Government ratifies four-decade minimum interest rate of 8.1 percent Employees Provident Fund (EPF) Deposited for 2021-22. EPF is for people working in the formal sector. However, those who want to invest in such safe social-security plans can look at small savings schemes, which include PPF, Senior Citizen Savings Scheme, National Savings Certificate and Sukanya Samriddhi Account Scheme. Here’s what you need to know about these schemes and the interest rates they offer.
What are Small Savings Schemes?
Small savings schemes, which include post office savings deposits, fixed deposits of 1-3 years and recurring deposits of 5 years, are government-managed savings instruments to encourage citizens to save regularly. These also include saving certificates like National Savings Certificate and Kisan Vikas Patra.
It also includes social security schemes like Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme. Monthly income account also comes under the schemes.
Interest Rates Offered by Small Savings Schemes
Interest rates on small savings schemes are reviewed on a quarterly basis. The revised rates for the next quarter will be announced by the end of this month. The revision is commensurate with the volatility in benchmark government bonds of similar maturity. Currently, the rates on various schemes range between four per cent and 8.1 per cent.
Post office savings deposits are offered at an interest rate of 4 per cent per annum, while fixed deposits for tenures of 1-3 years offer 5.5 per cent per annum. The five-year fixed deposit is giving a return of 6.7 per cent per annum. An interest rate of 5.8 per cent per annum can be earned on a five-year recurring deposit.
National Saving Certificates and Kisan Vikas Patra are offering annual interest rates of 6.8 per cent and 6.9 per cent respectively. PPF, Sukanya Samriddhi Account and Senior Citizen Savings Scheme are giving annual returns of 7.1 per cent, 7.6 per cent and 7.4 per cent respectively.
Under the Sukanya Samridhi Yojana launched in 2015 under the Beti Bachao Beti Padhao campaign, an account can be opened in the name of a girl child below the age of 10 years. The scheme is eligible for tax benefits under section 80C of the Income Tax Act. The period of deposit is 21 years from the date of account opening and maximum amount of Rs 1.5 lakh can be invested in a year.
Monthly Income Account is paying 6.6 percent annual interest.
EPF Revised Rates
The government has approved a four-decade low interest rate of 8.1 per cent on Employees’ Provident Fund deposits for 2021-22, news agency PTI quoted the EPFO office’s order as saying. About five crore subscribers of the Employees’ Provident Fund Organization (EPFO) will be affected by this decision.
The retirement fund body had in March decided to pay 8.1 per cent interest on provident fund deposits for the financial year 2021-22, from 8.5 per cent earlier. The 8.1 per cent EPF interest rate is the lowest since 1977-78, when it was 8 per cent.
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