There is some good news for millions of investors who depend on small savings instruments such as post office savings and public provident fund scheme.
The government on Friday raised interest rate on the Public Provident Fund (PPF) to 8.6 per cent, from 8 per cent earlier. The maximum increase is in the one-year fixed deposits – from 6.25 per cent to 7.7 per cent. The interest rate on other time maturities has been hiked as well.
Similarly, the government also hiked the interest rate on post office savings accounts to 4 per cent from 3.5 per cent now.
The decision to hike interest rates, which is in line with the recommendations of Shyamala Gopinath Committee, will make small savings schemes more attractive and offers investors to get a better deal in a raging inflationary scenario.
In the PPF scheme, the government has also increased the investment ceiling be raised from Rs. 70,000 to Rs. 1 lakh in line with the exemption given under 80C of the Income Tax Act.
Earlier this year, a committee set up by the finance ministry has recommended raising interest rates for post office savings deposits to 4 per cent from 3.5 per cent at present, in line with the Reserve Bank's decision to hike rates on savings bank deposits. The committee, which submitted its report to finance minister Pranab Mukherjee, has recommended that the rate of interest be at least 0.25 per cent higher than the g-sec yield.
The government, however, decided to discontinue the Kisan Vikas Patras (KVPs) and lowered the maturity period for MIS and NSCs to five years from existing six years.
It also introduced the National Savings Scheme (NSC) with 10-year maturity.
The government has scraped five per cent bonus on MIS and has also done away with commission for agents on PPF and Senior Citizens Savings Schemes.
The government on Friday raised interest rate on the Public Provident Fund (PPF) to 8.6 per cent, from 8 per cent earlier. The maximum increase is in the one-year fixed deposits – from 6.25 per cent to 7.7 per cent. The interest rate on other time maturities has been hiked as well.
Similarly, the government also hiked the interest rate on post office savings accounts to 4 per cent from 3.5 per cent now.
The decision to hike interest rates, which is in line with the recommendations of Shyamala Gopinath Committee, will make small savings schemes more attractive and offers investors to get a better deal in a raging inflationary scenario.
In the PPF scheme, the government has also increased the investment ceiling be raised from Rs. 70,000 to Rs. 1 lakh in line with the exemption given under 80C of the Income Tax Act.
Earlier this year, a committee set up by the finance ministry has recommended raising interest rates for post office savings deposits to 4 per cent from 3.5 per cent at present, in line with the Reserve Bank's decision to hike rates on savings bank deposits. The committee, which submitted its report to finance minister Pranab Mukherjee, has recommended that the rate of interest be at least 0.25 per cent higher than the g-sec yield.
The government, however, decided to discontinue the Kisan Vikas Patras (KVPs) and lowered the maturity period for MIS and NSCs to five years from existing six years.
It also introduced the National Savings Scheme (NSC) with 10-year maturity.
The government has scraped five per cent bonus on MIS and has also done away with commission for agents on PPF and Senior Citizens Savings Schemes.
Following are the highlights of changes in small savings deposits schemes:
* Interest rate on post office savings hiked to 4 per cent
* Public Provident Fund to fetch 8.6 per cent returns
* PPF investment limit hiked to Rs. 1 lakh from Rs. 70,000/year
* 5-year MIS will yield 8.2 per cent interest
* One-year time deposit will fetch 7.7 per cent
* Kisan Vikas Patras to be discontinued
* Interest on 5-year recurring deposit hiked to 8 per cent
* 10-year NSC with 8.7 per cent interest to be launched
* 5 per cent bonus on maturity of MIS discontinued
* Agent commission on PPF and senior citizen schemes to go.
* Interest rate on post office savings hiked to 4 per cent
* Public Provident Fund to fetch 8.6 per cent returns
* PPF investment limit hiked to Rs. 1 lakh from Rs. 70,000/year
* 5-year MIS will yield 8.2 per cent interest
* One-year time deposit will fetch 7.7 per cent
* Kisan Vikas Patras to be discontinued
* Interest on 5-year recurring deposit hiked to 8 per cent
* 10-year NSC with 8.7 per cent interest to be launched
* 5 per cent bonus on maturity of MIS discontinued
* Agent commission on PPF and senior citizen schemes to go.
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