Various Investment Options from Taxpayers Perspective: A comparison

27th January 2021

Various Investment Options from Taxpayers Perspective: A comparison

There are various investment options available with the taxpayers for making investment. The investment decision is not only driven by rate of interest but also by the tax benefit available with the instruments. From taxpayers perspective, few of the common investments options are as under:

Pubilc Provident Fund, most commonly pronounced as PPF
Kisan Vikas Patra, most commonly pronounced as KVP
Senior Citizen Saving Scheme, most commonly pronounced as SCSS
National Saving Certificate Scheme, most commonly pronounced as NSC
Post Office Saving Account Scheme
National Savings (Monthly Income Account) Scheme or National Saving Time Deposit Scheme, most commonly pronounced as NSSor National Saving Recurring Deposit Scheme
Sukanya Samriddhi Scheme, , most commonly pronounced as SSS

The comparative features of various schemes are as under:

S. No.	Particulars	Public Provident Fund [PPF]	Senior Citizen Saving Scheme [SCSS]	Kisan Vikas Patra [KVP]	National Saving Certificate Scheme [NSC]
1	Who Can Invest	Any Person	Investment can be made by following individuals:- 1. Whose age is 60 years or more 2. Whose age is between 55 years to 59 year and who has retired on superan-nuation or 3. Whose age is 50 years or more and who has retired from defence services (excluding Civilian Defense Employees)	Any Person	Any Person
2	Who Can be the Beneficiary from the investment	Beneficiary can be Individual himself or a minor or a person of unsound mind on whose behalf individual is acting as a guardian
3	Rate of Interest	7.10% p.a	8.6% p.a.	7.6% p.a.	7.10% p.a.
4	Mode of calculating Interset	Interest is calculated monthly on lowest balance between close of 5th day and last day of the month. The interest is credited to the account at end of each financial year	Computed on monthly basis and paid on quarterly basis		Interest is computed on yearly compounding basis (interest is deemed to have been reinvested)
5	Maturity Period	15 Years	5 Years		5 Years
6	Maturity Amount			Double after 9 years and 5 months	Rs. 1462.54 payable on a certificate of Rs. 1000 denom-ination
7	Premature Withdrawal	Allowed up to 50% of the amount standing to the credit of the account. One can refer – https://thetaxtalk.com/2018/09/10/personal-loan-credit-card-loan-vs-ppf-loan-partial-withdrawal-facility-from-ppf-account/ OR https://thetaxtalk.com/2018/01/29/know-the-liquidity-of-your-ppf-account-thetaxtalk/
8	Premature Closure	Allowed after 5 years on following grounds:- 1. Higher education of account holder or dependent children or 2. In the event of life threatening disease 3. Change in residency status of the account holder	Withdrawal can be made any time	Allowed under the specified circums-tances	1. In the event of death of holder 2. On forfeiture by a pledgee 3. When ordered by a court of law
9	Is Joint Account Allowable	No	Yes
10	Number of Account Permissible	One Account	An Individual can operate more than one account, however total deposit in all accounts shall not exceed the maximum limit	No Limit	No Limit
11	Minimum Investment	Initial Investment is Rs. 500 and in multiples Rs. 50 thereafter	Initial Investment is Rs. 1000 and in multiples Rs. 1000 thereafter	Initial Investment is Rs. 1000 and in multiples Rs. 100 thereafter	Initial Investment is Rs. 1000 and in multiples Rs. 100 thereafter
12	Maximum Investment	Rs. 150000 in a financial year	Rs. 1500000 or retirement benefits Whichever is lower	No Limit	No Limit
13	Maximum Number of Deposit during the year	Any No. of deposit can be made subject to maximum investment limit
14	Deduction Under Section 80C	Allowable	Allowable	Not Allowed	Allowable
15	Taxability of Interest	Exempt	Interest is taxable under the head Income from Other Sources. However deduction can be claimed under section 80TTB (up to Rs. 50000) if investor is a senior citizen	Interest is taxable under the head Income from Other Sources. However deduction can be claimed under section 80TTB (up to Rs. 50000) if investor is a senior citizen	Interest earned on deposit during the tenure of NSC are deemed to be reinvested in NSC. Such Interest can be claimed as deduction under section 80C. A senior citizen can claim deduction either under section 80C or under section 80TTB in respect of such interest

