In previous two articles we covered the basic term First Time Investor should be aware of and reasons to Invest in India. In this article we will cover the first part of investment options currently available in India.
If you want to save your money in a safe way and earn returns without taking much risk, you should look for low-risk investment options. These choices help protect your hard-earned money and give you steady income or growth. Low-risk investments mean putting your money in schemes that do not lose value easily. These options are best for beginners, retired persons, and anyone who wants peace of mind.
What are the low-risk investment options in India?
Low-risk investment options in India are those that prioritize capital protection and deliver steady returns, making them ideal for beginners and cautious investors. Government-backed schemes and regular bank products are typically safest due to regulatory protections and stable returns. Let explore the low-risk investment options available in India.
Fixed Deposits (FD)
Fixed Deposits are one of the most popular safe investments in India. You deposit money in the bank for a set time (from 7 days up to 10 years), and earn a fixed interest, usually between 6.5% and 8% per year. The money is safe and you get your interest when the FD matures.
There are various kinds of fixed deposit available in India and you can open it by visiting either Bank or Post Office. You need your PAN card, Aadhaar card, or other KYC documents like passport, voter ID, or driver’s license. Most of the banks allow you to open fixed deposit by online mode as well, if you maintain saving account with them.
Fixed Deposit can be open with minimum amount of ₹1,000. Return from fixed deposits (FDs) are taxable and added to your total income, then taxed according to your applicable income tax slab rate.
Government Securities
Government securities are debt instruments issued by the government to raise money for public projects and day-to-day expenses. They are considered very safe because they carry almost no risk of default and are backed by the government itself. The returns are moderate, usually 6.8%–7.5% per year, and the time period can range from 5 to 40 years. These are suitable for long-term saving and are preferred for pension planning or future goals.
To invest in government securities in India, you can use both online and offline methods. The process has become simpler with the availability of online trading platforms and the RBI’s “Retail Direct” portal.
Taxation on government securities varies depending on the type of security and the nature of income.
National Savings Certificate (NSC)
NSC is a fixed-income investment scheme that you can buy at banks or post offices. It has a lock-in of 5 years and gives you guaranteed interest at maturity (rate decided by the government). You can also get tax deductions on the invested amount.
You can invest in National Savings Certificate (NSC) through any India Post Office or via select digital platforms like IPPB app. NSC is a government-backed savings scheme ideal for safe, tax-saving investments with a five-year lock-in period.
NSC has fixed interest rate (currently about 7.7% p.a. for FY 2025-26), paid only at maturity. Early withdrawal is not allowed in this except for select cases like death or court orders. In this scheme, you are eligible for tax deduction up to ₹1.5 lakh under Section 80C.
NSC provides a dual tax advantage by allowing deduction on the invested amount under Section 80C and deferring the tax on interest until maturity. This makes it a favored choice for risk-averse investors seeking secure, tax-efficient investment options.
Public Provident Fund (PPF)
PPF is a government-backed savings scheme. You need to keep your money in the account for 15 years, but partial withdrawal is allowed after 5 years. The interest rate is set by the government and is currently around 7.1% per year. PPF has the advantage of tax savings as well.
To invest in a Public Provident Fund (PPF), open an account at a bank or post office by submitting an application form and required documents like your PAN, Aadhaar, and passport-sized photos. You can also open an account online if you have an existing bank account with a participating bank.
There is 0% tax on the interest earned from a Public Provident Fund (PPF), making it a completely tax-free investment in India. The total amount you withdraw at maturity is also free from income tax.
Post Office Monthly Income Scheme (POMIS)
POMIS allows you to invest some money in the Post Office and receive monthly interest as income. You can open accounts as a single person or jointly, and this scheme suits people who want fixed monthly earnings. POMIS can be open by visiting nearest post office branch.
The monthly income is not tax-exempt and is added to your total income, which is taxed according to your applicable slab rate.
Senior Citizen Savings Scheme (SCSS)
SCSS is only for people aged above 60. This government scheme gives higher interest compared to regular FDs and provides steady regular income. It is a favourite among retired citizens because of guaranteed returns and tax benefits.
You must meet the eligibility criteria and open an account at an authorized bank or post office by submitting the required documents and an initial deposit. Online account opening is generally not available, so the process is primarily offline.
Interest from the scheme is fully taxable based on your income slab. TDS of 10% is applied if the annual interest is more than ₹50,000. However, the amount you invest is eligible for a deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act.
Disclaimer: The information presented in this article is for general informational purposes only and should not be considered investment advice or a recommendation to buy or sell any financial product. It is recommended to consult your financial advisor before investing.