Interest Rate on PPF Remain Unchanged
Bullet Points:
- The latest revised list indicates that the interest rate for the Sukanya Samriddhi Scheme will now be 8.2%, and for the 3-year Time Deposit (TD), it will be 7.1% for the last quarter of the current fiscal year.
- Previously, the interest rates for the Sukanya Samriddhi Scheme and 3-year TD were 8.0% and 7.1%, respectively.
- Rates for the Public Provident Fund (PPF) have remained unchanged for over three years.
Enhanced Interest Rates for Sukanya Samriddhi Yojana Unveiled by Government of India
In a recent development, the Government of India has announced a noteworthy increase of 20 basis points in the interest rates for the popular ‘Sukanya Samriddhi Yojana.’ The Union Finance Ministry disclosed that under the revamped scheme, deposits made in Sukanya Samriddhi Yojana will now accrue an interest rate of 8.2%, up from the previous 8%.
This adjustment is part of a broader initiative by the government to enhance the interest rates on various small savings schemes for the January-March 2024 quarter. A notification from the Union finance ministry revealed that while most schemes maintained their existing interest rates, slight adjustments were made for the Sukanya Samriddhi Scheme and the 3-year Time Deposit.
The revised interest rates for the Sukanya Samriddhi Scheme now stand at 8.2%, whereas the 3-year Time Deposit will yield an interest rate of 7.1% for the last quarter of the current fiscal year. This marks a subtle increase from the earlier rates of 8.0% and 7.1%, respectively.
Interestingly, the interest rates for Public Provident Fund (PPF) remained unchanged for over three years, with the last modification occurring in April-June 2020, resulting in a reduction from 7.9% to 7.1%.
Prior to this recent adjustment, small savings interest rates, spanning from 4% for post office savings deposits to 8.2% for the Senior Citizens Savings Scheme, were maintained at the same level during the October-December quarter. Notably, a marginal increase was observed in the rates for five-year recurring deposits.
Categorically, small savings schemes encompass savings deposits, social security schemes, and monthly income plans. The government has consistently aligned the interest rates offered on these schemes, including the Post Office Fixed Deposit, with those of term deposits offered by banks.
Beyond the financial benefits, small savings schemes also serve as effective instruments for individuals seeking to save on income tax. Under Section 80C of the Income Tax Act, individuals can claim deductions of up to Rs 1.5 lakh per year from their taxable income by investing in schemes such as PPF, SCSS, NSC, SSY, and the 5-Year Post Office Time Deposit Scheme.
The periodic revisions in the interest rates of small savings instruments, such as the National Savings Certificate, Sukanya Samriddhi Account Scheme, Kisan Vikas Patra, and Public Provident Fund, are executed quarterly. These adjustments align with the market rate for the 10-year government security, as per the recommendations of a committee led by former Reserve Bank of India Governor Shyamala Gopinath. The committee has advocated for interest rates on different schemes to be 25-100 basis points higher than the yields of government bonds with similar maturity periods
Interest rates for Jan-March 2024 Announced by Govt. of India
Savings Deposit: 4 per cent
1-Year Post Office Time Deposits: 6.9 per cent
2-Year Post Office Time Deposits: 7.0 per cent
3-Year Post Office Time Deposits: 7.1 per cent
5-Year Post Office Time Deposits: 7.5 per cent
5-Year Recurring Deposits: 6.7 per cent (6.5 per cent earlier)
National Saving Certificates (NSC): 7.7 per cent
Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)
Public Provident Fund: 7.1 per cent
Sukanya Samriddhi Account: 8.2 per cent
Senior Citizens Savings Scheme: 8.2 per cent
Monthly Income Account: 7.4 per cent.
Further, SBI and other Banks have also increased their Deposit Interest Rate: Please visit your Bank’s official website to know more.