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In this policy, the investment risk in investment portfolio is borne by the policyholder Param Rakshak Plus solution comprises of Tata AIA Life Insurance Smart Sampoorna Raksha, A Unit-linked, Non-participating, Individual Life Insurance Plan for Savings and Protection (UIN:110L156V03), Tata AIA Vitality Protect Plus, A Non-Linked, Non- Participating Individual Health rider (UIN: 110A048V03) and Tata AIA Vitality Health Plus, A Non-linked, Non-participating, Individual Health Rider (UIN: 110A047V02). Tata AIA Life Insurance Smart Sampoorna Raksha is also available individually for sale.


Personal financial management is a crucial aspect. It helps individuals manage their routine expenses and secure finances for the future. The Government and other financial institutions introduced saving schemes to help individuals manage their finances, plan for their upcoming financial needs, and secure their family’s financial future.

There are different types of saving schemes in India. Here is a detail about what it means and how it can help individuals plan their financial investments. 
 

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What Is a Savings Scheme?
 

Saving schemes are financial instruments that help individuals accumulate funds for accomplishing their future financial goals based on the terms and conditions of the specific scheme.

The saving schemes in India are introduced by the Government, financial institutions, and public and private sector banks. The Government or the financial institution decides the interest rate for the saving schemes on a periodical basis.

Individuals can utilize these saving schemes to manage short-term emergencies and long-term financial goals, such as purchasing a new house, starting a new business, planning for their children's higher education, etc.,

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Importance Of Saving Schemes in India


Investing in saving schemes is considered a major financial objective for certain reasons:

  • Cost-effective/affordable - Why Purchase Term Insurance Plans Online?

    Accomplishing Long-Term Financial Goals

    The money-saving schemes are based on the compounding factor. It will help individuals earn interest on interest and accumulate the funds long-term. These maturity returns can aid in accomplishing future money goals.

    As the interest rate is known during inception, individuals can plan their investment amount and the period to accomplish the goals based on their requirements. The investment period can range between 5 years and 60 years.

  • Enhance Term Insurance coverage with Rider Benefits

    Retirement Planning

    As against future financial goals, one of the most important reasons to invest in saving schemes in India is retirement planning. Retirement planning is necessary to lead a peaceful life after the employment phase without compromising the current living standards.

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    Financial Security

    The majority of the saving schemes in India are not based on the financial market. Therefore, the returns are not affected by the inherent market risk and are considered safer for the investment.

    Conservative investors seeking a safe investment platform and earning considerable interest on their funds deposited can choose the Government savings schemes. 

  • Choose your sum assured to get coverage which is at least 10 times of your annual income

    Personal Financial Management

    Saving funds for the future and avoiding unnecessary expenses is important for personal financial management. Investing in financial products such as saving schemes in India is necessary for personal financial management to become easier. 

    Investors can plan their monthly budget considering their income and expenses, make a long-term financial plan to accommodate their financial goals, and choose the most affordable and best savings scheme based on their financial needs. 

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    Tax Benefits

    The Government has introduced various tax provisions to help the investors benefit from these saving schemes by providing various tax# deductions and exemption benefits. It encourages investors to save funds for the future for their financial needs while saving on tax.

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    Accessibility and Flexibility

    The saving schemes in India are becoming increasingly accessible due to online services. Therefore, the investors can navigate across different products, compare, and choose the best savings scheme. In addition, some of the saving schemes are customisable, considering the investment period, withdrawal features, etc.,

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Non-Linked, Non-Participating, Individual Life Insurance Savings Plan (UIN:110N158V07)
 

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Different Types of Saving Schemes in India
 

There are different types of saving schemes in India. It is important to understand the features and benefits of each of these to benefit from them maximally. Here is a detail explaining the different saving schemes.

The interest rates provided here are for FY 2022 - 23. It is subject to revision by the Government annually or every quarter.

Public Provident Fund (PPF)

PPF is a long-term small savings scheme introduced by the Government. Individuals can open a PPF account at the post office or the nearest bank. The investors have to deposit a certain amount regularly into the PPF account. The accumulated fund and the interests earned will be provided as the maturity benefit at the end of the policy tenure.
 

