New Delhi: The Union government has maintained the interest rate on small saving schemes for the third quarter (October-December 2024) of the current financial year. These small saving schemes are managed by the Central government and saving instruments are offered through banks and post offices and include schemes such as the Public Provident Fund (PPF), Senior Citizen Saving Scheme (SSC), Kisan Vikas Patra (KVP), Sukanya Sammriddhi Yojana (SSY) among others.
“The rates of interest on various Small Savings Schemes for the third quarter of FY 2024-25 starting from October 1, 2024, and ending on December 31, 2024, shall remain unchanged from those notified for the second quarter of FY 2024-25,” the Department of Economic Affairs (DEA) said in a notification issued on Monday.
This means the interest rate of PPF will remain at 7.1 per cent for the October-December period this year. This is the third straight quarter when the government has maintained the interest rates on small savings schemes (SSS).
Similarly, the interest rate on the Kisan Vikas Patra (KVP) will be 7.5 per cent, and the investments will mature in 115 months.
The deposits under the Sukanya Samriddhi Yojana (SSA) will earn an interest rate of 8.2 per cent, while the rate on a three-year term deposit remains at 7.1 per cent.
The interest rate on the National Savings Certificate (NSC) will remain at 7.7 per cent for the October-December 2024 period.
What are Small Savings Instruments?
Small savings schemes are launched and managed by the Central government and these schemes are aimed at encouraging the citizens to save money to achieve their financial goals, including tax savings.
These small saving schemes include:
Public Provident Fund Account (PPF)
The Public Provident Fund (PPF) is a long-term investment scheme offered by the Indian government. It's a safe and secure investment option with a guaranteed interest rate. The PPF account can be opened at any post office or authorized bank. It offers tax benefits under Section 80C of the Income Tax Act.
Sukanya Samriddhi Scheme
The Sukanya Samriddhi Scheme is a government-backed savings scheme specifically designed for the future education and marriage of a girl child. Parents or legal guardians can open this account in the name of a girl child below 10 years of age. The scheme offers a guaranteed interest rate and tax benefits under Section 80C of the Income Tax Act.
Senior Citizen Savings Scheme
The Senior Citizen Savings Scheme is a fixed-term deposit scheme designed for individuals aged 60 and above. It offers a higher interest rate compared to other savings schemes. The scheme provides a guaranteed return and is exempt from income tax under Section 80C of the Income Tax Act.
Post Office Savings Account
A Post Office Savings Account is a basic savings account offered by the Indian Postal Department. It's a low-risk investment option with a competitive interest rate. The account can be opened with a minimum deposit and offers easy accessibility to funds. It's a suitable option for individuals who prefer a safe and secure place to save their money.
5-Year Post Office Recurring Deposit Account (RD)
The 5-Year Post Office Recurring Deposit Account (RD) is a fixed-term deposit scheme that requires regular monthly deposits over five years. It offers a higher interest rate compared to a savings account. The RD is a suitable option for individuals who want to save a specific amount of money over time.
National Savings Certificates (NSC)
National Savings Certificates (NSC) are a government-backed fixed-term investment option. They offer a guaranteed interest rate and are available in different maturity periods. NSCs are a popular choice for individuals who want to save money for specific goals such as buying a house or a car. They are also eligible for tax benefits under Section 80C of the Income Tax Act.
Post Office Time Deposits (POTD)
Post Office Time Deposits (POTD) are a type of fixed-term deposit offered by the Indian Postal Department. They offer a higher interest rate compared to regular savings accounts and are available for various maturity periods. POTDs are a safe and secure investment option with a guaranteed return. They are suitable for individuals who want to save a lump sum of money for a specific period.
Mahila Samman Savings Certificate
The Mahila Samman Savings Certificate is a government-backed savings scheme specifically designed for women. It offers a higher interest rate than other savings schemes and can be opened by any woman above the age of 18. The scheme provides a guaranteed return and is eligible for tax benefits under Section 80C of the Income Tax Act. It's a suitable option for women who want a safe and secure investment for their financial goals.
Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) is a fixed-term deposit scheme that provides a regular monthly income. It's a suitable option for individuals who require a steady stream of income. The scheme offers a guaranteed interest rate and is available for various maturity periods. POMIS is a popular choice for senior citizens and individuals who want to supplement their income.
These schemes are popular among the masses as they are backed by the Central Government’s sovereign guarantee and as such they are major saving instruments for the majority of Indian households. The Central government reviews the applicable interest rates on these schemes quarterly.
