With a good news for investors, the government has kept a post office. small savings schemes Interest rates unchanged for the October-November-December 2021 quarter. The interest rate will remain unchanged for PPF, NSC and other small savings schemes at least for the next three months. In line with the rules, the government sets the interest rate for small savings schemes at the beginning of each quarter for the next three months. The rate of change in the interest rate is based on the average yield of government securities.
The government’s decision has come as a sigh of relief for fixed income investors, who invest in these avenues to reduce risk. Currently, most of the major banks are offering interest rates of around 5.5 per cent on deposits of 1 to 10 years. The interest rate on PPF is 7.1 per cent per annum while the interest rate for Senior Citizens Savings Scheme is 7.4 per cent per annum. Sukanya Samriddhi account holders will continue to get 7.6 percent compounding annually on their account balance.
The 5-year monthly income account scheme is offering 6.6 percent monthly payable, while the 5-year NSC is offering 6.8 percent compounded annually. On a 1-year fixed deposit, the interest rate is 5.5 percent while on a 5-year deposit, the rate is 6.7 percent per annum.
PPF and Sukanya Samriddhi Yojana (SSY) are the two major small savings schemes that revise rates when they are revised by the government. National Savings Certificate (NSC), KVP, Time-Deposit, Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY) etc., will continue to offer the same rate as last quarter. The quarter of July-August-September 2021.
Public Provident Fund (PPF) remains a favorite of many investors. Certain factors that make PPF a popular choice among long-term investors – Firstly, the interest earned in PPF is tax-free under Section 10 of the Income Tax Act, 1961 and does not add to one’s tax liability. Secondly, in PPF, the benefit of annual compounding accrues to the interest. Third, the investment made in PPF and the interest earned enjoys a sovereign guarantee.
Many other post office schemes are also the first choice for investors looking for a fixed and assured income. Some of them also come with tax benefits under Section 80C of the IT Act. These are all sovereign backed investments in which the principal invested and the interest earned is guaranteed by the government. This was announced by the Ministry of Finance through a circular on September 30, 2021. According to the ministry’s circular, PPF will earn 7.1 per cent, NSC will earn 6.8 per cent, and Post Office Monthly Income Scheme account will earn 6.6. Percent.
Post Office Fixed Deposit (TD) is somewhat similar to Bank Fixed Deposit. While the post office fixed deposit is for 1, 2, 3 and 5 years, it is only 5 years TD that comes with section 80C tax benefit. Senior Citizen Savings Scheme (SCSS) is a popular investment option for people aged 60 years and above.
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