  • Interest rate - 7.1%
  • Lock-in period - 15 years. The investment period can be extended in a block of 5 years.
  • Minimum investment - ₹500
  • Maximum investment - ₹1.5 Lakh
  • Taxation - The amount deposited annually, interest earned, and maturity returns qualify for the tax deductions and exemptions benefit.

National Savings Certificate (NSC)

NSC is a government savings scheme that provides guaranteed returns. The interest is compounded annually and payable at the end of the policy tenure. It is a small savings scheme available at any of the post office branches for investment.
 

  • Interest rate - 6.8% per annum
  • Lock-in period - 5 years
  • Minimum investment - ₹100
  • Maximum investment - Not defined.
  • Taxation - The investment made in the NSC qualifies for the tax deduction under Section 80C. And the interest earned is taxed as per the income tax slab. However, if the interest is reinvested, it qualifies for the tax deduction under Section 80C within the applicable limit.

Senior Citizens Savings Scheme (SCSS)

Senior Citizens Savings Scheme is a financial instrument exclusively for senior citizens who want to invest their retirement funds. However, individuals between 55 and 60 years who opt for early retirement can also invest in these saving schemes within one month of receiving their retirement benefits. The interest earned from the SCSS will be credited to the investor's savings account maintained with the same post office.
 

  • Interest rate - 7.4% per annum
  • Lock-in period - 5 years. The investment period can be extended for 3 years.
  • Minimum investment - ₹1000
  • Maximum investment - ₹15 Lakh
  • Taxation - The amount deposited qualifies for the deduction benefits under Section 80C. And the interest earned is taxable. However, senior citizens can claim a deduction of up to ₹50,000 under Section 80TTB for the returns credited under this scheme.

Post Office Monthly Income Scheme (National Savings Monthly Income Account)

The Post Office Monthly Income Scheme is a money savings scheme that provides a regular income. The account holder will receive a regular income based on the interest credited to the savings account maintained with the post office. It applies to joint account holders of up to three members and a maximum of up to ₹9 Lakh investment.
 

  • Interest rate - 6.6%
  • Minimum investment - ₹1500
  • Maximum investment - ₹4.5 Lakh
  • Taxation - The investment made in this scheme and the interests earned do not qualify for the tax deduction or exemption benefits.

Kisan Vikas Patra (KVP)

It is a small savings scheme with a fixed rate for conservative investors. Investors can approach investing in the scheme at the nearest post office. The KVP offers guaranteed returns and the premature encashment option after completing two and half years of investment. In addition, the investment certificate can be used as collateral to get loans from banks.
 

  • Interest rate - 6.9%
  • Investment period - 124 months
  • Minimum investment - ₹1000
  • Maximum investment - Not defined
  • Taxation - The investment made, and the returns earned will not qualify for the tax deduction and exemption benefits.

Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana is one of the best saving schemes in India to secure the life of girl children. It can be opened by parents with girl children less than 10 years of age. Parents can open up to two accounts, one for each girl child. Partial withdrawal of up to 50% of the balance is applicable for the child's higher education after she attains the age of 18.
 

  • Interest rate - 7.6%
  • Investment tenure - 21 years from the date of opening the account or after attaining the age of 18 when the girl child gets married. However, the parents must contribute to the account for 15 years.
  • Minimum investment - ₹250
  • Maximum investment - ₹1.5 Lakh
  • Taxation - Investment in these money-saving schemes will qualify for the tax deduction of up to ₹1.5 Lakh under Section 80C, and the interests earned are tax-exempt.

National Pension Scheme (NPS)

The NPS is a government savings scheme for Central and State Government employees and employees in the organised and unorganised sectors. The contribution to this scheme has to be made by the employees and the employers equally. The contribution is 10% of the salary for other employees and 14% for Government employees. When the account holder retires, he can withdraw up to 60% of the accumulated fund. The remaining 40% of the fund should be invested in an annuity plan for a monthly income after retirement.
 

  • Interest rate - 9% to 12% per annum
  • Investment period - Until 60 years of age
  • Minimum investment - ₹1000
  • Maximum investment - Not defined
  • Taxation - The amount invested will qualify for the tax deduction under Section 80C. In addition, individuals can increase their self-contribution and claim an additional deduction benefit of up to ₹50,000. 60% of the funds withdrawn after retirement are tax-exempt. However, the annual income received post-retirement is taxable based on the income tax slab. 

