Sukanya Samriddhi Scheme, 3-yr Term Deposit, and more: Small savings schemes' interest rates hiked up to 20 bps for Q4FY24

Sukanya Samriddhi Scheme: The Centre on Friday hiked the interest rates of some of the small savings schemes, such as  Sukanya Samriddhi Scheme, 3-year Time Deposit, for the January-March 2024 quarter. In a notification, the Union finance ministry said that the interest rates of most schemes were at the same level, with minor tweaks for the Sukanya Samriddhi Scheme and 3-year time deposit.

As per the latest revised list, the interest rate of Sukanya Samriddhi Scheme will be 8.2%, while for 3-year TD it would be 7.1% for the last quarter of the current fiscal. Earlier, the interest rates for Sukanya Samriddhi Scheme and 3-year TD were 8.0%, 7.1%, respectively.

The PPF rates were kept unchanged for more than 3 years. It was last tweaked in April-June 2020, when it was slashed to 7.1 per cent from 7.9 per cent. 

In the last announcement, the Centre kept small savings interest rates at the same level for the October-December quarter except for a marginal increase in five-year recurring deposit rates. 

Before today's revision, the interest rates on small savings schemes ranged between 4 per cent (post office savings deposits) and 8.2 per cent (Senior Citizens Savings Scheme).

Interest rates for  Jan-March 2024

Savings Deposit: 4 per cent

1-Year Post Office Time Deposits: 6.9 per cent

2-Year Post Office Time Deposits: 7.0 per cent

3-Year Post Office Time Deposits: 7.1 per cent

5-Year Post Office Time Deposits: 7.5 per cent

5-Year Recurring Deposits: 6.7 per cent (6.5 per cent earlier)

National Saving Certificates (NSC): 7.7 per cent

Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)

Public Provident Fund: 7.1 per cent

Sukanya Samriddhi Account: 8.2 per cent

Senior Citizens Savings Scheme: 8.2 per cent

Monthly Income Account: 7.4 per cent.

 

Interest rates in the October-December 2023 quarter

Savings Deposit: 4 per cent

1-Year Post Office Time Deposits: 6.9 per cent

2-Year Post Office Time Deposits: 7.0 per cent

3-Year Post Office Time Deposits: 7 per cent

5-Year Post Office Time Deposits: 7.5 per cent

5-Year Recurring Deposits: 6.7 per cent (6.5 per cent earlier)

National Saving Certificates (NSC): 7.7 per cent

Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)

Public Provident Fund: 7.1 per cent

Sukanya Samriddhi Account: 8.0 per cent

Senior Citizens Savings Scheme: 8.2 per cent

Monthly Income Account: 7.4 per cent.

Small savings schemes have three categories — savings deposits, social security schemes and monthly income plan. The interest rates offered by the Government on most of the small savings schemes, including Post Office Fixed Deposit, are already at par with term deposits offered by banks.

The small savings schemes are great instruments to save individual income tax. Under Section 80C of the Income Tax Act, individuals can claim deductions of up to Rs 1.5 lakh per year from their taxable income by investing in PPF, SCSS, NSC, SSY, and the 5-Year Post Office Time Deposit Scheme.

The interest rate on small savings instruments such as the National Savings Certificate, Sukanya Samriddhi Account Scheme, Kisan Vikas Patra and Public Provident Fund are revised every quarter in line with the market rate for the 10-year government security, based on a formula devised by a committee led by former Reserve Bank of India Governor Shyamala Gopinath. The committee had recommended that the interest rates of different schemes should be 25-100 bps higher than the yields of the government bonds of similar maturity.

Earlier, the NDA government claimed that the current interest rates on various Small Savings Schemes are comparatively better than the fixed deposit schemes offered by public and private banks.

Also read: Public provident fund, Senior Citizens Savings Scheme to National Pension Scheme: Best tax saving instruments for senior citizens

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