Best Government Investment Schemes to Invest In 2024

Government Investment Schemes help tackle One of the biggest fears for the majority of investors, i.e. losing money to market volatility. Although market-linked securities reward investors for the risk taken, not everyone has a high appetite for risk. Some prefer growing their money safely and steadily. For this category of investors, one of the safer investment options is government securities. Government securities are low-risk investments that offer steady returns. Read to learn about the different types of government securities available for Indians.

What Are Government Investment Schemes?

Government investment schemes are securities that the government introduces to help citizens improve their financial standing. The government offers these schemes to all citizens. All men, women, working, business class, and unemployed can invest in them.

If you want to invest in government schemes, you can visit any post office or authorized banks in India that can help you invest without hassle. The primary advantage of investing in government schemes is that they are risk-free and offer guaranteed returns. Some schemes also give tax deductions allowing you to save money on income tax.

There are multiple investment schemes introduced by the government for various reasons. Before investing in any one scheme, it is best to evaluate them and select one that suits your requirements the best.

Best Government Investment Schemes to Invest In 2024

Here are some of the best government investment schemes to consider in 2024:

1. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a secure, long-term savings plan offered by the government, designed to encourage small investments while giving good returns along with tax perks. It’s a go-to choice for those looking for a safe way to save money with tax advantages.

Main Features:

• Who Can Invest: Indian citizens, including minors with the help of a guardian.
• Investment Range: You can invest a minimum of ₹500 and up to ₹1.5 lakh each financial year.
• Interest Rate: Currently set at 7.1% (as of September 2024).
• Tenure: The account has a lock-in period of 15 years.
• Tax Benefits: Deposits qualify for tax deductions under Section 80C of the Income Tax Act.
• Extra Benefits: You can avail of a loan against your PPF balance from the third to the sixth financial year.

2. National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a safe, government-supported investment option you can open at the post office. It’s made for people who want a reliable way to grow their savings and save on taxes, especially small to mid-income earners. With the NSC, you can earn interest while benefiting from tax deductions, making it a solid choice for both savings and tax planning.

Main Features:

• Who Can Invest: Open to Indian citizens only; NRIs can’t invest.
• Investment Minimum: Starts at ₹1,000, with no maximum limit.
• Interest Rate: Currently 7.7% per year (as of September 2024).
• Investment Period: Locked in for 5 years.
• Tax Perks: You can claim tax deductions up to ₹1.5 lakh under Section 80C.

Another perk of NSC is its tax-saving potential, allowing you to claim up to ₹1.5 lakh annually under Section 80C of the Income Tax Act. Backed by the government, it’s a reliable option for those who want both growth and tax benefits from their savings.
 

3. Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) is a government savings scheme designed to support the financial future of girls. It encourages parents to save for their daughter’s education and other needs by offering solid returns on their deposits.

Main Features:

• Eligibility: This scheme is for girls under the age of 10.
• Deposit Range: You can start with as little as ₹250 and go up to ₹1.5 lakh per year.
• Interest Rate: Currently, the interest rate is 8.2% per year (as of April 2024).
• Account Duration: The account stays open for 21 years, though you only need to contribute for the first 15 years. After that, the account grows on its own until maturity.
• Tax Benefits: Deposits made qualify for deductions under Section 80C. The interest earned is tax-free under Section 10 of the Income Tax Act.

4. National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a flexible government-backed savings plan designed to help you save for retirement by making regular contributions throughout your career. It’s linked to the market and managed by the Pension Fund Regulatory and Development Authority (PFRDA), so there’s an added level of transparency and safety in how it operates.

Main Features:

• Who Can Join: Any Indian citizen, resident or non-resident, aged 18 to 70 years.
• Types of Accounts: There are two types: Tier I for retirement savings, and Tier II for extra, voluntary savings.
• Tax Benefits: You can get tax savings of up to ₹1.5 lakh on contributions.
• Withdrawals: At retirement, you can take out up to 60% of the total saved amount as a lump sum.

5. Sovereign Gold Bonds (SGB)

Sovereign Gold Bonds (SGBs) are government-backed securities that offer a way to invest in gold without needing to buy and store physical gold. These bonds are valued based on the price of gold, so you get the benefits of gold investment minus the worry of handling the actual metal.

Key Features:

• Investment Amount: You can start with as little as one gram of gold and invest up to 500 grams per person in a financial year.
• Interest Rate: Earn a fixed 2.5% annual interest on the bond’s face value, giving you steady returns beyond gold’s price movement.
• Tenure: The bond’s term lasts for 8 years.
• Redemption Options: You have the option to sell your bond in the secondary market after 5 years if you need early access.
• Tax Benefits: The interest earned is tax-free, and at maturity, the entire amount is exempt from taxes.

6. Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme (SCSS) is a government savings plan designed for older adults in India. It’s meant to offer a steady income, safety, and some tax benefits to support retirement.

Main Features:

• Eligibility: Open to people aged 60 and above, and to retirees aged 55-60 under certain conditions.
• Investment Limit: You can start with as little as ₹1,000, with a maximum limit of ₹30 lakhs.
• Interest Rate: Currently set at 8.2% per year.
• Duration: The scheme lasts for 5 years.
• Tax Benefits: You can claim deductions up to ₹1.5 lakhs under Section 80C of the Income Tax Act.

7. Atal Pension Yojana

The Atal Pension Yojana (APY) is a pension plan set up by the government to help people working in informal jobs. It’s designed to give financial security to those who might not have access to regular retirement savings. With APY, you can put aside a certain amount of money every month and, once you turn 60, you’ll receive a guaranteed pension.

