Everything about Popular Saving Schemes including tax saving schemes

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SOME VERY POPULAR SCHEMES FOR INVESTMENTS (INCLUDING FOR TAX SAVINGS)

NAME OF THE SCHEME	WHO CAN INVEST	MINIMUM AND MAXIMUM INVESTMENTS ALLOWED	OTHER DETAILS
Public Provident Fund (PPF)	A PPF account can be opened at anytime during the year in a Post Office, or in SBI & its associates or in other selected nationalized banks. It is safe to invest in the instrument, as it is government-backed. It can be held by single, joint, minor with parent/guardian and HUF	Min Amount : Rs. 500/- per annum, and thereafter in multiples of Rs 5/- Max Amount :Rs. 1,00,000/- (Earlier it was Rs.70,000. Increased wef Dec 2011)	The PPF account matures after 15 years. Tax benefit: Rebate under section 80C for the amount invested. Interest accrued is Tax-free. Interest 8.60% p.a. (compounded annually) is credited to the PPF account at the end of each financial year. (Wef December, 2011, the rate of interest has been linked to 10 year government bonds and thus rate will vary from time to time) Nomination is allowed at the time of opening the account or even later on during the tenor of the account. Loan facility is also available, but the first loan can be taken in the third financial year from the date of opening of the account, and only up to 25% of the amount at credit at the end of the first financial year. Rate of interest has been increased to 2% from earlier 1%. Withdrawals are permitted every year from the seventh financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any. This is one of the most popular schemes of tax savings as the interest received is tax free.
National Savings Certificate (NSC)	NSCs can be purchased through out the year by individuals either in single, joint, minor with parent/guardian, HUFs. from Post offices. Tax benefit: Rebate under section 80C. Interest accrued for any year is taxable but can be treated as fresh investment in NSC for that year and tax benefits can be claimed	The NSCs have a maturity period of 5 years. Interest rate - 8.40% (The maturity period has been reduced from 6 years wef Dec 2011) - The rate of interest will vary as the same has now been benchmarked to 5 year government securities. Min Amount Rs. 100/- and additional investment in multiples of Rs. 100/- Max Amount : No Limit	One can avail of a loan against the certificates by pledging it to the bank. The certificate can be encashed from the issuing post office on the due date by simply discharging the certificates at the back. It is safe to invest in this instrument, as it is government-backed. It is useful for people who invest to save tax. If encashed prematurely, within a year of issue, then only the face value is given. If encashed after a year but before 3 years, then simple interest on the face value, at the rate applicable from time to time, will be paid. The discount rate (The difference between the accrued interest and the simple interest is the discount rate) will be specified by the government from time to time.
Kisan Vikas Patra (KVP)	Scheme Discontinued	Scheme Discontinued	Scheme Discontinued
Infrastructure bonds	Infrastructure bonds can be purchased only when the same have been floated by the specified financial institutions. These Bonds provide tax-saving benefits under Section 80C of the Income Tax Act, 1961, up to an investment of Rs.1,00,000. In addition to Section 80C, an investment of Rs.20,000 is additionally allowed under Section 80CCF Safety: Purely depends on the credit rating of the bank or financial institution issuing the bond	Interest rate usually ranges between : 8%	Liquidity: Lock-in for three years Tax benefit: Rebate under section 80C. However, with low rate of interest and flexibility of investing in any type of instruments since 2005-06, these Bonds are no longer popular.
Equity-Linked Saving Schemes (ELSS)	Equity linked savings scheme (ELSS) are equity funds floated by mutual funds. This scheme is suited for young people as they have the ability to take on higher risk. The ELSS funds should invest more than 80 per cent of their money in equity and related instruments. It is ideal to invest in them when the markets are down. These funds are now open all the year round. The other way of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly). It is a market-linked security and therefore there will be risks accordingly.	The Maximum investment limit is Rs 10000. Liquidity: Lock-in for three years	Tax benefit: Rebate under section 80C Long-term capital gains tax are exempt from tax.
Insurance policies	There are a range of life insurance products to choose from, such as term life insurance, whole life insurance, variable life insurance, universal life insurance, and variable universal life insurance. Annuities are tax-deferred investments that guarantee you regular payments at some future time, usually retirement. It is a market-linked security.	Interest rate: Depends on returns of the funds Liquidity - Minimum lock-in of 2 years for participatory policies and 5 years for unit-linked	Tax benefit: Rebate under section 80C Interest or returns are not taxable
Pension policies	Pension plans apart from playing a significant role in retirement planning, also offer tax benefits under a dedicated section i.e. Section 80C. Premiums paid for the same are eligible for deduction. It is a market-linked security.	Interest rate - Depends on returns of the funds.

Some important changes which were made effective from 1st December, 2011 are as follows for Small Saving Schemes

COMPARATIVE INTEREST RATES OF SMALL SAVING SCHEMES

Serial No.	Instruments	Old Rates %	New Rates %
1	Saving Deposit	3.50	4.00
2	1 Year Time Deposit	6.25	7.70
3	2 Year Time Deposit	6.50	7.80
4	3 Year Time Deposit	7.25	8.00
5	5 Year Time Deposit	7.50	8.30
6	5 Year Recurring Deposit	7.50	8.00
7	5 Year SCSS	9.00	9.00
8	5 Year MIS	8.00 (6 Year MIS)	8.20
9	5 Year NSC	8.00 (6 Year NSC)	8.40
10	10 Year NSC	New Instrument	8.70
11	PPF	8.00	8.60

The government, however, decided to discontinue the Kisan Vikas Patra (KVP) and lowered the maturity period for MIS and national savings certificate to five years from six years.

It also introduced a new instrument � the 10-year-maturity NSC � offering 8.7%.

The annual investment ceiling in PPF savings has been increased to Rs 1 lakh from the present limit of Rs 70,000, but made loans against PPF costlier, doubling the interest to 2% a year

Interest on Post Office Saving Account (POSA) will be increased from 3.50% to 4.00% p.a.
Bonus @ 5% on Monthly Income Scheme (MIS) will be discontinued
Interest on savings schemes will be aligned with G-Sec rates of similar maturity with a spread of 25 basis points (BPS) with two exceptions. The spread on 10 year NSC (new instrument) will be 50 bps and on senior citizens Saving Scheme 100 bps. The interest rates for every financial year will be notified before 1st April of that year.