Top 10 Best Government Saving Schemes to invest in 2022 in India

Top 7 Best Government Saving Schemes to invest in 2022 in India10 Best Government Saving Schemes to invest in 2022

Many investors are scared to invest in direct equity or mutual funds. Fixed Deposits or NCD from NBFC are high risk. Bank fixed deposits offer fixed returns, however deposit insurance covers up to Rs 5 Lacs per bank. If you are an investor who worries more about safety and looking for various safe investment options, this article is for you. In this article, we would provide Top 10 Best Government Saving Schemes to invest in 2022 in India.

Also Read: Best Dividend Yield Stocks to invest in 2022

Top 10 Best Government Saving Schemes to invest in 2022

Government Saving Schemers offers 100% safety to the capital. If you are a low risk investors and looking for safe investment options, you can consider any of these schemes depending on your need.

#1 – Sukanya Samriddhi Yojana (SSY)

#2 – Public Provident Fund

#3 – National Pension Scheme (NPS)

#4 – National Saving Scheme (NSC)

#5 – Post Office MIS (POMIS)

#6 – Kisan Vikas Patra (KVP)

#7 – Senior Citizens Saving Scheme (SCSS)

#8 – Voluntary Provident Fund (VPF)

#9 – Pradhan Mantri Vaya Vandhana Yojana (PMVVY)

#10 – Atal Pension Yojana (APY)

Best Government Saving Schemes in 2022 – Features and Returns

Now that we have the list of best government schemes for 2022, let us get into more info about their features, minimum and maximum investment and any tax benefits of investing in these schemes.

#1 – Sukanya Samriddhi Yojana (SSY)

This scheme is aimed to provide savings for the girl child in the family.

Parent or guardian can open SSY for the girl below 10 years age in any post office or authorized branches of specific commercial banks.

Govt of India would announce the interest rate every quarter. Current SSY interest rates is 7.6%.

Maturity period is 21 years or marriage time after 18 years whichever is earlier.

Minimum deposit is Rs 250 per financial year. One need to invest for at least 15 years to earn interest till maturity.

Maximum investment is Rs 1.5 Lacs in a financial year.

Maturity amount is tax free.

Deposits quality for deduction u/s 80c up to Rs 1.5 Lacs in a financial year.

Premature closure can be done in case of death of the account holder or in case of life threatening disease of the a/c holder.

#2 – Public Provident Fund (PPF)

This scheme aims to accumulate good amount of money by investing for long term.

Govt of India would announce the interest rate every quarter. Current PPF interest rates is 7.1%.

Minimum deposit is Rs 500 per financial year.

Maximum investment is Rs 1.5 Lacs in a financial year. Any amount invested beyond this limit would be returned back to to savings account.

PPF has tenure of 15 years.

Maturity amount is tax free.

One can avail loan on PPF based on certain T&C.

Premature withdrawals can be done based on certain terms and conditions.

Premature closure can be done after 5 years which is again based on terms and conditions.

Deposits made in PPF qualifies for tax benefit u/s 80c up to Rs 1.5 Lacs in a financial year.

If you are looking for safe investment option for long term, PPF could be best option for you (only risk can be reduction in interest rate in coming years).

Also Read: How to invest Government Bonds online on RBI Retail Direct?

#3 – National Pension Scheme (NPS)

This scheme was originally launched only for government employees, later opened up for all citizens of India and NRIs.

Minimum age of entry is 18 years and maximum age is 70 years.

Minimum contribution per financial year is Rs 1,000.

NPS is market linked, hence the returns would fluctuate and vary year on year. Typical returns from NPS are in the range of 7% to 12%. One can opt for scheme preference to invest in Govt bonds, equity and corporate bonds. The higher the component of equity, the higher the returns in medium to long term.

One need to open Tier-1 account initially. If required, they can opt for Tier-2 account too.

Contributions made in NPS Tier-1 account are eligible for income tax benefits u/c 80c up to Rs 1.5 Lacs and u/s 80CCD up to Rs 50,000 totaling to Rs 2 Lacs.

Tier-2 account is voluntary. Contributions made up to Rs 1.5 Lacs to NPS Tier-2 account is eligible for tax benefits for Government employees. There is no tax benefits for other employees.

Partial withdrawals are allowed from Tier-1 account based on specific T&C. However, one can withdraw 100% of the amounts from Tier-2 account.

On retirement of 60 years of age, one can withdraw 60% amount and balance 40% one need to take a annuity pension scheme.

NPS is for long term till retirement. One should allocate good amount of percentage towards equity so that they can get returns that can beat inflation.

