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Best post office schemes that offer over 7% interest

Both the Public Provident Fund (PPF) scheme and the <keyword id="2757237" type="PERSON" weightage="20" keywordseo="Sukanya-Samriddhi-Yojana">Sukanya Samriddhi Yojana</keyword> scheme are two investment options backed by the Government of India. Hence both these plans assure safety and security of the invested amount. Also, Section 80 C of the Income Tax Act of 1961 allows tax exemptions for the contributions made on them. Here we compare between these two investment options to know how to choose between them. Nature of these schemes The main objective of the <keyword id="248266" type="PERSON" weightage="20" keywordseo="Sukanya">Sukanya</keyword> Samriddhi Yojana investment is to secure a girl child’s future. PPF can be understood as a small savings scheme that can give good returns in the long term. Eligibility to open the account The parents or the legal guardians of a girl child can open an account on her behalf until she attains 10 years of age. Only one account can be opened in the name of a given girl child under the Sukanya Samriddhi Yojana and a family can only open a maximum of two accounts if there are more than one girl child in the family. On the other hand, any Indian resident can open a PPF account. This account can also be opened on behalf of a minor. Maturity tenure The tenure of a SSY scheme is 21 years or when the girl gets married after attaining the age of 18. PPF scheme comes with a lock in period of 15 years. Minimum and maximum amount of deposit The minimum amount that can be deposited in a SSY scheme is Rs 250 and it is Rs 500 in case of PPF scheme. The maximum amount that can be deposited in both these schemes per year is Rs 1.5 lakhs. Tax benefits Section 80 C under the Income Tax Act of 1961 allows tax exemptions for an upper limit of Rs 1.5 lakhs per year invested in both these schemes. In this regard, these schemes are just similar to each other. Interest rates Both these schemes come with an interest that is compounded on an annual basis. The interest rates of both these schemes vary year on year and at present the interest rate is 7.9% for SSY and it is 8.4% for PPF. Managing the accounts An SSF account or a PPF account can be opened in a bank or post office that offer these schemes. Also, they can be transferred from a bank to post office and also vice versa. Liquidity In SSY scheme, complete withdrawals are allowed only when the girl child attains 21 years of age or when her marriage is arranged after her 18th year. Up to 50% of the amount accrued can be withdrawn for the girl’s education or marriage after the girl attains 18 years. In a PPF scheme, partial amount (50% of what has accumulated) can be withdrawn after the 6th year of opening the account. How to decide between them Sukanya Samridhi Yojana and a PPF scheme have many things in common between them. However, the choice of the right investment option will have to depend on the reasons for the investment and what you expect from the investment.

PPF Vs Sukanya Samriddhi Yojana Scheme, which is better?