Key Features:

• Eligibility: Anyone between the ages of 18 and 40 can join.
• Contributions: You can make contributions monthly, quarterly, or every six months.
• Pension Amount: Depending on how much you contribute, your monthly pension can be between ₹1,000 and ₹5,000.
• Tax Benefits: You can claim tax deductions under Section 80CCD of the Income Tax Act, which can help reduce your tax burden.

Overall, APY is a good option for those looking to secure their financial future, especially if they don’t have a traditional retirement plan.
 

8. Pradhan Mantri Jan Dhan Yojana

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a national effort in India aimed at bringing financial services to everyone. The main goal is to help people access essential banking services like savings accounts, money transfers, loans, insurance, and pensions without breaking the bank. Under this scheme, anyone who doesn’t already have a bank account can open a basic savings bank account at any bank branch or through a Bank Mitra (a local banking representative).

Key Features:

• Who Can Apply: This scheme is open to all Indian citizens, including kids aged 10 and up.
• Account Type: You can open an account with no initial deposit required, meaning it’s a zero-balance account. Even with this basic account, you can get handy tools like cheque books and debit cards.
• Earning Interest: The money you save in the account earns a fixed interest rate, which helps your savings grow over time.
• Extra Perks: The scheme also offers some nice bonuses, like an overdraft facility (which lets you withdraw more money than you have), accidental insurance coverage, and a life insurance cover.

9. Kisan Vikas Patra (KVP)

Kisan Vikas Patra, or KVP, is a savings scheme set up by the government to help people save money over the long term. If you invest in KVP, your money will double by the end of the investment period, which lasts about 9 years and 3 months. This makes it a good option for those looking to grow their savings in a secure way.

Key Features:

• Who Can Invest: Anyone living in India can open a KVP account, including minors, but they need to do it through a parent or guardian.
• How Much to Invest: You can start investing with a minimum of ₹1,000. There’s no upper limit, so you can invest as much as you want.
• Interest Rate: As of April 2024, the interest rate is 7.5%. This means your money will earn a decent amount over time.
• Investment Duration: The total period for KVP is 115 months, which is roughly 9 years and 3 months.
• Tax Benefits: One of the good things about KVP is that the interest you earn is exempt from Tax Deducted at Source (TDS), so you get to keep all your earnings.

10. Post Office Time Deposit Account

The Post Office Time Deposit Account works a lot like a fixed deposit. With this account, you can invest your money for a set period of time and earn interest on it. The minimum amount you can put in is ₹1,000, and there’s no cap on how much you can invest overall.

Key Features:

• Who Can Open It: Anyone who is a resident of India can open this account, including minors over the age of 10, as long as a guardian helps manage it.
• How You Contribute: You can choose to make contributions monthly, quarterly, or every six months, depending on what suits you best.
• Pension Payments: If you’re looking for a steady income, this account offers a guaranteed monthly pension ranging from ₹1,000 to ₹5,000. The amount you receive will depend on how much you’ve contributed.
• Tax Benefits: If you keep your money in the account for five years, you can get a tax deduction under Section 80C, up to ₹1.5 lakh.

11. Post Office Monthly Income Scheme (POMIS)

The Post Office Monthly Income Scheme (POMIS) is a government-approved investment plan, offering a steady income with a low-risk approach. It provides an interest rate of 6.6%, which is paid out to investors every month. To start, individuals can open a POMIS account and invest an amount they are comfortable with, as long as it is at least ₹1,500. This scheme is designed to be a safe option for earning regular income, with monthly payouts based on the interest rate set by the post office.

Key Features:

• Eligibility: It is available to Indian citizens, including minors (with a guardian), and joint account holders.
• Investment Range: You can invest a minimum of ₹1,000 and up to ₹9 lakh in a single account or ₹15 lakh in a joint account.
• Interest Rates: For terms of 1, 2, or 3 years, the interest rate is 5.5%. For a 5-year term, it’s higher at 7.6%.
• Tenure: The scheme typically runs for 5 years.

How to Choose the Right Scheme?

Choosing the right government investment scheme in India can be a bit overwhelming, given the many options available. To help you make the best choice for your needs, here are some important factors to think about:

1. Investment Amount

   First and foremost, consider how much money you want to invest. Different schemes have different limits on how little or how much you can put in. It’s essential to find a scheme that fits your financial situation, so you can invest comfortably without stretching your budget.

2. Investment Horizon

   Think about how long you plan to keep your money invested. Some schemes, like the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY), require you to lock in your money for several years. These are great for long-term goals. In contrast, options like the Post Office Monthly Income Scheme (POMIS) or Senior Citizens Savings Scheme (SCSS) allow for shorter investment periods, making them better for those who might need their money sooner.

3. Investment Goals

   What are you saving for? Your goals will help you pick the right scheme. If you’re focused on retirement, the National Pension Scheme (NPS) or Atal Pension Yojana (APY) could be ideal. If you’re saving for your daughter’s education, the Sukanya Samriddhi Yojana (SSY) is designed specifically for that purpose. Knowing your goals will steer you toward the right investment.

4. Risk Tolerance

   While many government schemes are low-risk, some, like the NPS, are tied to market performance. If you’re comfortable with some risk for the chance of better returns, you might look into those options. If you prefer a steady, guaranteed return, schemes like PPF or National Savings Certificate (NSC) might be more your speed.

5. Liquidity Needs

   Think about how quickly you might need access to your money. Some investments, like Kisan Vikas Patra (KVP) and NSC, don’t allow you to take out your money early or might charge penalties for doing so. If you think you might need to access your cash before the investment matures, you might want to choose options that allow for partial withdrawals, like the PPF or POMIS.

6. Tax Benefits

   Many government investment schemes offer tax breaks under Section 80C of the Income Tax Act. If you’re looking to save on taxes while you invest, schemes like PPF, NSC, and SSY can be good options that help you grow your savings and save on tax at the same time.

Frequently Asked Questions (FAQs)