Interest rates on small savings schemes for the quarter ending September have been kept unchanged. Interest rates on small savings schemes like public provident fund (PPF), national savings certificates (NSC), senior citizen savings schemes (SCSC), kisan vikas patra (KVP) and sukanya samriddhi accounts, among others, are decided every quarter by the government. "On the basis of the decision of the Government, interest rates for small savings schemes are notified on quarterly basis since April, 2016. Accordingly, the rates of interest on various small savings schemes for the second quarter of financial year 2018-19 staring 1st July, 2018 and ending on 30th September, 2018 shall remain unchanged from those notified for the first quarter of financial year 2018-19," said an official statement issued by the Department of Economic Affairs, Ministry of Finance.
The latest interest rates on small savings schemes are approved by the Finance Minister, according to the statement.
Given below is a comparison of interest rates on five small savings schemes: PPF, NSC, SCSC, KVP and Sukanya Samriddhi accounts
1) 15-year public provident fund scheme
Public provident funds (PPF) are a long-term investment option which offer you the benefit of exempt, exempt, exempt or EEE on income tax. EEE means that PPF returns are exempt from income tax, the maturity amount is tax-free and the main investment is qualifies for a deduction under section 80C of the Income Tax Act. PPF accounts can be opened in banks and post offices.
Interest rate on PPF accounts stands at 7.6 per cent per annum for the quarter ending September. The interest on PPF accounts is compounded yearly.
2) National Savings Certificates (NSC)
NSC certificates can be purchased from post offices. The investment tenure of NSCs is for five to 10 years. NSC is a low-risk, secure investment option. NSCs offer you benefits under Section 80C of the Income Tax Act.
Interest rates on NSCs for the quarter ending September is fixed at 7.6 per cent per annum. The interest is compounded annually but paid on maturity.
3) Senior Citizen Savings Schemes (SCSC)
This saving scheme is meant for people above 60 years of age. People who take voluntary retirement can also invest in this scheme. Only one deposit, not exceeding Rs 15 lakh, is allowed in this scheme. The maturity period is five years. Investment under this scheme qualifies for benefit under Section 80C of the Income Tax Act, 1961. This account can be opened in banks and post offices.
Interest rate on senior citizen savings scheme for the quarter ending September is fixed at 8.3 per cent per annum. It is payable from the date of deposit of March 31/ September 30/ December 31 in the first instance and thereafter, interest is payable on March 31, June 30, September 30 and December 31.
4) Kisan Vikas Patra (KVP)
KVP is also a long-term savings plan. KVP certificates can be purchased from post offices. The certificate can be encashed after two-and-a-half years from the date of issue.
Interest rate on KVP is fixed at 7.3 per cent for the quarter ending September. The interest on KVP is compounded annually. The amount invested doubles in 118 months (9 years and 10 months).
5) Sukanya Samriddhi Account
A legal guardian/ natural guardian, on behalf of a girl child, can open this account in post offices or banks. This account matures in 21 years after you deposit money for 15 years. This scheme gives a triple income tax benefit i.e. there will be no tax on the amount invested, amount earned as interest and amount withdrawn.
Interest rate on sukanya samriddhi accounts is fixed at 8.1 per cent per annum. It is compounded and calculated on a yearly basis.
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