S. No.	Particulars	Post Office Saving Account Scheme	National Savings (Monthly Income Acoount) Scheme	National Saving Time Deposit Scheme	National Saving Recurring Deposit Scheme	Sukanya Samriddhi Scheme [SSS]
1	Who Can Invest	Any Person	Any Person	Any Person	Any Person	Any Legal or natural guardian in the name of a girl child
2	Who Can be Beneficiary					Any Girl Child [Investment cannot be done for other beneficiary]
3	Rate of Interest	4% per annum	7.6% per annum	1 Year Account : 6.9% per annum 2 Year Account : 6.9% per annum 3 Year Account : 6.9% per annum 5 Year Account : 7.7% per annum	7.2% per annum	8.4% p.a.
4	Calculation of Interest	Calculated on monthly basis on lowest balance available between close of 10th day and end of the month. Interest is credited at the end of each year	Calculated and paid monthly	Computed on monthly basis and compound on quarterly basis. Interest is however payable anually at the end of each year		Calculated monthly but credited at the end of the year
5	Maturity Period	No maturity period		1 year/ 2 years / 3 years / 5years		21 Years from the date of Opening of Account or at the time of marriage, Which ever is earlier
6	Maturity Amount				Rs. 7231.38 payable after making 60 monthly deposits of Rs. 100 each
7	Premature Withdrawal					Allowed up to 50% of amount standing to the credit of the account for specified purpose
8	Premature Closure		Alowed after 1 year from the date of opening of account	Alowed after 6 month from the date of opening of account	Allowed after 3 years from the date of opening of the account	1. In the event of death of beneficiary and 2. In the event of life threatening disease after completion of 5 years
9	Is Joint Account Allowable	Yes	Yes	Allowed	Yes	No
10	Number of Account Permissible	Only one account can be opend as a single account. However multiple joint each accounts can be opned provided account holder has equal share.	Multiple but total deposit shall not exceed the maximum limit	No Limit	No Limit	One account in the name of each beneficiary Girl Child
11	Minimum Investment	Initial Investment is Rs. 500 and in multiples Rs. 10 thereafter	Initial Investment is Rs. 1000 and in multiples Rs. 1000 thereafter	Initial Investment is Rs. 1000 and in multiples Rs. 100 thereafter	Initial Investment is Rs. 100 and in multiples Rs. 10 thereafter	Initial Investment is Rs. 250 and in multiples Rs. 100 thereafter
12	Maximum Investment	No Limit	Rs. 450000 in case of single account and Rs. 900000 in case of joint account	No Limit but there will be just one deposit	No Limit	Rs. 150000 in a financial year
13	Maximum Number of Deposit during the year
14	Deduction Under Section 80C	Not Allowed	Not Allowed	Not Allowed	Not Allowed	Allowable
15	Taxability of Interest	Exempt up to Rs. 3500 in case of single account and Rs. 7000 in case of joint account. Balance amount remaining after claiming deduction Section 80TTA/80TTB is taxable under the head Income from Other Sources	Taxable	Interest is taxable under the head Income from Other Sources. However deduction can be claimed under section 80TTB (up to Rs. 50000) if investor is a senior citizen	Interest is taxable under the head Income from Other Sources. However deduction can be claimed under section 80TTB (up to Rs. 50000) if investor is a senior citizen	Exempt

One can read the following relevant article as well for better understanding of few of above scheme:

These are some of the most common points on which the comparision can be carried out by the taxpayer before investing. Readers can share the views at mukesh.motwani63@gmail.com

27th January 2021

Various Investment Options from Taxpayers Perspective: A comparison

Various Investment Options from Taxpayers Perspective: A comparison

S. No.

Particulars

Public Provident Fund [PPF]

Senior Citizen Saving Scheme [SCSS]