Both the <keyword id="114852" type="ORGANIZATION" weightage="20" keywordseo="Public-Provident-Fund">Public Provident Fund</keyword> (<keyword id="76579" type="CITY" weightage="20" keywordseo="PPF">PPF</keyword>) scheme and the <keyword id="2757237" type="PERSON" weightage="20" keywordseo="Sukanya-Samriddhi-Yojana">Sukanya Samriddhi Yojana</keyword> scheme are two investment options backed by the Government of India. Hence both these plans assure safety and security of the invested amount. Also, Section 80 C of the Income Tax Act of 1961 allows tax exemptions for the contributions made on them. Here we compare between these two investment options to know how to choose between them. Nature of these schemes The main objective of the <keyword id="248266" type="PERSON" weightage="20" keywordseo="Sukanya">Sukanya</keyword> Samriddhi Yojana investment is to secure a girl child’s future. PPF can be understood as a small savings scheme that can give good returns in the long term. Eligibility to open the account The parents or the legal guardians of a girl child can open an account on her behalf until she attains 10 years of age. Only one account can be opened in the name of a given girl child under the Sukanya Samriddhi Yojana and a family can only open a maximum of two accounts if there are more than one girl child in the family. On the other hand, any Indian resident can open a PPF account. This account can also be opened on behalf of a minor. Maturity tenure The tenure of a SSY scheme is 21 years or when the girl gets married after attaining the age of 18. PPF scheme comes with a lock in period of 15 years. Minimum and maximum amount of deposit The minimum amount that can be deposited in a SSY scheme is Rs 250 and it is Rs 500 in case of PPF scheme. The maximum amount that can be deposited in both these schemes per year is Rs 1.5 lakhs. Tax benefits Section 80 C under the Income Tax Act of 1961 allows tax exemptions for an upper limit of Rs 1.5 lakhs per year invested in both these schemes. In this regard, these schemes are just similar to each other. Interest rates Both these schemes come with an interest that is compounded on an annual basis. The interest rates of both these schemes vary year on year and at present the interest rate is 7.9% for SSY and it is 8.4% for PPF. Managing the accounts An SSF account or a PPF account can be opened in a bank or post office that offer these schemes. Also, they can be transferred from a bank to post office and also vice versa. Liquidity In SSY scheme, complete withdrawals are allowed only when the girl child attains 21 years of age or when her marriage is arranged after her 18th year. Up to 50% of the amount accrued can be withdrawn for the girl’s education or marriage after the girl attains 18 years. In a PPF scheme, partial amount (50% of what has accumulated) can be withdrawn after the 6th year of opening the account. How to decide between them Sukanya Samridhi Yojana and a PPF scheme have many things in common between them. However, the choice of the right investment option will have to depend on the reasons for the investment and what you expect from the investment.

PPF Vs Sukanya Samriddhi Yojana Scheme which is better?

Coming as yet another welcome initiative from the central government in the line of social security schemes, <keyword id="2713906" type="PERSON" weightage="20" keywordseo="Sukanya-Samriddhi-Account">Sukanya Samriddhi Account</keyword> is a part of “Beti Bachao – Beti Padhao” policy of the government. Even though the government has been taking many initiatives, the sex ratio in India has become a grave concern. Coming up to remedy the situation, the main objective of the Sukanya Samriddhi Scheme is to cure the gender imbalance and provide a conducive environment for the education of girl children. What is Sukanya Samriddhi Scheme? Sukanya Samriddhi Scheme comes through a bank account opened in the name of a girl child. This is a savings scheme that can secure the future of a girl child. Benefits of Sukanya Samriddhi Account Savings account with the highest interest rate This savings account provides the highest interest rate among the various savings account options. The rate of interest of this account will be linked with the market. The government of India will declare the interest rates on the deposits in this scheme for every year. The interest will be compounded every year meaning it will be credited to the account on a yearly basis. Saves on taxes For the sake of encouraging more people to open Sukanya Samriddhi Accounts, the government has exempted the contributions to this account under the 80C section of Income Tax Act, 1961. Lock-in-period The account will mature when the girl attains 21 years of age or gets married, whichever is earlier. If marriage is arranged, the girl must have attained the age of 18. The account cannot be operated after the girl gets married. In case the family wants funds for supporting the higher education of the child, one withdrawal is permitted when the girl attains 18 years of age. Only 50% of the balance accrued can be withdrawn in case of premature withdrawal. Payments directly given to the girl child Once the account matures, the balance in the account along with the interest accrued will be paid out only to the girl child concerned (account holder). In this way, we can say that this scheme aims at making girls financially independent. Interest paid even after the maturity of the account In most financial schemes, the interest will be paid only till the deposit or investment matures. However, in case of Sukanya Samriddhi Account, the interest will continue to be paid until the account is closed finally. Flexibility The account can be opened with Rs 1,000 minimum deposit. Deposits can be made thereafter in multiples of Rs 100 subject to the maximum limit of Rs 1.5 lakhs in a given financial year. In order to keep the account live, a minimum of Rs 1,000 must be deposited in every financial year. In case of a household having two girl children, the cumulative amount deposited in two Sukanya Samriddhi Account cannot exceed 1.5 lakhs in a financial year. Once the girl attains the age of 10, she can choose to operate the account on her own. If the account is resulting in some hardships to the account holder, it can be closed. The account can be transferred to any part of the country.

