Small Savings Schemes: These tax-saving instruments offer up to 7.5% interest. Should you invest?

Conservative investors who refrain from investing in equity tend to invest in financial instruments that give assured returns. These instruments include post office schemes or small savings schemes.

There are a number of small savings schemes that offer tax benefits along with assured returns to investors.

Investments in these schemes not only help create a corpus for emergency purposes and help achieve financial goals but also offer tax benefits up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. 

Here, we give a lowdown on some of the common small savings schemes.

Top 9 small savings schemes (post office schemes):

I. Post office savings account: This offers 4 per cent interest and the minimum contribution is ₹500.

II. National Savings Recurring Deposit Account: From January 1, the interest rate offered on NSC is 6.7 per cent a year. The minimum investment one can make in this deposit account is ₹100 a month, and there is no maximum cap.

III. National Savings Time Deposit: One can open an account for ₹1,000 and in multiples of ₹100. There is no maximum limit. 

For one year, the interest rate is 6.9 per cent and for two years, it is 7 per cent. For three years, the rate of interest is 7.1 per cent and for five years, one is entitled to earn 7.5 per cent interest.

IV. National Savings monthly income account: It offers 7.4 per cent interest per annum. Deposits can be made in multiples of ₹1,000, and the maximum investment limit is ₹9 lakh in a single account and ₹15 lakh in a joint account.

V. Senior Citizens Savings Scheme Account (SCSS)​: It offers 8.2 per cent per annum payable from the date of deposit to March  31/ Sept 30/ Dec 31 in the first instance and thereafter, interest will be payable on April 1, July 1, October 1 and January 1. 

There will be one deposit in the account in multiples of ₹1,000 while the maximum limit is ₹30 lakh.

VI. Public Provident Funds: PPF offers 7.1 per cent per annum to investors. The minimum investment is ₹500 while the maximum is ₹1.5 lakh in a financial year.

VII. Sukanya Samriddhi Account: It offers 8.2 per cent per annum. The minimum investment one can make is ₹250 while the maximum investment is ₹1.5 lakh in a financial year.

VIII. National Savings Certificates (NSC): Interest rate offerened on NSC is 7.7 per cent a year. One can invest a minimum of ₹1,000 and there is no maximum limit.

IX. Kisan Vikas Patra (KVP): It offers 7.5 per cent per annum. The minimum investment is ₹1,000 and there is no maximum limit.