#4 – National Saving Scheme (NSC)

One of the popular tax saving scheme being used from ages is NSC.

These are offered by post office and authorized branches of specific commercial banks.

NSC tenure is 5 years.

NSC interest rate is decided by Govt of India through ministry of finance and announced every quarter. Current NSC rate is 6.8%. Interest is compounded every quarter and paid on maturity. Rs 1,000 invested would grow to Rs 1,389.49 in 5 years.

Minimum investment in NSC is 1,000.

There is no maximum investment limit in NSC. One can invest any amount they want.

Investment in NSC are eligible for income tax deduction u/s 80c up to Rs 1.5 Lacs.

One can take loan against NSC.

Premature closure is not possible in NSC except in case of death of the account holder.

There is no TDS on NSC. Interest earned on NSC is taxed in the hands of investors.

If your goal is do tax savings u/s 80c and earn fixed and safe income, you can opt for NSC.

#5 – Post Office MIS (POMIS)

If you are looking for safe fixed income, you can opt for Post office Monthly Income Scheme (POMIS).

Any resident individuals can invest in this scheme. NRIs cannot invest in POMIS.

Interest rate is fixed by Govt of India every quarter. Current POMIS rate is 6.6% which is paid monthly.

One need to open POMIS with any post office either individually or jointly.

Maturity period for POMIS is 5 years.

Minimum amount of deposit is Rs 1,000.

Maximum amount of deposit would depend on type of account. In case of individual account the maximum deposit is Rs 4.5 Lacs. In case of joint account, it is Rs 9 Lacs.

While there is no limit for number of POMIS accounts, the maximum amount invested across these accounts are limited to 4.5 Lacs / 9 lacs for single and joint account respectively.

No TDS on maturity amount. However, one need to assess their income and pay necessary tax based on their income tax slab applicable to them.

There are no tax benefits for this scheme.

Premature closure allowed after 1 year, however comes with penalty by way of reduction in interest rate.

POMIS is one of the best scheme to get regular safe income.

#6 – Kisan Vikas Patra (KVP)

This is another popular safe scheme from Indian Post Office.

KVP is government backed small saving scheme. These are offered with minimum denomination of 1,000 and in multiples of 100 there-of.

Resident Indian citizens can purchase KVP. NRI / HUFs and companies are not eligible to purchase KVP.

One can purchase KVP from any post office or selected commercial banks.

KVP current interest rate is 6.9%. Interest amount is paid on maturity along with invested amount.

The main objective of this scheme is to double your investment. With current rate, your investment would double in 124 months.

There is no limit on maximum deposits.

No income tax benefits for buying KVP.

No TDS on maturity. However, one can assess their total income and pay tax based on their income tax slab.

One can avail loan on KVP.

If you are looking for safe income and also want to double your investment, you can opt for KVP.

#7 – Senior Citizens Saving Scheme (SCSS)

This scheme is aimed to provide regular fixed income for Senior Citizens.

Resident Indian citizens who are above 60 years can open SCSS. NRIs are not eligible to open this account.

Individuals who are above 55 years and have retired under applicable superannuation or VRS rules are also eligible to open SCSS.

One can open SCSS in post office or any authorized commercial bank.

SCSS has a duration of 5 year. This can be extended for 3 more years.

Minimum deposit is Rs 1,000. Maximum deposit is Rs 15 Lacs. Only one time lumpsum investment is allowed.

Current SCSS interest rate is 7.4%. This rate would be revised by Ministry of finance every quarter and might reset.

Interest is paid every quarter once. It is paid on 31-Mar, 30-Jun, 30-Sep and 31-Dec.

Interest earned is fully taxable.

Premature withdrawals allowed, however comes with penalty by way of reduction in interest rate.

Investments done in SCSS are eligible for tax benefits u/s 80c up to Rs 1.5 Lacs in a financial year.

SCSS is an excellent government Savings scheme which provides fixed income for senior citizens.

#8 – Voluntary Provident Fund (VPF)

There are basically two types of provident funds i.e. compulsory provident fund which is EPF and optional provident fund which is like voluntary provident fund.

VPF is an extension of EPF.  Incase of EPF, both employer and employee would contribute. However in case of VPF only employee would contribute.

Govt of India would declare EPF interest rate every year. EPF rate is applicable for VPF too. Current VPF interest rate is 8.1%.

Due to recent change in taxation of EPF / VPF contributions, this has become less attractive. However, if you are looking for safe investments, you can still review and consider as part of your debt portfolio.

#9 – Pradhan Mantri Vaya Vandhana Yojana (PMVVY)

Any individual who are above 60 years can consider PMVVY.