This government scheme aims to right gender imbalance

New Delhi, Apr 11 () The Finance Ministry on Saturday extended the deadline for mandatory minimum deposit in Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA) for 2019-20 by three months up to June 30 in view of the lockdown due to coronavirus outbreak. "Relaxation of provisions for Account holders of PPF, Sukanya Samriddhi Account (SSA) and RDs (recurring deposits). Govt has taken the decision to safeguard interests of small savings depositors in view of the lockdown in the country due to #Covid19 Pandemic," the Finance Ministry said in a tweet. To keep these accounts active the subscribers are required to make some specified deposit in a year otherwise penalty is charged over that. Usually, subscribers make a payment towards the end of fiscal as these schemes are part of 80C of the Income Tax Act. The subscribers of PPF and SSA may now deposit their savings up to June 30, which couldn't be deposited in 2019-20 due to lockdown in the country, it said. The account holders of the specified schemes will be eligible to make a single deposit each in the account or accounts opened in his own name or in the name of minors the case may be for 2019-20 till June subject to maximum deposit ceiling of prescribed by law, an office memorandum issued by the ministry said. For this purpose, it said, the subscriber will have to give an undertaking to the account office that the maximum deposit ceiling applicable to PPF, SSA opened has not breached the deposit ceiling for 2019-20. However, it said, interest will be applicable from the actual date of deposits. It further said that the revival fee/ penalty charges are waived on the PPF, SSA/ RD accounts in which mandatory minimum deposit is not made up to March 31 subject to such deposit are made up to June 30. All those PPF subscribers, whose accounts were matured on March 31 including one year window for extension, can now be extended up to June 30, it added. Last month, the ''Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020'' extended the date for making various investment and payment for claiming deduction under Chapter-VIA-B of IT Act, which includes Section 80C (LIC, PPF, NSC etc.), 80D (Mediclaim), 80G (Donations), to June 30. DP CS MRMR

Govt eases norms for PPF and Sukanya Samriddhi account holders due to COVID-19

The Indian government has reduced the interest rate on <keyword id="807514" type="UNKNOWN" weightage="20" keywordseo="small-saving-schemes">small saving schemes</keyword> such as <keyword id="76579" type="CITY" weightage="20" keywordseo="PPF">PPF</keyword>, Kisan Vikas Patra and Sukanya Samriddhi scheme. 
 
In a bid to make banks cut their deposit rates, the government has lowered the interest rate by 0.1% for the April-June quarter. 
 
Meanwhile, interest rate on savings deposits has been retained at 4% annually. 
 
A finance ministry notification said investments in the public provident fund (PPF) scheme will fetch lower annual rate of 7.9 per cent, the same as 5-year National Savings Certificate. The existing rate for these two schemes is 8 per cent. 
 
Kisan Vikas Patra (KVP) investments will yield 7.6 per cent and mature in 112 months. 
 The one for girl child savings, <keyword id="3035572" type="UNKNOWN" weightage="20" keywordseo="Sukanya-Samriddhi-Account-scheme">Sukanya Samriddhi Account Scheme</keyword>, will offer 8.4 per cent annually, from 8.5 per cent at present, while it will be the same at 8.4 per cent for the 5-year Senior Citizens Savings Scheme. The interest rate on the senior citizens scheme is paid quarterly. 
 
Term deposits of 1-5 years will fetch a lower 6.9-7.7 per cent that will be paid quarterly while the 5-year recurring deposit has been pegged lower at 7.2 per cent. 
 
"On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis," the ministry said while notifying the rates for the fourth quarter of 2016-17 starting from April 1, 2017. 
 
While announcing the quarterly setting of interest rates, the ministry had said the rates of small saving schemes would be linked to government bond yields. 
 
The move is expected to prompt banks to lower the deposit rate in line with the small savings rate as offered by the government.

