Fixed Deposit Schemes
Some investors look for safe returns without taking any risk.
So the following are few fixed deposit schemes where investors can invest their money without any risk and except fixed returns.


Bank Term Deposits
Also called fixed deposits, it is one of the most favourite instruments among conservative investors and savers. Under this scheme, investors need to deposit a lump sum amount for a fixed period at a predetermined rate. Other than banks, post offices (PO) and corporates also offer term-deposit schemes. However, they differ in terms of interest rates, minimum investment, tenure and tax treatment of the interest income.

Interest rate 6% - 7.75% (Rate for deposits maturing within 3-5 yrs for major banks)
Interest payout/ Frequency of compounding Qtly/Hyly/Yrly/On maturity
Tenure 15 days - 10 yrs
Minimum investment Rs 100
Maximum investment No limit
Premature withdrawal** Allowed
Tax Benefit 80C (if the maturity period of term deposit is 5 yrs and above)
Tax on interest income Taxable (TDS is cut in case of bank FDs while no TDS is cut for rest all)
** it fetches cost either in the form of deduction in principal amount or reduction in interest income.


PO Term Deposits
With moderation in bank deposit rates, PO term deposits are now very competitive. PO allow to open term deposit only for the period of 1, 2, 3 and 5 years offering interest rate in the range of 6.25-7.50%. An added advantage is the investment under this scheme for 1-3 years is also liable for tax exemption under Section 80C. However, though the interest income is taxable, there is no TDS deduction.
Post Office Schemes


Interest rate 6.25%-7.5%
Interest payout/ Frequency of compounding Quarterly
Tenure 1-5 years
Minimum investment Rs 200
Maximum investment No limit
Premature withdrawal** Allowed
Tax Benefit Under 80C
Tax on interest income Taxable
Monthly income scheme
Similarly to term deposits, Post Offices offer Monthly Income Scheme (MIS), which is designed to provide a monthly income for investors. Individuals can open the account; either single or in joint name with any post office in India at the simple rate of interest 8% p.a that will be paid out to the investor each month.

If such monthly payout is not needed, one can invest the monthly interest receipts in Post Office’s Recurring Deposit (RD) scheme. This combination will fetch almost a yield of 10.5%. An added advantage to the investors of MIS is a bonus payout of 5% on the initial amount of investment. However, this scheme does not enjoy any tax benefit, which makes it unpopular amongst investors.

Interest rate 8% (Additional 5% bonus on maturity)
Interest payout/ Frequency of compounding Monthly
Tenure 6 yrs
Minimum investment Rs 1500
Maximum investment 4.5 lakh (in case of individual and 9 lakh if hold jointly)
Premature withdrawal** Allowed
Tax Benefit Not available
Tax on interest income Taxable
Public Provident Fund
This is an investment-cum-tax saving instrument. It also serves as a retirement planning tool for many. The rate of interest offered is fixed at 8% compounded annually. One can open a PPF account with some of the major branches of State Bank of India and any of post office in the country.

The amount parked under the scheme enjoys tax exemption under Sec 80C. Unlike other schemes, the interest earned under PPF is tax free. However, it is for longer tenure like 15 years and one needs to invest at least Rs 500 every year without a fail to continue with the same account.
Public Provident Fund

Interest rate 8%
Interest payout/ Frequency of compounding Yearly
Tenure 15 yrs
Minimum investment Rs 500 every year
Maximum investment Rs 70,000
Premature withdrawal** Allowed
Tax Benefit Under 80C
Tax on interest income Tax free
Kisan Vikas Patra (KVP)
It is the only fixed income instrument that guarantees to double the investment over a period of 8 years and 7 months. KVP’s are issued in various denominations for a maturity period, which is fixed. Encashment of KVP before maturity is possible after two-and-a-half years. However, one may forgo some interest income. Kisan Vikas Patra could be a better option when there is low interest rate as it offers high returns with liquidity. The only drawback of this instrument is that it does not qualify for tax exemption u/s 80C and the interest income is taxable.
Kisan Vikas Patra: A secure Investment

Interest rate 8.40%
Interest payout/ Frequency of compounding Qrtly
Tenure 8 yrs 7 months
Minimum investment Rs 100
Maximum investment No limit
Premature withdrawal** Allowed
Tax Benefit Not available
Tax on interest income Taxable
National Saving certificate
Looking for a fixed income instrument for tax saving, then the best option is Post Office’s NSC. It combines adequate returns with high safety. They are issued in various denominations starting from Rs 100 for fixed maturity period of 6 years at the rate of 8% compounded half yearly. The amount parked under NSC enjoys tax benefit under Section 80C, and the premature withdrawal is not allowed.
National Savings Certificate


Interest rate 8%
Interest payout/ Frequency of compounding Hyly
Tenure 6 yrs
Minimum investment Rs 100
Maximum investment No limit
Premature withdrawal** Not allowed
Tax Benefit Under 80C
Tax on interest income Taxable
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