Kisan Vikas Patra [KVP]

National Saving Certificate Scheme

[NSC]

1

Who Can Invest

Any Person

Investment can be made by following individuals:- 1. Whose age is 60 years or more 2. Whose age is between 55 years to 59 year and who has retired on superan-nuation or 3. Whose age is 50 years or more and who has retired from defence services (excluding Civilian Defense Employees)

Any Person

Any Person

2

Who Can be the Beneficiary from the investment

Beneficiary can be Individual himself or a minor or a person of unsound mind on whose behalf individual is acting as a guardian

3

Rate of Interest

7.10% p.a

8.6% p.a.

7.6% p.a.

7.10% p.a.

4

Mode of calculating Interset

Interest is calculated monthly on lowest balance between close of 5th day and last day of the month. The interest is credited to the account at end of each financial year

Computed on monthly basis and paid on quarterly basis

Interest is computed on yearly compounding basis (interest is deemed to have been reinvested)

5

Maturity Period

15 Years

5 Years

5 Years

6

Maturity Amount

Double after 9 years and 5 months

Rs. 1462.54 payable on a certificate of Rs. 1000 denom-ination

7

Premature Withdrawal

Allowed up to 50% of the amount standing to the credit of the account. One can refer – https://thetaxtalk.com/2018/09/10/personal-loan-credit-card-loan-vs-ppf-loan-partial-withdrawal-facility-from-ppf-account/

OR

https://thetaxtalk.com/2018/01/29/know-the-liquidity-of-your-ppf-account-thetaxtalk/

8

Premature Closure

Allowed after 5 years on following grounds:- 1. Higher education of account holder or dependent children or 2. In the event of life threatening disease 3. Change in residency status of the account holder

Withdrawal can be made any time

Allowed under the specified circums-tances

1. In the event of death of holder 2. On forfeiture by a pledgee 3. When ordered by a court of law

9

Is Joint Account Allowable

No

Yes

10

Number of Account Permissible

One Account

An Individual can operate more than one account, however total deposit in all accounts shall not exceed the maximum limit

No Limit

No Limit

11

Minimum Investment

Initial Investment is Rs. 500 and in multiples Rs. 50 thereafter

Initial Investment is Rs. 1000 and in multiples Rs. 1000 thereafter

Initial Investment is Rs. 1000 and in multiples Rs. 100 thereafter

Initial Investment is Rs. 1000 and in multiples Rs. 100 thereafter

12

Maximum Investment

Rs. 150000 in a financial year

Rs. 1500000 or retirement benefits Whichever is lower

No Limit

No Limit

13

Maximum Number of Deposit during the year

Any No. of deposit can be made subject to maximum investment limit

14

Deduction Under Section 80C

Allowable

Allowable

Not Allowed

Allowable

Public Provident Fund
[PPF]

Kisan Vikas Patra
[KVP]

Investment can be made by following individuals:-
1. Whose age is 60 years or more
2. Whose age is between 55 years to 59 year and who has retired on superan-nuation or
3. Whose age is 50 years or more and who has retired from defence services (excluding Civilian Defense Employees)

Beneficiary can be Individual himself
or
a minor
or
a person of unsound mind on whose behalf individual is acting as a guardian

Allowed after 5 years on following grounds:-
1. Higher education of account holder or dependent children or
2. In the event of life threatening disease
3. Change in residency status of the account holder

1. In the event of death of holder
2. On forfeiture by a pledgee
3. When ordered by a court of law

Rs. 1500000 or retirement benefits
Whichever is lower

Interest is taxable under the head Income from Other Sources.
However deduction can be claimed under section 80TTB (up to Rs. 50000) if investor is a senior citizen

Interest is taxable under the head Income from Other Sources.
However deduction can be claimed under section 80TTB (up to Rs. 50000) if investor is a senior citizen

1 Year Account : 6.9% per annum
2 Year Account : 6.9% per annum
3 Year Account : 6.9% per annum
5 Year Account : 7.7% per annum

21 Years from the date of Opening of Account or at the time of marriage,
Which ever is earlier