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ToggleWomen are known to save more than men. For a long time, women have been saving coins and currency notes in rice boxes or cookie jars in the kitchen. While that is a popular practice even today, there are several savings schemes available in the market that pay good interest. In this article, we have shortlisted the top savings schemes for women in India.
The following are the different savings schemes available in the market, and most of them are government schemes, making them risk-free investments.
The government introduced the Mahila Samman Savings Certificate in January 2023 as a one-time savings scheme for a tenure of two years, starting April 1st 2023, to March 31st 2025. The primary reason for introducing this scheme is to empower women by increasing their participation in investments.
The minimum investment in this scheme is Rs 1,000, and the maximum is Rs 2 lakhs. You can open multiple accounts. However, the total investment in all the accounts shouldn’t be more than Rs 2 lakhs. Its tenure is two years, and the government will accept deposits only until March 31st 2025. The scheme offers a fixed interest of 7.5% per annum compounded quarterly but paid only at maturity.
To open a Mahila Samman Savings Certificate account, you must be an Indian citizen and a woman. If you are a minor, a guardian can open this account on your behalf. The scheme has a lock-in period of 2 years, but you can withdraw 40% of the amount prematurely. You can also pre-close your account only on certain conditions.
To open this account, you must have a Mahila Samman Savings Certificate account opening form, PAN Card, Aadhar Card, and any other government ID card. You have to submit these documents at the nearest post office and pay the amount in cash or cheque. Once done, the post office will issue a Mahila Samman Savings Certificate in your name.
At present, the government has not mentioned any tax benefits, so it is assumed that the interest is taxable as per your income tax slab rate upon maturity, and the investment doesn’t qualify for tax deduction.
Public Provided Fund (PPF) is a government-launched investment scheme to encourage small savings for the long term. The scheme is open to all Indian citizens and not just to women. However, it is a great savings scheme for women as it pays 7.1% interest per annum and is completely risk-free. The interest is revisited every quarter by the Ministry of Finance.
The minimum investment in the scheme is Rs 500, and the maximum is Rs 1.5 lakhs per annum. Any investment above Rs 1.5 lakhs will not earn any interest. You can open only one PPF account in your name at the nearest post office or any authorised bank. To keep your account active, you must invest once a year for a tenure of 15 years.
The scheme matures after 15 years, but you can extend it for another five years. The investment is locked in for the entire duration, and you cannot withdraw your money. However, you can partially withdraw from the 7th year onwards and take a loan up to 25% of the money in the account between the 3rd and 6th year.
The scheme is a good long-term investing scheme and also allows you to save on taxes as the investment, interest and maturity proceeds are exempt from tax.
Employees Provident Fund (EPF) is a retirement benefit scheme provided by the Employees Provident Fund Organisation (EPFO). Under the scheme, the employee and employer contribute a similar amount every month until the employee is working. It pays an interest of 8.15% per annum. However, it is subject to change as per the government of India rules.
The employees and employers will contribute around 12% of the monthly income to the scheme. However, new women employees will contribute only 8% for the first three years, which will increase the take-home pay.
Once your EPF account is opened, you will be given a UAN or Universal Account Number, which is a 12-digit number that is unique to each employee. You can use this UAN number to check your EPF balance and withdraw funds from the EPF portal. Moreover, the UAN number doesn’t change even if you switch companies. In fact, the UAN number will make it easy to transfer your PF details from one organisation to the other.
The investment and interest are completely tax-free. An investment up to Rs 1.5 lakhs is eligible for tax deduction under Section 80C of the Income Tax Act, 1961, and the interest is also tax-free at maturity.
You can withdraw your investment in EPF partially at any time during your employment years. You can make a full withdrawal only when you retire or you are unemployed for two months.
Kisan Vikas Patra (KVP) is a government savings scheme introduced in 1998. The primary aim is to inculcate long-term financial discipline among Indian citizens. The scheme was originally intended for farmers, hence the name. However, eventually, the scheme has been opened to all Indian citizens.
To invest in KVP, you must be an Indian citizen. Even minors can invest in the scheme through their legal guardian. However, NRIs (Non-resident Indians) and HUFs (Hindu Undivided Families) cannot invest in this scheme.
You can open an individual or joint account with a minimum contribution of Rs 1,000. The contributions can be 5,000, Rs 10,000, or Rs 50,000 for a tenure of 10 years. There is no limit on the maximum amount of investment. The scheme pays a fixed interest of 7.5% per annum compounded annually. This means your investment will double in nine years and seven months.
Although the scheme has a ten-year tenure, you can withdraw your investments after the lock-in period of 30 months. Even if you don’t withdraw money after the ten-year tenure, you will continue to earn interest until you withdraw your investment.
There are no tax benefits for investing in this scheme. The investment, interest, and maturity amounts are taxable per income tax laws.
The National Savings Certificate (NSC) is a government scheme launched to encourage small savings among small and middle-income investors. You can invest in NSC through the nearest post office or any authorised bank. To invest in the scheme, you must be an Indian resident citizen. Even minors can invest through a legal guardian. NRIs, HUF, and private and public limited companies cannot invest in it.
The minimum investment in the scheme is Rs 1,000, which can be done individually or jointly. There is no limit on the maximum amount of investment. You will require identity proof such as PAN Card, Aadhar Card, Voter ID, Driving License, and Passport and address proof such as Aadhar Card, Passport, Utility Bills, or bank statement to invest in NSC.
The scheme pays a fixed interest of 7.7% per annum compounded annually but paid at maturity. The interest is automatically reinvested into the account every year for four years. At the time of maturity or at the end of the fifth year, the interest is paid to you. The investment is locked in for five years, so you cannot withdraw your money until maturity. If you want to withdraw prematurely, you will require a court order, which has to be submitted at the post office.
