Top 7 Conservative Deposit Schemes That Make Money Work For You & Also Save Tax

If you are looking to park your savings away from the stock market, there are several fixed-income investment options to choose from. Some of these fixed income investments also offer tax benefits under Section 80C of the Income Tax Act, 9161. However, not all of them could be available to everyone as some of them are exclusive to senior citizens or retired investors. Still, there are a handful of safe financial instruments that come with an assured interest income and in some of these, there is a government guarantee as well. Here is the list of 7 fixed income investment options that you can pick to park your savings and earn fixed income and also save taxes.

1. Sukanya Samriddhi Yojana (SSY)

• A long-term 21-year programme called Sukanya Samriddhi Yojana (SSY) is designed to encourage saving for girls backed by the government.
• Due to its status as a government-sponsored scheme, SSY offers the highest level of principle and interest income protection.
• Only a girl under the age of 10 may have an SSY account registered in her name. If the child is 5 years old, SSY maturity won't occur till the child is 25 years old.
• Parental deposits are only required during the first 15 years of the programme, and for the final six years, even though the scheme is still operational, there are no deposits required.
• One is not permitted to leave the scheme early except under medical circumstances. A maximum of 50% of the money from the prior year may be taken for the girl's further education after the girl reaches the age of 18.
• The SSY may be closed in the event of marriage as long as the girl is at least 18 years old.
• SSY is a tax-advantageous investment because it is eligible for a Section 80C tax benefit and even the interest earned is tax-free.
• The current interest rate is 7.6% per year, compounded yearly, and paid upon maturity.

2. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

• The interest rate for the scheme will keep varying depending on the financial year in which the investment is made.
• The PMVVY is a government-backed ten-year pension scheme for retired adults aged 60 and up who want a regular income from their investment.
• The maximum investment in PMVVY is Rs 15 lakh per senior citizen.
• The age of the investor has no bearing on the pension in PMVVY.
• For Financial Year (FY) 2022-23, PMVVY shall provide an assured pension of 7.40 per cent per annum payable monthly.
• This assured rate of pension shall be payable for the full policy term of 10 years for all the policies purchased till 31st March 2023.

3. Kisan Vikas Patra (KVP)

• Under the Kisan Vikas Patra scheme, you will get the amount invested with a guaranteed double growth after the maturity period, regardless of market fluctuations. It is a safe way to save money.
• The KVP certificate is only available at post offices and can be bought by two adults, an adult for themselves, or an adult on behalf of a juvenile.
• To start investment in KVP, the minimum amount required is Rs. 1,000, and in multiple of Rs 100. There is no maximum limit for the scheme.
• Transferring KVP from one person to another and between post offices is permitted, there is a provision for the transfer.
• In 124 months, the amount invested doubles, and interest and capital are only paid at maturity.
• Currently, the KVP offers a yearly compound return of 6.9%.

4. Senior Citizen Savings Scheme (SCSS)

• SCSS is a well-liked investment choice for people 60 years of age and above.
• A person who has retired or is enrolled in VRS and is 55 years of age or older but not yet 60 years of age may also open an account, provided that they do so within one month of receiving their retirement benefits and that the balance of the account does not exceed their retirement payments.
• SCSS is provided for a five-year term. Although multiple accounts may be opened, the total opening limit is restricted to Rs. 15 lakh.
• Earned interest must be included in one's "Income from Other Sources" and is completely taxable.
• Within one year of the account's maturity, it may be extended for another three years.
• Currently, the interest rate on SCSS is 7.4% per year, payable quarterly, for the Financial Year period of 2022-2023.

5. Post Office Time Deposit Account (TD)

• A time deposit (TD) at the post office is comparable to a fixed deposit at a bank.
• Even though time deposits are available at the post office for 1, 2, 3, and 5 years, only the 5-year saving period is eligible for the tax deduction under section 80C tax benefit.
• Although there is no upper limit, the annual tax advantage on investments made in 5-year deposits is limited to Rs. 1.5 lakh.
• Earned interest must be included in one's "Income from Other Sources" and is completely taxable.
• There is only the annual interest option available; monthly and cumulative alternatives are not available.
• The current interest rate on a five-year Treasury Note is 6.7% annually (5-year), payable annually but computed quarterly.

6. National Savings Certificate (NSC)

• There are no recurring contributions required for NSC; only a one-time payment for a five-year term is required.
• At maturity, a fixed sum is paid out to the investor that was predetermined at the time of investment.
• The Minimum amount required to open NSE is Rs. 1000 and in multiples of Rs. 100 for more, there is no Maximum Limit for the scheme. Any number of accounts can be opened under the scheme. 
• While it's crucial to note that the deposits qualify for the Section 80C benefit.
• The current interest rate for NSC is 6.8 per cent per year, compounded yearly, but paid at maturity.

7. Fixed deposits with Bank/NBFC

A common approach to generating consistent income has traditionally been through bank fixed deposits, however, now the NBFCs (Non-Banking Financial Companies) are also making their way into the FD segment by offering maximum 8.5 per cent interest on deposits depending on the NBFC & Tenure. Currently, the interest rate is roughly 6.5% per year for the majority of tenure, depending on the bank and tenure. A fixed deposit is a reliable and trusted way to keep your capital earning a fixed rate of return while maintaining your liquidity.