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
|
Senior Citizen Saving Scheme [SCSS] |
Kisan Vikas Patra
|
National Saving Certificate Scheme[NSC] |
1 |
Who Can Invest |
Any Person |
Investment can be made by following individuals:-
|
Any Person |
Any Person |
2 |
Who Can be the Beneficiary from the investment |
Beneficiary can be Individual himself
|
|||
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/ORhttps://thetaxtalk.com/2018/01/29/know-the-liquidity-of-your-ppf-account-thetaxtalk/ |
|||
8 |
Premature Closure |
Allowed after 5 years on following grounds:-
|
Withdrawal can be made any time |
Allowed under the specified circums-tances |
1. In the event of death of holder
|
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
|
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.
|
Interest is taxable under the head Income from Other Sources.
|
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
|
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,
|
||
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
|
|
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.
|
Interest is taxable under the head Income from Other Sources.
|
Exempt |
One can read the following relevant article as well for better understanding of few of above scheme:
- https://thetaxtalk.com/2015/10/19/senior-citizen-saving-scheme-investment-cum-tax-saving-option-senior-citizen/
- https://thetaxtalk.com/2019/03/08/sukanya-samriddhi-yojana-ssy-at-a-glance/
- https://thetaxtalk.com/2020/04/20/sukanya-samriddhi-account-rules-2016/
- https://thetaxtalk.com/2016/08/22/sukanya-samriddhi-account-new-scheme-for-a-girl-child-in-india/
- https://thetaxtalk.com/2020/04/20/senior-citizens-savings-scheme-rules-2004/
- https://thetaxtalk.com/2020/04/18/the-public-provident-fund-scheme-1968/
- https://thetaxtalk.com/2020/04/12/whether-huf-can-claim-deduction-u-s-80c-by-investing-in-the-ppf-account-of-its-members
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