Interest rates on small saving schemes like PPF lowered

<keyword id="2757237" type="PERSON" weightage="20" keywordseo="Sukanya-Samriddhi-Yojana">Sukanya Samriddhi Yojana</keyword> is an incredible savings scheme offered by the Central Government for the benefit of girl children. Post Offices and some banks are authorized to operate these accounts on behalf of the government. Customers can open this account in some simple steps by submitting the required documents at the designated branches of banks and post offices offering this facility. Here are the features of this scheme you need to know and how to open this account to benefit your girl child. Who can open this account? <keyword id="7329439" type="UNKNOWN" weightage="20" keywordseo="sukanya-samriddhi-yojana-account">Sukanya Samriddhi Yojana account</keyword> can be opened by any parent or a legal guardian of a girl child of less than 10 years of age. Under this scheme, only one account can be opened for a given child. Also, the parents or legal guardians can open this account only for two girl children in a family. However, a third account is permitted in case the first or second delivery gives birth to twin girls. Documents required to open a <keyword id="248266" type="PERSON" weightage="20" keywordseo="Sukanya">Sukanya</keyword> Samriddhi Yojana account The documents required to open an account under the Sukanya Samriddhi Yojana include the SSY account opening form, birth certificate of the girl child on whose name the account must be opened, identity proof, and residence proof. The documents submitted as proof of identity and address must satisfy the KYC guideline issued by the RBI. Attractive features of Sukanya Samriddhi Yojana Account This scheme provides an attractive interest of 8.4%. However, the interest rate is regulated by the Ministry of Finance from time to time. In a given financial year, a minimum amount of Rs. 1,000 can be invested. The maximum amount that can be invested in a financial year is Rs. 1,50,000. In a given account opened under this scheme, deposits can be made until the girl child attains 14 years of age from the date of opening the account. The account opened under this scheme will mature once the girl child completes 21 years of age. If the marriage of the girl happens before the account matures, the account cannot be operated beyond the date of the child’s marriage. Tax exemption The investment made in the Sukanya Samriddhi Yojana account is fully exempted from Income Tax under Section 80C. the tax benefits offered by this scheme comes under the triple E regimen which means the principal amount, interest accumulated and also the outflow are all tax exempted. Once the account holder attains the age of 18, a partial amount can be withdrawn to support the girl’s higher education. Simple steps to open a Sukanya Samriddhi Yojana Account You can open a Sukanya Samriddhi Yojana account by visiting any authorized post office or the authorized branches of nationalized banks. For a general understanding, we can say all those banks that provide the facility to open public provident fund (PPF) account provide the facility to open a Sukanya Samriddhi Yojana Account also. The bank branches and post offices will provide the complete assistance to open this account. Once the account is opened, the account holder will be given a passbook.

