Social Security Programs
A minimum income for those in need and a decent replacement income for those who have contributed in accordance with their level of income are the two main goals of the majority of social security programs. Public Provident Fund, Sukanya Samriddhi Account, and Senior Citizens Savings Scheme are at the top of the social security pyramid.
- Public Provident Fund: The National Savings Institute introduced a post office savings program in 1968. The Public Provident Fund is a well-liked savings option for long-term objectives like retirement. The minimum amount is 500/ annum. The Ministry of Finance decides the interest rate on PPF at the start of each quarter. It has an annual yield of 7.1% and is exempt from taxes under Section 80 C of the Income Tax Act. The account can be extended forever in blocks of 5 years after it matures after 15 years. The total sum and interest earned are tax-free at the time of withdrawal.
- Sukanya Samriddhi Account: In 2015, the Beti Bachao Beti Padhao campaign introduced the Sukanya Samriddhi Account. It was created specifically for girl children. A girl under ten can have an account opened in her name and the maximum number of accounts allowed per family is two with a minimum deposit of 250 rs. The program is eligible for a tax break under Section 80 C of the Income Tax Act. It promises an annual return of 7.6%. A maximum of Rs 1.5 lac can be invested in a year, and the deposit has a 21-year term from the account opening date. The investment will mature after 21 years since the account was opened or when the girl kid marries after turning 18 years old. If the girl kid loses her Indian citizenship or becomes an NRI, the account must be cancelled. If the girl passes away too young or develops a condition that makes her life in danger, premature withdrawals are permitted.
- Senior Citizens Saving Scheme: Any person over 60 may start a 5-year Senior Citizen Savings Account. It bears a 7.4% annual interest rate that is due every quarter and is tax-deductible under Section 80 C. Individuals can invest up to Rs. 15 lac (total balances across all accounts). The initial deposit must be at least Rs. 1000.
Small Savings Instruments
Small Savings Schemes are a collection of savings instruments run by the federal government. It aims to encourage all residents, regardless of age, to save consistently. They are well-liked because they offer perks such as a sovereign guarantee, tax advantages, and returns that are typically higher than bank fixed deposits. The Finance Ministry has reassessed the interest rates for modest savings plans. The interest rates have been reviewed every three months since 2016. The National Small Savings Fund collects all deposits made through different small savings programs. The central government uses the funds to pay for its budgetary deficit. Small savings programs are created to offer the public secure and alluring investment options while simultaneously mobilizing funds for development.
The programs can be divided into social security programs, savings certificates, and post office deposits.
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