Atal Pension Yojana

It is a Government savings scheme introduced for the welfare of the weaker section of society. Individuals between 18 and 40 years of age can apply for this scheme. The contribution to this scheme is based on the monthly pension required. Therefore, subscribers must analyse their requirements and invest in this scheme. The minimum and maximum pension applicable are ₹1000 and ₹5000 upon attaining the age of 60 years.
 

  • Investment tenure - 20 years
  • Minimum pension - ₹1000
  • Maximum pension -₹5000
  • Taxation - The investment and the returns are not taxable.
     

The Government will contribute 50% of the annual premium paid by the subscribers or ₹1000 per annum, whichever is lower. The co-contribution is applicable for 5 years if the scheme is subscribed between 1st June 2015 and 31st December 2015. Furthermore, the Government contribution is applicable if the subscribers are not taxpayers and do not have a statutory savings scheme.

Employees Provident Fund (EPF)

EPF is a savings scheme in India operated based on the EPFO guidelines for long-term retirement benefits. It applies to salaried individuals. The employees and employers must contribute 12% of the employee's monthly basic salary and dearness allowance up to ₹15000 to the Provident Fund account. The contribution to the EPF is reduced to 10% for non-government organizations.
 

  • Interest rate - 8.1%
  • Lock-in period - 5 years
  • Investment tenure - Until retirement
  • Taxation - The employee’s contribution qualifies for tax deduction under Section 80C, and the employer’s contribution is taxable if the total contribution to NPS, EPF or superannuation fund exceeds ₹7.5 Lakh. Furthermore, the interest credited on employee contributions made above ₹2.5 Lakh is taxable.

Voluntary Retirement Fund

Voluntary Retirement Fund refers to an increase in the employees' contribution to their provident fund account. The contribution is higher than the 12% contribution by an employee towards their EPF. The maximum contribution can be 100% of their basic salary and dearness allowance.
 

  • Interest rate - 8.1%
  • Investment tenure - 5 years from when the contribution starts
  • Minimum investment - Above 12% of the EPF contribution
  • Maximum investment - Up to 100% of the basic salary and dearness allowance
  • Taxation - The contribution, interest earned, and maturity returns qualify for the tax deduction and exemption benefit.

Post Office Savings Schemes

The Post Office Savings Schemes provide various options that provide guaranteed returns. Investors can choose the best savings schemes based on their financial needs, return on investment and investment tenure. The risks involved in the financial products offered by India Post are extremely less or negligible. Some of the popular savings’ schemes offered at the post offices are:
 

  • Post Office Savings Account
  • Senior Citizens Savings Scheme Account
  • National Savings Certificate Account
  • Sukanya Samriddhi Account
  • Public Provident Fund Account
  • Kisan Vikas Patra Account
  • National Savings Time Deposit Account
  • National Savings Recurring Deposit Account
  • National Savings Monthly Income Account


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Comparison Of Savings Schemes in India

Savings Schemes

Lock - in period/Investment tenure

Interest rate

Investment amount

Taxation

Public Provident Fund (PPF)

15 years

7.1%

Min - ₹500

Max - ₹1.5 Lakh

 

Investment, interest earned, and maturity returns qualify for tax deduction and exemption benefits.

National Savings Certificate (NSC)

5 years

6.8%

Min - ₹100

Max - Not defined.

 

The investment and the interest reinvested qualify for the tax deduction under Section 80C. The interest earned is taxable based on the tax slab.

Senior Citizens Savings Scheme (SCSS)

5 years, investment period can be extended for 3 years.

7.4%

Min - ₹1000

Max - ₹15 Lakh

 

Investment qualifies for the deduction under Section 80C. Interest earned is taxable. However, senior citizens can claim a deduction of up to ₹50,000 under Section 80TTB.

 

Post Office Monthly Income Scheme (POMIS)

5 years

6.6%

Min - ₹1500

Max - ₹4.5 Lakh

No tax benefits.

Kisan Vikas Patra (KVP)

124 months

6.9%

Min - ₹1000

Max - Not defined

No tax benefits

Sukanya Samriddhi Yojana (SSY)

Contribution - 15 years

21 years from the date of opening the account or until when the girl child gets married after 18 years of age.