How to open Sukanya Samriddhi Yojana account

When it comes to investments, you always need to do a careful planning and research before settling with an option. This is because, the decision you make can affect the several aspects of your investment like flexibility of operation, tenure and interest rate besides many others. Here we compare between the FDs offered by banks and the Post Office Savings Scheme to decide which among them is the better option for investors looking from different angles. Bank FDs and Post Office Savings Bank FDs are the conventional fixed deposit investment instruments offered by different banks. Any amount of money without any upper limit can be invested in FD for a period ranging from 12 months to 60 months. The rates of interest for FDs vary between banks and for different categories of investors like regular investors and senior citizens. Post Office Savings scheme is operated by Post Office which is also popularly called as small savings scheme. They are known to offer far better interest rates and returns than bank deposits. Here is a comparison of the different features of FD and Post Office Saving Scheme. Interest rate of Bank FD and Post Office To compare the interest rate between FD and Post Office, let us take the case of SBI for example. SBI is the largest lender in the country. While SBI offers only 5.75% interest on your investment in FDs, a five year term post office term deposit can give you 7.4%. The interest rate of PPF is 7.8%. NSC offers 7.6% interest on deposits and the interest rates for deposits in <keyword id="248266" type="PERSON" weightage="20" keywordseo="Sukanya">Sukanya</keyword> Samriddhi and KVP are 8.1 percent and 7.3 percent respectively. Tax efficiency When compared to the banks FDs, some schemes offered by the post office are seen to be more tax efficient. For instance, what is earned from PPF is completely tax exempted. On the other hand, all that is earned from FD is taxable. Under Section 80C, it is possible to get tax savings for bank FDs. Some select post office savings schemes like PPF, National Savings Certificate, and Sukanya Samriddhi can give the investors similar tax benefits. Since post office savings schemes combine in them a higher interest rate as well as some attractive tax benefits, they weigh more than the bank FDs. Advantages for senior citizens in FD and Post Office Majority of the bank deposits do not give any encouraging benefits to senior citizens. Whereas, the Senior Citizens Saving Scheme offers 8.3% per annum. The senior citizens looking for monthly income will find the monthly income scheme much better at Post Offices s it would offer an interest rate of 7.3% per annum. The monthly interest rates on the bank deposits are considerably lower and hence are not that beneficial when compared with the post office savings schemes. Service quality in Bank FD and Post Office In this one aspect, the banks significantly outweigh the post offices. When it comes to customer service, banks work with the latest and advanced technology today. The experience at the post office can be time consuming and tedious involving a lot of paper work. However, considering the significant gains that you have while investing in the post office savings schemes, you can overlook this aspect and settle with these better investment instruments to gain more from your hard earned money.

Bank FD Vs Post Office Saving Scheme : Which Is Better

<keyword id="6380711" type="UNKNOWN" weightage="20" keywordseo="post-office">Post Office</keyword> in India provides a host of savings schemes to the citizens and most of them assure a risk-free high returns on the investments. The reliability and operational convenience of the different post office savings schemes have made a lot of Indians turn towards these investment instruments as highly sought after options. Offered through 1.54 lakh post offices located across the country, some of the major benefits of these schemes include attractive tax benefits, reliability, security and high interest rates. Here is a list of some post office savings schemes and their unique advantages over other investment options. Some popular post office savings schemes <ul><li>Post Office Savings Account</li><li>Post Office Recurring Deposit Account (RD)</li><li>Post Office Time Deposit Account (TD)</li><li>Post Office Monthly Income Scheme Account (MIS)</li><li>Senior Citizen Savings Scheme (SCSS)</li><li>Public Provident Fund Account (PPF)</li><li>National Savings Certificates (NSC)</li><li>Kisan Vikas Patra (KVP)</li><li>Sukanya Samriddhi Accounts (SSA)</li></ul>Unique advantages of post office savings schemes Ease of operation The various post office savings schemes are very easy to operate. They are highly suitable both for rural as well as urban investors. The ease of accessing them and operating them make them attractive options for people from all walks of life. Simplicity and government support All the post office savings schemes are simple in their nature without any need for cumbersome documentation. Since these are backed by the government, there are much safer than the other kinds of investment instruments. Long term investment options Some post office savings schemes like PPF (Public Provident Fund) are long term oriented. They are also forward looking to meet the retirement needs of the investors. Hence such schemes give room for pension and retirement planning. Tax exemption The majority of the post office savings schemes carry tax deductions under Section 80C for the amount deposited in them. The interest earned from savings schemes like PPF, <keyword id="2713906" type="PERSON" weightage="20" keywordseo="Sukanya-Samriddhi-Account">Sukanya Samriddhi Account</keyword> and SCSS enable for claiming tax exemption for the amount earned as interest through these investments. High interest rates and risk-free nature The interest rates in the various post office savings schemes range from 4% to 9% which is very attractive in many cases when compared to the interest rates offered by the different kinds of bank deposits. Since post office is an undertaking by the Government of India, the investments in them are safer as against investing in the private sector and even in some other kinds of banks. Wide range of investment choices Post offices offer a wide portfolio of investment options for different categories of investors and across different purposes of investments. Hence depending on their situation and need, the investors can choose the instrument that meets their needs and expectations. Take away The ultimate objective behind the various savings schemes operated by the government through post offices is to provide the citizens with safer and easier investment avenues. All these schemes are very easy to manage and the money invested in them is safe without being subjected to any kinds of risks whatsoever while letting the people achieve their financial goals in a much better way.