Investment in NSC qualifies for a tax deduction of Rs 1.5 lakhs per annum under Section 80C of the Income Tax Act, 1961. However, the interest and maturity proceeds are taxable as per your income tax slab.
Post Office Time Deposit Scheme is a fixed deposit scheme managed by the post office. It works similarly to a fixed deposit (FD), where you invest a certain sum for a predetermined period of time and earn interest on it. The difference between a bank FD and a post office time deposit is the issuer. In the case of bank FD, banks issue it, and in the case of Post Office Time Deposit, the post office issues it.
The Post Office Time Deposit scheme can be opened for a tenure of one, two, three or five years. The interest rate for these tenures varies between 6.8% and 7.5% per annum, and the interest rates are revised every quarter by the government.
You can open a Post Office Time Deposit account individually or jointly with a minimum investment of Rs 1,000, and there is no limit on the maximum amount of investment. All Indian resident citizens and minors can invest in this scheme. However, NRIs, trust funds, and welfare funds can’t invest in it. To invest in the scheme, you will need a PAN and Aadhar card. If you fail to submit these documents during account opening, your account will become inoperational.
The scheme matures after the tenure you choose to invest in expires. So, the investment is locked in for the entire duration. However, you can withdraw the investment within six months to one year of opening the account without earning an interest. If you withdraw after one year of opening the account, then the post office will charge a penalty of 1% on the interest.
Only investment in five-year time deposits qualifies for tax deduction under section 80C of the Income Tax Act, 1961. The maturity and interest amount are taxable per the investor’s income tax slab rate.
Fixed Deposits, or FDs, are one of the most popular savings schemes in the country. They have been a go-to scheme for all the Indians. FDs are an investment tool through which you save a fixed sum of money for a certain period of time for a predetermined interest rate.
The minimum investment in FDs is Rs 500 and can go up to Rs 500 crores. The tenure of the FDS ranges between 7 days and ten years, making them a viable short and long-term savings scheme. Banks pay a fixed interest on the money invested, which ranges between 3% to 8.5% per annum. The interest rate is different for different tenures and also changes across banks.
You can open an FD account individually or jointly and can open multiple accounts as well. Once you invest money in an FD, it is locked in for the entire duration. The interest is either paid regularly or at maturity, based on your preference.
You cannot break an FD, but you can take a loan against your FD from the same bank. The interest rate varies across banks but is usually 1-2% above the FD rate. The investment in tax-saving FDs qualifies for tax deduction under Section 80C. However, investment in all other FDs is taxable. Moreover, the interest is also taxable as per your income tax slab rate.
Name of Investment | Rate of interest | Minimum investment | Maximum investment | Tenure | Tax Exemption | Special Note |
Mahila Samman Savings Certificate | 7.50% | Rs. 1,000 | 2 Lakhs | 2 Years | The Government has not mentioned any tax benefits | This scheme is effective only from April 1st 2023, to March 31st 2025 for investment |
Public Provident Fund (PPF) | 7.10% | Rs. 500 | Rs 1.5 lakhs | 15 Years | Tax exempted up to Rs. 1.5 lakh in a year under section 80C | |
Employees Provident Fund (EPF) | 8.15% | 8% of Basic Salary + 12% by employer | Invesment until employment | 15 years | Tax exempted up to Rs. 1.5 lakh in a year under section 80C | |
Kisan Vikas Patra (KVP) | 7.50% | Rs. 1,000 | No upper ceiling | 10 Years | The Government has not mentioned any tax benefits | The contributions can be 5,000, Rs 10,000, or Rs 50,000
You can withdraw your investments after the lock-in period of 30 months |
National Savings Certificate (NSC) | 7.70% | Rs. 1,000 | No upper ceiling | 5 Years | Tax exempted up to Rs. 1.5 lakh in a year under section 80C | |
Post Office Time Deposit Scheme | 6.9% to 7.5% | Rs. 1,000 | No upper ceiling | 1,2,3, or 5 Years | The investment under 5 year TD qualifies for the benefit of section 80C | Post office can charge 1% penalty if amount is withdrawn after completion of 1 year. |
Fixed Deposits | 3% to 8.5% | Rs. 500 | No upper ceiling | 7 Days to 10 Years | Tax-saving Fixed Deposits are exempted from tax up to Rs. 1.5 lakhs in a year under Section 80C |
To become financially independent, saving and investing money is as important as earning money. Hence, women need to understand that it’s okay to make financial decisions on their own. If you can’t decide where to invest, you can always consult a financial advisor who can help you become financially stable.
The Mahila Samman Savings Certificate is a one-time savings scheme launched by the government of India in January 2023. It has a tenure of two years, and women can only invest in this scheme between April 1 2023 to March 31 2025. Several banks offer this scheme, including the State Bank of India (SBI), Union Bank of India, Canara Bank, Bank of India, and Punjab National Bank.
The National Savings Certificate (NSC) has an interest rate of 7.7% and can be a viable savings alternative for women. If you are a senior citizen, then the Senior Citizen Savings Scheme (SCSS) is a better alternative as it offers an interest rate of 8.2% per annum.
When the government announced the Mahila Samman Savings Certificate in January 2023, it didn’t mention any tax benefits. Hence, it is assumed that the interest is taxable as per your income tax slab rate upon maturity, and the investment doesn’t qualify for tax deduction.
The government has announced a saving scheme for girl children aged between 0-10 years. Under this scheme, the parent can invest a sum of Rs 1.5 lakhs per annum until the child turns 15, withdraw the money at 21, and use it for marriage or further education. The scheme pays a fixed interest of 8% per annum.