What are Government Investment Schemes? | by Harish S | May, 2024

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What are Government Investment Schemes?

India’s government and various public sector financial organizations have introduced Schemes as investment opportunities for Indian citizens. These plans were implemented to encourage responsible economic behavior among Indian citizens. Historically, Indians had a habit of hoarding their wealth, which led to low economic growth and stagnation. Indian people can profit from the development of their wealth through government investment schemes with high returns and other perks, such as tax exemptions.

List of Best Government Schemes to Invest in India

• Atal Pension Yojana (APY) The Government provides employees in the unorganized sectors with the Atal Pension Yojana (APY), a social security plan. When it comes to helping the economically disadvantaged save aside money for their retirement, it is counted among the most significant investment schemes in the country. A monthly pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000, or Rs 5,000 is paid out to subscribers of APY, depending on their age and participation. To enroll, you must be non-income tax paying and at least 18 years old, but not older than 40 years. The minimum contribution term is 20 years since it provides a pension beginning at age 60 years.

• Public Provident Fund (PPF) Public Provident Fund (PPF) has developed into a significant vehicle for extended wealth creation for investors since its inception. Investors amass a nest egg by consistently putting money into their PPF accounts over many years. Due to its advantageous interest rate and tax advantages, the PPF has attracted a large customer base, particularly among younger depositors. At any time after the expiry of 1 year from the end of the year in which the initial subscription was made but before expiry of 5 years from the end of the year in which the initial subscription was made, the account holder may apply for obtaining a loan consisting of a sum not exceeding 25% of the amount that stood to credit at the end of the second year immediately preceding the year in which the loan is applied for.

• Sukanya Samriddhi Yojana (SSY) Sukanya Samriddhi Yojana is a welfare plan backed by the government. It was devised as part of a ‘Beti Bachao, Beti Padhao’ campaign. This is the government investment schemes in India particularly tailored to the financial requirements of the female child. The plan was introduced in 2015 by the Honorable Prime Minister. The program is designed to assist parents in saving up money for their daughter’s higher education, marriage, and other life milestones.

Under the program, a girl under ten years can have an account opened in her name by her parents or legal guardians. The amount ranges from Rs 250 to Rs 1,50,000 per financial year for 15 years from its opening date. The program has a lock-in term of 21 years, even if the returns are better than comparable fixed-income schemes. However, when a girl reach at the age of 18 years, she can make a partial withdrawal. Any financial institution or PO will accept your application for an SSY account.

• National Pension Scheme (NPS) The National Pension Scheme (NPS) is a retirement benefits program to ensure its members have a steady income once they retire. Each subscriber to the NPS is given a permanent retirement account number. An investor can divide their capital between stocks and bonds or other safe investments. In simple words, there is no upper limit for NPS contributions. Investments up to Rs 50,000 can avail of a tax relief or deduction under Section 80CCD (1B) of the Income Tax Act. Section 80C of the Income Tax Act allows for a tax deduction on investments of up to Rs 1,50,000.

• Sovereign Gold Bonds (SGBs) On behalf of the Indian Government, the Reserve Bank of India (RBI) issues Sovereign Gold Bonds . Gold-backed government bonds are known as SGBs. The government created the SGB Scheme in November 2015 as an alternative to physical gold ownership.

The Gold Bond also provides a set interest of 2.5% yearly on the issue price, in addition to the price fluctuation gain. Half-yearly, the accumulated interest gets deposited into the investor’s designated savings account. The SGB avoids the danger and expense of long-term storage because it is a paper-based instrument. Since early redemption is permitted after the fifth year, this investment choice is deemed liquid. Additionally, SGBs may be sold in a pinch or used for secured loans with them as collateral. They deliver a similar Loan to Value ratio as a loan secured by actual gold.

• Senior Citizens Savings Scheme (SCSS) The Senior Citizen Savings Scheme (SCSS) is a well-known option and among the best government investment schemes. The program was established to secure the future of those aged 60 years and up. It has a 5-year term that may be extended by another three years, and its interest rate is more significant than other low-risk investing alternatives.

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