Post Office Saving Schemes: which are best?

It’s that time of the year when people run around, searching for ways to save tax. In this matter, Section 80 C of the <keyword id="6354751" type="COMPANY" weightage="20" keywordseo="Income-Tax">Income Tax</keyword> Act gets the most amount of attention from investors, as it allows tax exemption through some popular investment instruments. Premiums paid for life insurance policies, investments in <keyword id="762633" type="UNKNOWN" weightage="20" keywordseo="equity-linked-saving-schemes">Equity Linked Saving Schemes</keyword> (<keyword id="103549" type="CITY" weightage="20" keywordseo="ELSS">ELSS</keyword>), five-year fixed deposits, National Savings Certificates (NSC), Public Provident Fund (<keyword id="76579" type="CITY" weightage="20" keywordseo="PPF">PPF</keyword>) and investment in Sukanya Samriddhi Yojana are some such instruments. 
 
Among these, ELSS has the potential to beat the long-term returns from all other investment options. It also allows you to save tax up to Rs. 1.5 lakh under Section 80 C. Let’s understand what ELSS is and what are the associated benefits through this article. 
 
What is ELSS? 
Equity Linked Saving Schemes (ELSS) are open-ended mutual funds with at least 65% exposure to equity. Although there’s a high degree of risk involved in this investment, it is beaten down in the long run. The returns earned through ELSS funds have outperformed other investment instruments in the long run. 
 
According to the CRISIL - AMFI ELSS Fund Performance Index in December 2016, ELSS funds as a mutual fund category have returned 3.35% in the last year, 16.64% in three years, 17.71% in the last five and 10.61% in 10 years. 
 
The minimum investment in ELSS has to be Rs. 500, while there’s no limit on the maximum amount you can put in. ELSS comes with a lock-in period of three years and withdrawal cannot be done before the completion of the stipulated period. On completion of the stipulated period, you can either redeem your scheme or continue with it. Returns from ELSS is tax-free on completion of a year. 
 
Why is ELSS your best long-term bet? 
ELSS has proven to be beneficial in terms of saving tax and yielding returns. Following are the benefits of ELSS: 
 
• ELSS allows you to claim tax deduction of up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act. The proceeds on redemption of the scheme after three years of lock-in is also completely tax free. 
 
• Compared to PPFs, NSC and fixed deposits, the lock-in period associated with ELSS is relatively shorter, indicating more liquidity. 
 
• The highest ranked ELSS funds have provided a CAGR of around 20% in the last five years – far more than options such as PPF and NSC which can provide returns in the range of 8-9%. Not just that, your ELSS returns are tax-free. 
 
• This scheme is highly affordable, as the minimum amount you can invest is only Rs. 500. If you don’t have a lump sum amount, you can even invest through Systematic Investment Plans (SIPs), depositing a small amount every month. 
 
• There is no fixed maturity period. Investors can stay invested as long as they want. 
 
• Investors earn dividends even during the lock in period and it is tax free. 
 
• The scheme forces you to stay invested at least for a period of three years without any interruptions. Moreover, if you opt for SIPs, you indulge in a more disciplined saving habit which ensures high capital growth. 
• 
ELSS and other instruments that allow exemptions under Section 80C 
 
Here is a comparative analysis of ELSS and other popular investment instruments:

Looking to save tax? Give an ELSS fund a chance – For tax savings & wealth creation