7.6%

Min - ₹250

Max - ₹1.5 Lakh

Investment made and interests earned qualify the tax deduction and exemption benefits.

National Pension Scheme (NPS)

Until 60 years of age

9% - 12%

Min - ₹1000

Max - Not defined

 

Amount invested qualifies for a tax deduction of up to ₹2 Lakh. 60% of funds withdrawn at maturity is tax-exempt, and the income earned is taxed based on the applicable income tax slab post-retirement.

Atal Pension Yojana

20 years

 

Investment is based on the pension required.

Min - ₹1000

Max - ₹5000

Investment and returns are not taxable.

Employees Provident Fund

5 years

8.1%

12% of the basic salary each by the employee and employer.

Employee’s contribution qualifies for tax deduction under Section 80C, and the employer’s contribution is taxable if the total contribution to NPS, EPF or superannuation fund exceeds ₹7.5 Lakh. The interest credited on employee contributions made above ₹2.5 Lakh is taxable.

Voluntary Retirement Fund

5 years

8.1%

Min - Above 12% of the EPF contribution

Max - Up to 100% of the basic salary and dearness allowance

The contribution, interest earned, and maturity returns qualify for the tax deduction and exemption benefit.

 

How To Find the Best Saving Scheme?
 

Finding the best saving scheme for individual financial needs is an important step in financial planning. It helps achieve financial goals timely without affecting the current lifestyle and routine expenses. Here are a few steps to help find the best savings scheme.

  1. Understand the financial needs and investment objectives.
  2. Make a monthly budget considering the routine expenses.
  3. Make a financial plan considering the short-term and long-term financial goals.
  4. Based on the income, financial commitments, and goals, decide on the fund that can be invested regularly.
  5. Find the different applicable savings schemes in India.
  6. Compare the different options and choose the best savings scheme considering the financial objectives and affordability.
  7. Analyse the risk profile before investing to ensure no financial crisis during an emergency.
  8. Calculate the tax benefit by understanding the tax deduction and exemptions for the saving schemes.
  9. Reduce the investment and, if applicable, the interest earned on the taxable income to find the income tax liability and decide on the most affordable and best savings scheme.
  10. Invest in the savings scheme for the long term to maximise the investment benefit.
     

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Frequently Asked Questions

What is a small savings scheme?

Small savings schemes are financial instruments that help individuals achieve their financial goals over a certain period. It helps accumulate funds based on a regular investment and the interests earned. The interest rates are revised by the Government every quarter or annually. Some of the common small savings’ schemes are Public Provident Fund, Senior Citizen Savings Scheme, Sukanya Samriddhi Yojana, National Savings Certificate, etc.,

What are the best saving schemes for senior citizens?

Senior citizens prefer investing in savings schemes that provide guaranteed returns and receive a regular income after retirement. Some of the popular saving schemes for senior citizens are: 

  • Senior Citizens Savings Scheme
  • Bank Fixed Deposits
  • Post Office Monthly Income Scheme
  • Equity Linked Savings Scheme (for growth if risks can be affordable to a certain extent)
  • National Pension Scheme

Are the interest rates fixed for saving schemes?

The interest rates are not fixed for the savings schemes. The Government will revise it timely, either every quarter or annually, based on the type of savings scheme.

How to create a savings plan?

A savings plan can be created based on the following steps:

  • Make a monthly budget accommodating routine expense such as groceries, travel, clothing, etc.,
  • Set aside a portion of your income to manage emergencies and invest in savings schemes.
  • Identify the short-term and long-term financial goals.
  • Compare and find the best savings schemes to help accomplish your future financial goals.
  • Create a savings plan by allocating a portion of your income to the chosen savings schemes for the long term.
  • Revise the income invested timely based on the increase in the income.

What is a Fixed Deposit Double Scheme?

The Fixed Deposit Double Scheme offered by banking financial institutions is a savings scheme that doubles the money invested based on the interests earned. It requires the investors to deposit a particular sum for a fixed period.

What is an Employee Savings Plan?

An employee savings plan is a savings scheme wherein the employees contribute to a fund for future financial or retirement needs managed by the employer.

What are monthly income savings schemes?

Monthly income savings schemes allow accumulating funds over the long term and investing the returns in an annuity plan to receive a regular income or investing a lump sum or retirement benefits for immediate regular income.

