There are several schemes launched by the Government to infuse the habit of saving and encourage people to invest in Government-backed schemes to enjoy the tax benefits and risk-free investments. If you are looking for an investment with safe returns, you can consider investing in the below schemes. However, if you already have invested in a few, you can consider altering the amount based on the risk factor. The government implements these schemes through banks, financial institutions, and post offices.
If you are comfortable with low risks and moderate returns, then government-backed investment options are perfect for you. There are some of the government investment opportunities for you:
Government Securities (G-Secs)
Retail investors have several ways to invest in Government securities Treasury bills (T-Bills) and the Government of India (GoI) dated bonds on the primary market. G-Secs come in a variety of maturities from 91 days to 40 years, based on the length of the particular arrangement of the liabilities of the respective organizations.
Benefits of investing Government Securities
- As they are Sovereign secure, there is no risk of default.
- No TDS applicable on interest
- G-Secs can be stored in a current Demat account
- They can be quickly traded on the secondary market
- G-Secs can also be used as collateral to borrow funds in the repo market.
Sovereign Gold Bonds (SGBs)
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. The Bond is issued by Reserve Bank on behalf of the Government of India. Investors must pay the agreed price in cash and the bonds will be redeemed in cash at maturity. The SGBs are issued by Reserve Bank on behalf of the Government of India.
Benefits of SGBs
- The risks and costs of storage are eliminated.
- SGB is exempt from problems such as making charges and purity
- The bonds can be held Demat form
- TDS is not applicable on the bond.
- The bonds are eligible as collateral for loans from banks.
Atal Pension Yojana
Atal Pension Yojana (APY), a pension scheme for Indian residents, focuses on unorganized sector workers. Under the APY, a fixed minimum pension will be provided at the age of 60 years, based on the donation rendered by the subscribers.
Benefits of joining APY scheme
- On the death of the contributor, the pension automatically vests to the spouse who is the default nominee
- Tax exemption is applicable to payments made by individuals to Atal Pension Yojana under Section 80CCD of the Income Tax Act, 1961
- GoI will also co-contribute 50% of the subscriber's contribution or Rs 1000 per annum, whichever is lower.
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National Pension Scheme
NPS aims at encouraging people the practice saving for retirement. It is an effort to find a permanent solution to the issue of providing every citizen of India with a sufficient retirement income. The NPS is a successful scheme for someone who wishes to schedule early retirement and has a low-risk appetite.
Benefits of NPS
- There is a deduction of up to Rs 1.5 lakh can claim for the contribution made
- NPS offers a broad variety of investment choices and the preference of pension funds (PFs)
- Opening an account with NPS is simple. It provides seamless portability across jobs and locations
- Until retirement, the accumulation of pension wealth rises over time with a compounding effect.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana scheme was launched by the Government, designed to improve the betterment of the girl child. Investments made under the Sukanya Samriddhi scheme are excluded from income tax according to section 80C of the Income Tax Act.
Public Provident Fund (PPF)
Public Provident Fund, PPF is one of the popular investment avenues among Indians. It is a tax-free savings scheme. Individuals may invest up to Rs 1.5 lakh per year in their PPF account and can also claim tax benefits under section 80C of the Income Tax Act.
Prime Minister Vaya Vandana Yojana
Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme offered by the Government of India specifically for senior citizens aged 60 years and above.
Benefits of Pradhan Mantri Vaya Vandana Yojana
- Pension is payable at the end of each period, during the policy term of 10 years, as per the frequency requested
- Loan up to 75% of the purchase price will be allowed after 3 policy years.
- The scheme is exempted from GST.
- The scheme initially offers a fixed rate of return of 7.66% every year for 2020-21 per year and would reset thereafter.
Pradhan Mantri Jeevan Jyoti Bima
Pradhan Mantri Jeevan Jyoti Bima is a term insurance plan launched by the Government of India. This plan aims to secure your family's future with a life cover. This insurance scheme offers life insurance cover for death due to any reason.
Benefits of Pradhan Mantri Jeevan Jyoti Bima
- The premium charged in the scheme is liable for tax benefits as provided for in Section 80C of the Income Tax Act.
- This provides a death coverage of Rs 2,00,000 to the beneficiary in the case of a sudden demise.
- Other Important Government schemes
National Savings Certificate (NSC)
National Savings Certificate (NSC) provides you with a guaranteed return and bears practically no risk as it is sponsored by the Government of India. NSC comes with a set maturity period of 5 years. There is no upper limit on the purchase of NSCs, but under Section 80C of the Income Tax Act, only investments up to Rs.1.5 lakh can earn you a tax rebate.
Make sure you keep a watch on the investment schemes as the government continues to adjust the functionality and the interest rate on a regular basis.