(Eds: Adding details) New Delhi, Mar 31 () The government on Tuesday slashed interest rates on small savings schemes, including NSC and PPF, by up to 1.4 percentage points for the first quarter of 2020-21, in line with moderation in bank deposit rates. Interest rates for small savings schemes are notified on a quarterly basis. "The rates of interest on various small savings schemes for the first quarter of the financial year 2020-21 starting April 1, 2020, and ending on June 30, 2020, have been revised," the finance ministry said in a notification. With the reduction, term deposits of 1-3 years will now earn an interest rate of 5.5 per cent as against 6.9 per cent, down 1.4 percentage points, the notification said. However, the interest rate on the five-year term deposit has been reduced to 6.7 per cent from current rate of 7.7 per cent, it said adding that interest rate on these are paid quarterly. The cut in the interest rate on a 5-year recurring deposit is 1.4 percentage points. The new rate for this saving instrument will be 5.8 per cent. The interest rate for the five-year Senior Citizens Savings Scheme has been lowered by 1.2 percentage points to 7.4 per cent, from the existing 8.6 per cent. The interest on the senior citizens scheme is also paid quarterly. However, interest on savings deposits has been retained at 4 per cent annually. The girl child savings scheme Sukanya Samriddhi Yojana account will earn a lower rate of 7.6 per cent as against 8.4 per cent during the first quarter of the next financial year 2020-21. The interest rate moderation for Public Provident Fund (PPF) and National Savings Certificate (NSC) for the next quarter is 0.8 percentage points and 1.1 percentage points, respectively, it said. The rates will now stand at 7.1 per cent for PPF and 6.8 per cent for NSC. The Kisan Vikas Patra (KVP) will give a lower yield of 6.9 per cent with enhanced maturity period of 124 months as against 7.6 per cent and 113 months maturity at present. While announcing the quarterly setting of interest rates in 2016, the finance ministry had said the rates of small savings schemes would be linked to government bond yields. Last month, Economic Affairs Secretary Atanu Chakraborty had hinted at revision in small savings rates for the next quarter, in line with market rate for speedier transmission of monetary policy rate. Stating that the Shyamala Gopinath Committee report has been accepted, but operation of the linkage was still in the works, he had said "wait for this quarter interest rates. That will give you a fairly good indication." Bankers have been complaining that high small savings rates prohibits them to cut their deposit rates immediately to check flight of savings. DP HRS

Govt cuts interest rate on small savings schemes for June quarter

New Delhi, Mar 18 () The government is considering rate moderation for small savings schemes in the upcoming quarter, a development that could lead to speedier transmission of monetary policy rate cuts, sources said. During the current quarter, the government refrained from cutting interest rates on small savings schemes, such as Public Provident Fund (PPF) and National Savings Certificate (NSC), despite moderating bank deposit rates. Bankers have been complaining that high rates on small savings schemes prohibit them from cutting deposit rates. Currently, there is a difference of nearly 100 basis points between deposit rate of banks and small savings rate for one-year maturity. Earlier this week, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) will take a call on an interest rate cut and all options were on the table to counter the coronavirus blow. Last month, the governor in an interview with said, "We have said it in MPC resolution that there is a case for reducing the small savings rates and aligning it more with the formula-based rate fixation. We have referred to it in the MPC resolution." The MPC in its February Bi-monthly Monetary Policy Statement said that while there is a need for adjustment in interest rates on small saving schemes, the external benchmark system introduced from October 1 last year has strengthened the monetary transmission. The finance ministry has been nudging public sector banks to pass the whole repo rate cuts to retail loans for pushing consumption. Banks have resisted it fearing their margin will take a hit in case of 100 per cent transmission. Rates on small savings schemes are revised on quarterly basis. On December 31, 2019, the government decided to keep interest rates for small savings schemes like PPF and NSC unchanged at 7.9 per cent for the fourth quarter of the current financial year, while the rate for the Kisan Vikas Patra maturing in 113 months was kept at 7.6 per cent. The interest rate for 5-year Senior Citizens Savings Scheme was retained at 8.6 per cent, while that for savings deposits was kept unchanged at 4 per cent a year. The interest on the senior citizens' scheme is paid quarterly. However, the government had said that first quarter of the next financial year, the Sukanya Samriddhi Yojana will offer 8.4 per cent rate. DP HRS

