Zero Risk Investments in India: VPF, EPF, NSC, PPF

Zero Risk Investments in India

Finally the income tax filing date is nearing and everyone i.e. public or private companies, salaried or self employed individuals have to declare their investments for tax saving. While many of us have already started investing the money, there are still individuals who have not yet made any investments in order to save tax. And such individuals end up investing money in schemes which do not meet their financial goals and also carry risks.

There are many different investment options available in the market which can be best categorized as follows:

Zero/Low Risk
Moderate Risk
High Risk

Zero risk investment options are those which give guaranteed returns on maturity and are not affected by external factors such as share market fluctuations, oil prices, global economy etc. In short, they offer highest security although the returns are on lower side when compared to high risk-high return investing options. So here is the list of low risk investment options in India:

VPF: Voluntary provident fund (VPF) has given a return of 8%-9% over years. And for the financial year 2014-2015, the interest rate is 8.75%. And tax benefit is upto Rs.1 Lakh under section 80C of Indian income tax act. Also there is no tax on the interest earned. And this form of investment is only for salaried individuals. Check out historic VPF rates and more details on it’s benefits, limit, contribution etc.

EPF: Individual can invest till his/her retirement or upon resignation, whichever is earlier. Interest rate for the year 2014-2015 is 8.75% and is same for VPF as well.
Employee provident fund also carries tax benefit of upto Rs.1 Lakh. Similar to VPF, EPF also for salaried employees.


EPF and VPF interest rates on decided by the government.

PPF: Public provident fund (PPF) carries a lock-in period of 15 years and offers interest rate of 8.7%. After 15 years, you can either withdraw the money or further extend the investment by another 5 years. And most importantly interest is totally tax free.

NSC: Then comes National Savings Scheme (NSC). The most important criteria is that the investor should be an Indian citizen. This form of investment is eligible
for tax redemption and money is invested only once. There are two schemes available: 5 year and 10 year and the interest rate offered is 8.5% and 8.8% respectively.

Post Office Savings Scheme: This offers lowest interest rate which is just 4% per annum and interest earned is tax free.

Check out difference between NPS and EPF.

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