Guaranteed Return Plans
We like certainty in life. It is a remarkable feeling - we want to be assured that our paycheck will arrive on time. We want to be sure that our family will be financially secured, even in our absence. Life insurance can help you get this reassurance.
Likewise a guaranteed investment plan helps to meet your goals like child's education & comfortable retirement or see your family through future emergencies. It also provides you life insurance cover to take care of your family even in your absense.
Types Of Guaranteed Return Plans
1. Guaranteed Savings Plans
Guaranteed savings plans are safe investment plans from life assurance companies. Investment in these plans is tax-deductible under section 80C and therefore the maturity value is tax-free under section 10(10D).
Thus, you've got a savings plan which guarantees a minimum rate of return completely tax-free. you ought to note that these plans guarantee a minimum return on your investment. So, you've got an opportunity to earn higher, but your returns won't drop below the minimum guaranteed amount.
2. Public Provident Fund (PPF) & Sukanya Samriddhi Yojana (SSY)
Both PPF and SSY carry similar investment and return profiles. the sole difference is that anyone can open a PPF account and just one PPF account. However, only a trustee or parent of a woman child can open one SSY per child for up to 2 girls.
So, if you're taking care of a woman child financially you'll open one PPF and one SSY accounts. the utmost investment in both instruments is restricted to Rs. 1.5 lakhs. Both investments offer tax-free maturity value.
Both instruments have a dynamic rate of return which is adjusted at the start of the fiscal year . the traditional maturity period for PPF is 15 years, after which you'll extend the account for an additional 5 years then on.
3. National Savings Certificate (NSC VIII)
National Savings Certificate of NSC VIII-issue is another popular tax saving instrument with guaranteed returns. The returns on new issues are revised at the start of each fiscal year .
Investment in NSC qualifies for the 80C deduction, but the interest accumulated within the account becomes taxable at maturity. The rate applicable to NSC interest is as per your tax slab.
So, you'll say that the returns aren't as guaranteed because it says. But this is often an ideal scheme for you to grow your money safely, as once you invest your rate of interest is fixed.
4. Kisan Vikas Patra (KVP)
KVP investment also offers a hard and fast guaranteed rate of return, which is revised every fiscal year . However, unlike NSC and other investments, KVP doesn't have a particular maturity period. you'll hold KVP until your money investment doubles.
As per the newest rates (w.e.f. 1st April 2020), the cash will double in 124 months or 10 years 4 months. you'll withdraw the whole money then .
You can also withdraw a part of the cash without penalty after 2.5 years. Withdrawals before this era attract lower interest, so you ought to avoid them.
KVP investments don't provide any tax rebate under section 80C. So, the instrument is fully taxable. But you'll got to add the interest to your annual income only at maturity.
5. Bank or Post Office Fixed & Recurring Deposits
Bank and post office fixed deposits are the oldest guaranteed investment schemes in India. you'll choose various maturities with fixed and recurring deposits.
The only difference between a bank fixed deposit and a post office deposit are going to be the TDS deduction. While bank FDs got to deduct 10% TDS per annum on the interest, the post office doesn't .
Both banks and Post Office provide 5-year tax-saving deposits. The investment within the FD is eligible for deduction under section 80C. However, the interest accrued annually is taxable.