5 Savings Plan in India Worth Considering

savings plan in india

Whether it’s making it through rainy days where the money is limited, or staying self-dependent during financial emergencies, or fulfilling various life goals, money always plays a significant role. So, be it financing your children’s higher education, and buying a house for your family, or creating a retirement corpus, you need to start investing money, and do so very wisely. You will find various investments and savings plans offered by the government, banking institutions and financial companies that you can choose from.

On the other hand, reputable insurers too, offer many such savings plan, including varieties of smart investment plans and TDS returns that help you accomplish all your financial aspirations.

With the best savings plan in India, you can develop a habit of making smart investments and earn periodic returns. If you invest sensibly, realizing the pros and cons of different investment options, you can surely secure your financial endeavors.

Here are the best five savings plan in India that is worth considering for your future financial goals:

Public Provident Fund (PPF)

A 15-year long investment, PPF is a government-backed savings plan scheme that offers you with attractive interest rates annually. Investing in PPF enables small regular savings that overtime accrued interests and gives substantial returns that are also backed by the government, making it a safe option.

You invests your money in PPF for a fixed period and provides you with returns on your savings. If you are new, in terms of  ofmaking investments in savings plans, you can begin with a PPF. Amongst all the other savings plan in India, PPF contends to besafe and affordable choice as it has revised its rate of return to 8% interestsince 1st October 2018. Additionally, the returns you get from your PPF are entirely tax-free and thus are considered to be one of the best savings plan in India.

National Pension System (NPS)

A government-sponsored savings plan, National Pension System (NPS), allows you to make regular contributions. A part of your monthly incomeis forwarded to your pension account throughout youremployed or working life, creating significant savings. Then during your retirement, you receive a percentage of this created corpus in the form of a lump sum pay-out. Moreover, you can use the leftover corpus to purchase an annuity that provides a regular income after your retirement.

According to Section 80C of the Indian Income Tax Act, 1961, a total tax deduction of up to Rs. 1.5 lakh is allowed on all investment and savings plan instruments. Under the provisions of this same section, NPS is also eligible for a tax deduction, which means investing in this savings plan can also help you save substantially on your taxes.Besides, the interest that you receive from your PPF is entirely tax-free, and no wealth tax is indicted on any PPF accounts and earnings.

Equity-Linked Savings Scheme (ELSS)

Equity-linked savings scheme (ELSS) is a form of equity mutual funds that invests a minimum of 80% of its total assets into equity and equity-related investment options. ELSS comes with a statutory lock-in duration of 3 years and provides excellent returns.

What makes ELSS a preferable savings plan option is that it is eligible for a tax exemption of up to 1.5 Lakh, as per Section 80C of the Income Tax Act. Additionally, even though the returns on ELSS funds are subjected to a Long-Term Capital Gains Tax (LTCG) at 10%, any gains up to Rs.1 Lakh per annum are exempted from tax.So, if you are looking for a savings plan investment that allows both substantial returns and tax-savings, then ELSS is a terrific option.

Employee’s Provident Fund (EPF)

Initiated by the Employee Provident Fund Organization (EPFO), EPF is a government-initiated savings plan in India, wherein salaried individuals must make a financial contribution towards their Provident Fund (PF) account.

Apart from the employer’s contribution of 8.33% towards Employee’s Pension Scheme, 12% of your basic salary is forwarded towards your PF account every month. As per Section 80C of the Indian Income Tax Act, not only is EPF eligible for tax exemptions, but both the interest earned and returns received on superannuation is entirely tax-free. EPF ensures that your monthly contributions keep rising gradually with the rise in your salary.

Atal Pension Yojana (APY)

Introduced in the year 2015 by the Indian Government, the Atal Pension Yojana (APY) encourages the habit of saving for retirement, intended for the work forces of the disorganized sectors. The 66th Round of NSSO Survey for the year of 2011-12 stated that nearly 88% of Indian workers don’t have any form of income support for their retirement and old age.

Subsequently, the Atal Pension Yojana is directed for those individuals who want to save money for receiving a fixed pension after retirement. Primarily, this savings plan is intended for daily wage or less wage workers who cannot spare savings for their future. Additionally, for those working in the private sector, or those who don’t pay taxes, or those who don’t fall under other social security schemes, can also enjoy the benefits of APY.

Small Regular Savings Creates Huge Corpus

Its rightly said that ‘A penny saved is a penny earned.’ Similarly, investing in the best savings plan in India can help and support you to create a substantial corpus in the long-term. In the meanwhile, investing in such savings plan also enables considerable tax savings, and provides with significant returns, only adding to further financial benefits for you.

Now you know about the different options of savings plan in India that are available in the market. So, you can start building yourself a safe and sound investment portfolio. Choose the best savings plan in India and start investing now!

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