The central government revises interest rates on popular small savings schemes periodically. These savings schemes include Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), Senior Citizen Savings Scheme (SCSS) and Kisan Vikas Patra (KVP). These savings schemes, offered by post office and select banks, are designed in such a way that they give small and retail investors safe and stable investment options. Though the government has not changed the interest rates on these schemes in its last review announced in June this year, the rates are still very attractive keeping in view that these investment tools are non-market linked and offer assured returns. In this story, we will discuss various features and benefits of these small savings schemes (SSS) along with the interest rates.
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Public Provident Fund (PPF):
The Public Provident Fund (PPF) is a long-term investment option helping small investors park their money in a government backed scheme that assures fixed returns along with tax benefits.
PPF interest rate: The PPF offers 7.1% interest per annum.
Tax benefits: PPF falls in the EEE category, which means your deposits are tax free, interest earned is also tax free and the maturity amount is exempted from tax. Deposits made up to Rs 1.5 lakh during the year can be claimed under section 80C of the Income Tax Act.
You can invest in PPF for 15 years, but it can be extended in blocks of 5 years after maturity.
National Savings Certificate (NSC):
National Savings Certificate (NSC) is a complete savings instrument that offers fixed returns and tax benefits. Backed by the government, NSC can be opened in any post office branch.
Investors can get an interest rate of 7.7% per annum on NSC investment. The NSC account matures in 5 years and one can open an account with a minimum deposit of Rs 1,000 and thereafter in multiples of Rs 100. There is no maximum deposit limit.Sukanya Samriddhi Yojana (SSY):
Sukanya Samriddhi Yojana is a government of India scheme launched to protect financial future of your girl child. Under the scheme, an account can be opened with a minimum amount of Rs 250 and the maximum deposit can be Rs 1.5 lakh in a year.
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Sukanya Samriddhi Account Scheme offers an interest rate of 8.2% currently on deposits. The account is valid for 21 years from the date of opening, but the maximum deposit period is 15 years.
The account can be opened by a guardian in the name of a girl child who is under 10 years old. Only one account can be opened per girl child, but a family can open up to two accounts, one for each girl.
Senior Citizen Savings Scheme (SCSS):
Senior Citizens Savings Scheme (SCSS) is a government-backed retirement benefit programme for senior citizens. The scheme allows senior citizens receive a regular income by depositing a lump sum amount. SCSS account can be opened in post office or any bank authorised by the RBI to operate such programme. The key benefits of this savings scheme are steady income post retirement and income tax deduction under Section 80C of the Income Tax Act.
Senior Citizen Savings Scheme offers an interest rate of 8.2% per annum to depositors. The maximum deposit limit under the scheme is kept at Rs 30 lakh.
Also Read : Provident Fund: With Rs 25,000 monthly salary, how long will it take to reach Rs 1 crore corpus under EPF?
Kisan Vikas Patra (KVP):
The Kisan Vikas Patra (KVP) scheme is a savings certificate scheme to encourage small savings among small investors. The scheme offers guaranteed returns. The KVP certificate matures in 113 months.
The interest rate for the Kisan Vikas Patra (KVP) scheme for the July-September quarter is 7.5% per annum, compounded yearly.