The tenure of PMVVY is 10 years.

PMVVY current interest rate is 7.4%.

Interest is paid monthly, quarterly or yearly depending on the option chosen by the investor.

Minimum investment is Rs 1.5 Lacs.

Maximum investment is Rs 15 Lacs.

Amount invested in PMVVY qualifies for tax benefit u/s 80c up to Rs 1.5 Lacs.

PMVVY allows premature exit during the policy term under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases shall be 98% of the Purchase Price.

Interest received under PMVVY is taxable as per income tax slab applicable to individual.

At the end of 10 years, the amount invested would be returned back to the investor.

You may like: Is 8.5% TN Power Finance FD Safe to invest?

#10 –  Atal Pension Yojana (APY)

This scheme aims to provide pension for the unorganized sector workers.

Individuals in the age group of 18 years to 40 years can subscribe to the plan.

Pension amounts would be Rs 1,000 to Rs 5,000 per month depending on the premiums paid.

Individuals whoever is not availing any benefits or not subscribed to any statutory social security scheme can opt for this scheme.

At the age of 60 years, would would get regular pension. In case of death of subscriber, spouse would still get the pension.

No premature withdrawals allowed.

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Suresh KP


  • Sivaraman

    Sir, Request guidance on tax free bonds. Recently I got NHAI bond for 8.2% maturing on 2027. Is it safe to invest on government bonds like NHAI. Hope the maturity amount indicated as yield with Principle amount will be credited as long as we wait till maturity is my understanding. But not confident on the return and what kind of Tax free bonds to choose. Guidance from a veteran like you will help

    • Hello Sivaraman, Investment in Tax free bonds offered by Govt PSUs are 100% safer. The only issue is liquidity. If you want to sell them on stock exchange before maturity, you might get lower price (in some cases). Yield is only indicative. Interest payment would be done based on the interest coupon rate of these tax free bonds and would be credited on interest payment due date / maturity date (in case of cumulative interest payment option). Check when these tax free bonds interest is due as per the series which you purchased and let me know

      • Sivaraman

        Thanks for your time.

        I verified now. Purchase date is 13-Apr-2022. Transaction Price 1206. Next Coupon payment date is mentioned as 1-Oct-2022. Market price today is 1199 (not sure will this loss to continue throughout maturity) . Security name NHAI 8.3% BD 25JN27.

        Accrued Interest mentioned as 470. Not sure what this parameter is.

        Since Im new to bond investment just tried this for a minimal amount. Will this give at leas t 5 to 6 % return during maturity. Request to guide me on this

        • 25-Jan-12 is issue date and maturity date is 25-Jan-27 (15 years). The price of bond is 1,000 and you purchased at 1,199 (20% extra). You would get 8.3% interest on Rs 1,000 bond i.e. Rs 83 per year. Your return would be Rs 83 / 1,199 = 6.9% per year. Tax free bonds issued few years back are where interest is paid every year. Not sure what is this Rs 470 accrued interest Is this 470 for your entire investment or is it only per bond ? How many bonds you purchased ?

          • Sivaraman

            I got 10 lot. Only 1 bond. I got now how it will get calculated. So return will be around 6.9% from the date I purchased.

            Even Im not sure what accrued interest is .

            Thanks for the insights.

  • Vijay

    Can one person avail both senior citizens savings scheme and PMVVY at the same time by investing 15 lakhs in each scheme.

  • manu bali

    Your Site has some error. Nowadays mobile site is not properly viewed.

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  • Kamal Garg

    You are requested to kindly inform whether the interest rate under SCSS and PMVVY is locked in for five years, at the interest rate prevailing at the time of entry or these interest rates can be revised in between the tenure for the existing depositors.

    • Hello Kamalji I have already indicated in the article 1) SCSS – Interest rate would be reset every quarter by Ministry of Finance. One would get interest based on new rates applicable for that quarter 2) PMVVY interest is not changed from FY2020 onwards. However it was expected to reset from Apr-2022 onwards and would be inline with SCSS interest rate going forward. Nothing is heard as of now on this

  • veea

    Dear Suresh Ji

    PMVVY at present from April-1St onwards LIC hold to certain months.

    Kindly include the another article of all type of available bonds of GOVT RBI Bonds tax saving bonds and Bank Bonds how to invest on that

    • Hello Vera, There is only RBI Savings Bonds (Taxable). There are no RBI tax saving bonds. You might be referring to tax free bonds. Currently there are no fresh tax free bonds issue. One can check in secondary market. Currently secondary market tax free bonds are providing low yields.

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