Finance
By: Shree1news, 31 MAR 2021
Finance ministry on Wednesday has announced a cut in interest rates of small savings schemes. The government has reduce the rates of interest on post office small savings schemes for the three months ending June 30, 2021. The rate of interest on PPF will probably be 6.4 per cent instead of 7.1 per cent per annum whereas for the Senior Citizen Savings Scheme, the rate of interest has been fixed at 6.5 per cent instead of 7.4 per cent per annum. The 5-year Monthly Income Account Scheme will offer 5.7 per cent instead of 6.6 per cent payable monthly. On the 1-year time deposit, the rate of interest stands at 4.4 per cent while on the 5-year deposit, the rate will remain 5.8 per cent per annum.
The biggest cut is on the 1-year deposit where the new fee stands lower by 1.1 per cent now. The rate of interest on post office savings account has also been reduce from 4 per cent to 3.5 per cent. The 5-year RD scheme will get 5.3 per cent whereas Sukanya Samriddhi Yojana will offer 6.9 per cent per annum. The money in KVP will now double in 138 months ( 6.2 per cent) instead of earlier tenure of 124 months (6.9 per cent).
Based on government yields, at the start of every quarter of the financial year, the government units the interest rates on post office schemes for the next three months. If at all there’s a change, it does not impact all the post office schemes. For the investor who invests in NSC, KVP, Time Deposits, Senior Citizens Savings Scheme (SCSS), the rate of interest remains fixed till maturity. However, investors of PPF and Sukanya Samriddhi Yojana (SSY) see a revision in the rate as and when the government revises the rate at each quarter of any financial year.
A number of post office schemes are the first choice of investors looking for fixed and assured income. Some of them also come with tax benefits under Section 80C of the I-T Act. All of them are sovereign backed investments wherein the principal invested and the interest earned are guaranteed by the government.
Before investing, make sure about the tax liability of the interest that you’ll earn on PO schemes as some of them may have a taxable interest. Likewise, as nearly all of them have a long duration, ensure you have liquid assets available to you prior to locking funds for the long haul. Put funds into them by connecting to your long term requirements and keeping asset allocation across equity and debt into consideration.
Significantly, the post office schemes carry a sovereign assurance on the whole sum contributed and therefore carry the highest safety on the entire principal invested.
Source:A-N