Govt may cut rate on small savings schemes in next quarter

The taxation laws in India contain a number of provisions to let the tax payers save on taxes. By taking some informed decisions on how you spend and account, you can save on taxes in a legitimate way. Here we discuss some important deductions under the Income Tax Act 1961. Tips to save on income tax Make the right use of Rs.1.5 lakhs limit allowed under Section 80C Investing up to a limit of Rs. 1.5 lakh in schemes like Tax-Saver FDs, PPF (Public Provident Fund), ELSS Funds, NSC (National Saving Certificate), Life Insurance Premiums, National Pension System (NPS), Home Loan Repayment, Payment of tuition fees of your children, EPF, Senior Citizens Savings Scheme, and Sukanya Samriddhi Yojana can enable you for appropriate tax deductions depending on the case. National Pension System This deduction facilitated by Section 80CCD (1B) allows up to Rs 50,000 for contributing to the National Pension Scheme. The NPS makes it possible to invest in equity and debt pension funds for building a corpus for the retirement life. This can be withdrawn at 60 years of age. Health Insurance Premiums Paying for health insurance premiums can let you qualify for a deduction up to Rs 25,000 under Section 80D. This is permitted on top of all the deductions listed above. In case of senior citizens, this limit is up to Rs. 50,000. The taxpayer contributing towards health insurance premiums for himself as well as for a senior citizen can claim a combined deduction of up to Rs. 75,000 per annum. Deduction on your rent If you are getting HRA, it is possible to claim tax deduction on your House Rent. Though there is no upper limit specified for this, there are some rules that place a cap on the maximum deduction. If you do not get HRA but pay towards rent, a maximum claim of up to Rs. 60,000 per annum is allowed under Section 80GG. Deduction on the home loan interest When you have a home loan running, the interest you pay towards the home loan is tax deductible under Section 24 of the Income tax Act. The maximum limit that you can claim in this regard is Rs. 2 lakh. If the house is rented out, there is no upper limit. Money in your savings account The easiest way to save money on income tax is to keep some money in your savings account. Up to a limit of Rs. 10,000 per year, the interest on savings accounts is tax free under the Section 80TTA. In case of senior citizens, this limit is up to Rs 50,000 applicable in cases of both FD and savings account interest. Give for charity Donations made towards charity enable you for tax deductions. Though there is no upper limit for this, there are different rules that restrict the amount deductible on the contributions towards charities. Across a majority types of donations to the NGOs, this limit is fixed at 50% of the donated amount and up to 10% of the total income that is adjusted. If you want to claim this deduction, the NGOs to which you contribute must have 80 G certificate.

How to save Income Tax in India Schemes to Invest in 2019

New Delhi, Dec 31 () The government on Tuesday kept the interest rates on small savings schemes, including NSC and PPF, unchanged for the fourth quarter of 2019-20 despite moderating bank deposit rates.
Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.9 per cent, while Kisan Vikas Patra (KVP) will give a yield of 7.6 per cent and mature in 113 months.
Interest rates for small savings schemes are notified on a quarterly basis.
"The rates of interest on various small savings schemes for the fourth quarter of the financial year 2019-20 starting January 1, 2020, and ending on March 31, 2020, shall remain unchanged from those notified for the third quarter of the financial year 2019-20," the finance ministry said in a notification.
 The interest rate for the five-year Senior Citizens Savings Scheme has been retained at 8.6 per cent. The interest on the senior citizens' scheme is paid quarterly. Interest on savings deposits has been retained at 4 per cent annually.
The girl child savings scheme Sukanya Samriddhi Yojana account will offer 8.4 per cent rate during the first quarter of the next fiscal.
Term deposits of 1-5 years will fetch interest rate in the range of 6.9-7.7 per cent, to be paid quarterly, while the five-year recurring deposit is pegged at 7.2 per cent.
 While announcing the quarterly setting of interest rates in 2016, the finance ministry had said that rates of small savings schemes would be linked to government bond yields.
 The Reserve Bank of India (RBI) earlier this month had also kept interest rates static on inflationary concerns. DP MR
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