National Savings Scheme

8 Mins

National Saving Scheme in India

The national saving scheme (NSS) in India is a scheme regulated by the Ministry of Finance and operated and managed by the Department of Post, India. The national saving scheme is safer than other investment options because it is backed by the Central Government of India. The interest rates are monitored and revised periodically based on the bond rates in the country.

The major goal of NSS is to encourage people to save and eventually develop a sizeable savings account. Each scheme under the national saving scheme is designed for every category of investor. It is suitable for investors seeking regular savings, fixed income, retirement planning, securing the future of a girl child, etc. Along with tax deductions, each scheme provides multiple benefits such as loan against the deposit, premature withdrawal, low minimum investment amount, nominee facility, ease of transaction, etc.

National Savings Scheme Interest Rates 2024

Schemes	Minimum Investment Amount	Interest Rate
Post Office Saving Account	Rs 500	4% p.a.
National Savings Recurring Deposit Account	Rs 100	6.70% p.a.
National Savings Time Deposit Account	Rs 1,000	6.90% to 7.50% p.a.
National Savings (Monthly Income Account) Scheme	Rs 1,000	7.40% p.a.
Senior Citizen Savings Scheme	Rs 1,000	8.20% p.a.
Public Provident Fund Scheme	Rs 500	7.10% p.a.
Sukanya Samriddhi Account	Rs 250	8.00% p.a.
National Saving Certificate (VIII issue)	Rs 1,000	7.70% p.a.
Kisan Vikas Patra	Rs 1,000	7.50% p.a.

Compare Best National Saving Schemes (NSS)

Schemes	Investment Amount	Interest Rate	Tax Deduction	Premature Withdrawal
Post Office Saving Account	Rs 500 – No Limit	4% p.a.	Interest Earned- U/S 80TTA	NA
National Savings Recurring Deposit Account	Rs 100 per month – No Limit	6.70% p.a.	Nil	Available after 3 years
National Savings Time Deposit Account	Rs 1,000 – No Limit	6.90% to 7.50% p.a.	5 year TD- U/S 80C upto Rs 1.5 lakhs	Available after 6 months
National Savings (Monthly Income Account) Scheme	Rs 1,000 – Rs 9 lakhs	7.40% p.a.	Nil	Available after 6 months
Senior Citizen Savings Scheme	Rs 1,000 – Rs 15 lakhs	8.20% p.a.	U/S 80C up to Rs 1.5 lakhs	Anytime after account opening(penalty applicable)
Public Provident Fund Scheme	Rs 500 – Rs 1.5 lakhs	7.10% p.a.	U/S 80C up to Rs 1.5 lakhs	1 withdrawal during a financial after five years Premature withdrawal after 5 years
Sukanya Samriddhi Account	Rs 250 – Rs 1.5 lakhs	8.00% p.a.	U/S 80C up to Rs 1.5 lakhs	After 5 years of account opening (subject to conditions)
National Saving Certificate (VIII issue)	Rs 1,000 – No Limit	7.70% p.a.	U/S 80C up to Rs 1.5 lakhs	Allowed subject to conditions
Kisan Vikas Patra	Rs 1,000 – No Limit	7.50% p.a.	Nil	Any time before maturity

Features of a National Saving Scheme

The interest rate is reviewed quarterly. Since the interest rate is prefixed it does not account for inflation rates.
Premature withdrawal is subject to fulfilment of conditions such as emergency conditions, minimum duration, etc
Only residents of India can invest in any of the national savings schemes
An investor can invest directly through a post office or with any of the participating public or private banks in India

Benefits of Investing in a National Saving Scheme

The NSS schemes returns are guaranteed and announced before they are invested. Furthermore, because they are not connected to market risks, investors can expect set returns.
Except for a few, most of the schemes are eligible for a tax deduction under section 80C of the Income Tax Act 1961. You can claim a tax deduction of up to Rs 1.5 lakhs in a financial year. Many investors are attracted to this tax benefit.
Since the schemes are regulated by the Ministry of Finance, Central Government of India, the schemes are safer to invest in.
A loan facility is available against the deposits.
The national savings schemes are more suitable for conservative investors who want to invest in retirement planning.

Check Out Government Schemes for Girl Child

Frequently Asked Question

Which is the best savings scheme in India?

The best savings schemes in India are PPF, SSA, SCSS, NSC, POMIS, and so on. Moreover, the selection of the best savings schemes depends on the investor’s investment objectives and preferences w.r.t. Maturity and withdrawal. For example, PPF and SCSS are more suitable for an investor looking for retirement planning. On the other hand, SSY is suitable to secure the future of a girl child. Hence, you must consider your investment goals and preferences before investing.

Why should I invest in national savings schemes?

The national savings schemes are products of the Ministry of Finance, Government of India, and are backed by a sovereign guarantee. This makes them completely secure and safe. In comparison to other financial market programs, the interest rates offered on NSS are relatively attractive. The crucial feature is that 100 percent of the money collected in the state is invested in securities floated by the state government as a long-term loan from the government of India. Such funds are used by the state government for development projects in the state.

Which saving scheme is giving the highest interest rate?

The highest interest rate is provided by SCSS, PPF, and SSY. Senior citizen savings scheme SCSS provides 7.4 % per annum, payable from the date of deposit. Sukanya Samriddhi Account provides 8.00% p.a. Per Annum, yearly compounded. The public provident fund PPF provides 12.00% to 15.00% p.a. (compounded yearly).

Do NSS Schemes offer tax benefits?

The deposit in NSS schemes provides the tax deduction under Income Tax Act, 1961. National Savings Time Deposit, Senior Citizen Savings Scheme, Public Provident Fund Scheme, Sukanya Samriddhi Account, and National Saving certificate (VIII issue) are eligible. The maximum tax deduction available is up to Rs 1.5 lakhs in a financial year.

Whether NRI(s) can invest in the National Savings Schemes?

No, an NRI can invest in the National Savings Schemes.

Is nomination facility available in National Savings Products?

Yes. You can nominate one or more persons as the nominee. Moreover, you must mention the share of the nominee in case of more than one nominee.

Is NSC a good investment?

Yes, NSC is a good investment option. It provides fixed and guaranteed interest income along with capital appreciation. The government has made NSC widely available to potential investors by placing it at post office offices across the country. However, the investment decision must depend on your investment goals. There are other investment alternatives as well that provide higher returns like mutual funds. If you are a conservative investor then NSC is more suitable. However, if you understand the risk associated with mutual funds and wish to earn higher returns then you must invest in other options like mutual funds.