What are the post office savings schemes?

Some of the most common post office savings schemes are:

  • Senior Citizens Savings Scheme
  • Public Provident Fund
  • National Savings Certificate
  • Kisan Vikas Patra
  • Sukanya Samriddhi Yojana

Which saving schemes provide a higher interest rate?

Some of the saving schemes that provide a higher interest rate are:

  • Senior citizens savings scheme
  • Employee Provident Fund
  • National Pension Scheme
  • Sukanya Samriddhi Yojana
  • Public Provident Fund

Why are saving schemes considered safe investment options?

Savings schemes are considered safe investment options because the Government majorly regulates them. Therefore, the chances of default are negligible.

Is the interest earned on NSC taxable?

The interest earned and reinvested qualifies for the tax deduction up to the Section 80C limit. Upon maturity, the returns are taxable based on the income tax slab.

Which is a better investment, PPF or ELSS?

PPF helps investors accumulate a certain amount periodically over the long term and earn interest during the investment period. It is a safe investment option for retirement needs. On the other hand, the ELSS is a mutual fund scheme that provides market-linked returns based on the amount invested. However, there exists a risk factor considering the volatile market conditions. The better investment for an individual among the two will be based on the investment objectives, affordability, and risk profile.

Disclaimer

  • The complete name of Tata AIA Fortune Guarantee Plus is Tata AIA Life Insurance Fortune Guarantee Plus - Non-Linked, Non-Participating, Individual Life Insurance Savings Plan (UIN: 110N158V07)
  • *Guaranteed Income shall be a fixed percentage of the Annualised Premium / Single Premium (excluding discount) payable in a year. Guaranteed Annual Income as per the chosen Income Frequency shall commence after maturity till the end of the Income Period, irrespective of survival of the life insured(s) during the Income Period.
  • $Available under Regular Income with an Inbuilt Critical Illness Benefit option
  • **Tax benefits of up to ₹46,800 u/s 80C is calculated at highest tax slab rate of 31.20% (including cess excluding surcharge) on life insurance premium paid of ₹1,50,000. Tax benefits under the policy are subject to conditions laid under Section 80C, 80D,10(10D), 115BAC and other applicable provisions of the Income Tax Act,1961. Good and Service tax and Cess if any will be charged extra as per prevailing rates. The Tax-Free income is subject to conditions specified under section 10(10D) and other applicable provisions of the Income Tax Act,1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
  • ^Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere on this site. Please consult your own tax consultant to know the tax benefits available to you.
  • ^^Service is currently being provided by Practo. Medical Consultation is available under eligible policies of Tata AIA Life Insurance. Medical Consultation feature is optional. It is the customer’s sole discretion to avail Medical Consultation and to follow the advice suggested by the service provider. All medical-related dealing will be directly with the service provider and not with Tata AIA Life Insurance. It is available only for Life Assured of active policies for select products/riders. This feature can be discontinued, or service provider may be changed at any time at Tata AIA Life Insurance’s discretion. This feature is provided by a third-party service provider and Tata AIA Life Insurance shall not be liable for any liability arising due to customer opting to avail this feature.
  • +Return of Premium Benefit is The Total Premiums Paid (excluding loading for modal premiums and discount) by the policyholder will be payable at the end of the Income Period, irrespective of survival of the life insured(s) during the Income Period.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd. The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • Insurance cover is available under the products.
  • Risk cover commences along with policy commencement for all lives, including minor lives.
  • Buying a Life Insurance Policy is a long-term commitment. An early termination of the Policy usually involves high costs, and the Surrender Value payable may be less than the all the Premiums Paid.
  • In case of non-standard lives and on submission of non-standard age proof, extra premiums will be charged as per our underwriting guidelines.
  • All Premiums and interest payable under the policy are exclusive of the taxes, rider premiums, underwriting extra premiums, loading for modal premiums, if any which will be entirely borne/ paid by the Policyholder, in addition to the payment of such Premium or interest. Tata AIA Life shall have the right to claim, deduct, adjust, and recover the amount of any applicable tax or imposition, levied by any statutory or administrative body, from the benefits payable under the Policy.
  • This publication is for general circulation only. This document is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. This document is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • L&C/Advt/2023/Jan/0059