscriber’s contribution or Rs 1000 per annum, whichever is lower, for five years. The contribution amount is eligible for tax deduction under section 80CCD(1B) up to Rs 50,000.