In a statement on Thursday, FinMin said, “The rates of interest on various small savings schemes For the quarter of the financial year 2022-23 starting from 1st July 2022, the quarter ending 30th September 2022 will remain unchanged from that notified for the first quarter of the financial year 2022-23 (1st April 2022 to 30th September 2022).
Here’s a brief look!
post office savings account(SB): Here, an investor can earn up to 4% per annum. The minimum amount to open an account is 500. There is no maximum limit. Interest is calculated on the basis of the minimum balance between the 10th of the month and the end of the month and is allowed only for the whole of Rs. From all savings bank accounts, up to interest, under Section 80TTA of the IT Act 10,000 earned in a financial year is exempted from taxable income.
5 Year Post Office Recurring Deposit Account (RD): The interest rate of 5.8% per annum (quarterly compounded) is . can be earned on a minimum deposit amount of 100 per month. There is no maximum limit.
As per India Post website, Maturity Value 100 dN are:
– 5 years = 6,969.67 after extension with deposit.
– 6 years = 8,620.98
– 7 years= 10,370.17
– 8 years = 12,223.03
– 9 years = 14,185.73
– 10 years = 16,264.76
Post Office Fixed Deposit Account (TD): Here, the minimum deposit value is 1,000 without any maximum limit.
Notably, the interest rate on fixed deposits of 1 year, 2 years and 3 years is 5.5%. Meanwhile, the rate on 5-year fixed deposits is 6.7%. also has a tax advantage 1.5 lakh under section 80C of IT Act for TD of 5 years.
According to India Post, on deposits of 10,000 – is the annual interest 561 on fixed deposits of 1-3 years. While the annual interest earned is for 687 10,000 deposit on TD of 5 years.
Senior Citizen Savings Scheme (SCSS): Investors can earn 7.4% per annum under this scheme. There will be only one deposit in the account in multiples of not exceed 1,000 max 1.5 million. Interest is payable quarterly. Investment under this scheme is eligible for the benefits of section 80C of the Income Tax Act, 1961. However, interest is taxable if the total interest exceeds 50,000 in a financial year under the scheme, and TDS will also be deducted at the prescribed rate. Notably, there will be no TDS if Form 15G/15H is submitted and the interest earned does not exceed the prescribed limit.
According to India Post, quarterly interest becomes at 185 10,000 deposit.
Monthly Income Scheme Account (MIS): The interest rate here is 6.6% per annum. Maximum investment limit is 4.5 lakh in the same account and 9 lakh in a joint account. Interest will be payable on completion of one month from the date of opening and so on till maturity. Interest is taxable in the hands of the depositor. The account can be closed at the end of 5 years.
According to India Post, on deposits of 10,000 – Monthly interest. works till 55.
Public Provident Fund Account (PPF): The interest rate here is 7.1% per annum (compounded annually). Minimum investment is 500 and up to max 1.50 lakh in a financial year. Deposits can be made in lump sum or in installments. Interest for the calendar month will be calculated on the minimum balance in the account between the end of the fifth day and the end of the month. The interest earned is tax free under the Income Tax Act. In addition, deposits are eligible for deduction under section 80C of the Income Tax Act. The tenure for the scheme is 15 years.
Sukanya Samriddhi Account (SSA): The interest rate is 7.6%. Meanwhile, the minimum investment limit is 250 and up to max 1.5 lakh in a financial year. Deposits can be made for a maximum period of 15 years from the date of opening of the deposit. Also, deposits are eligible for deduction under section 80C of the Income Tax Act.
If the minimum deposit 250 is not credited to an account in a financial year, the account will be treated as a defaulted account. However, the defaulted account can be revived before completion of 15 years from the date of opening of the account by paying the minimum 250+ 50 defaults for each defaulted year.
National Savings Certificate (NSC): The interest rate on 5 year NSC is 6.8%. According to India Post, increases by 1,000 1,389.49 after 5 years. That said, the minimum investment amount is 1,000 with maturity period of 5 years and there is no maximum limit. The amount deposited under the scheme is eligible for benefits under section 80C of the IT Act.
Kisan Vikas Patra (KVP): The interest rate here is 6.9% compounded annually. The amount invested doubles in 124 months (10 years 4 months). Minimum investment limit is 1,000 and there is no maximum limit.
Many expect the interest rates of small savings schemes to go up in Q2 of FY23 due to rising government bonds due to strong demand.
According to data from Trading Economics, the 10-year yield of Government Sec is around 7.45%, while the 5-year yield as on June 30 is 7.26 per cent.
In line with the recommendations of the Shyamala Gopinath Committee for linking small savings schemes to the market, the Finance Ministry announced in March 2016 that instead of annual resetting of interest rates of small savings schemes for the next financial year, the interest rates would be released from now on. Will stay The G-Sec yield of the last three months should be reset every quarter.
In 2011, the Gopinath Committee recommended keeping small savings interest rates at 25-100 basis points above the average yield of government securities.
With the interest rates of small savings schemes kept unchanged, are they attractive as compared to bank deposits, which have seen their interest rates rise drastically ever since the RBI started increasing the repo rate? Since May this year, the RBI has increased the repo rate by 90 basis points – taking the rate to 4.90%.
Here is a list of interest rates offered by major banks on their fixed deposits,
State Bank Of India:
From June 14, SBI is offering 5.30% interest rate to regular customers for tenures ranging from 1 year to less than 2 years. The rate for senior citizens in the same tenure is 5.80%.
Meanwhile, the bank offers a rate of 5.35% to regular customers and 5.85% to senior citizens with tenures ranging from 2 years to less than 3 years.
The interest rate is 5.45% for regular customers with tenures ranging from 3 years to less than 5 years, and 5.95% for senior citizens.
On tenures of 5 years and 10 years, the rate is 5.50% for regular customers and 6.30% for senior citizens.
These rates are applicable on FDs below 2 crores.
HDFC bank:
down on FD 2 crore, HDFC Bank offers a rate of 5.35% for regular customers with a tenure of 1 year to 2 years, while for senior citizens the rate is 5.85%.
A regular customer earns 5.50% on deposits maturing in 2 years 1 day – 3 years. For the same period, senior citizens earn 6%.
The rate for regular customers is 5.70% on 3 years 1 day – 5 years tenure, and 6.20% for senior citizens on the same. Meanwhile, the rate is 5.75% for regular customers and 6.50% for senior citizens with a tenure of 5 years 1 day – 10 years.
An additional premium of 0.25% (over the existing premium of 0.50%) is also offered to senior citizens who wish to book a fixed deposit of less than 5 crores for a tenure of 5 years 1 day to 10 years.
ICICI Bank:
down on FD 2 crore, ICICI Bank offers a rate of 5.35% on deposits maturing in 1 year to 2 years. A senior citizen earns 5.85% for the same period.
Meanwhile, for regular customers, the rate is 5.50% on tenures of 2 years 1 day to 3 years; 3 years 1 day to 5 years 5.70%; and 5.75% on tenure of 5 years 1 day to 10 years.
A senior citizen earns 6% on tenure of 2 years 1 day to 3 years; 3 years 1 day to 5 years 6.20%; and 6.50% from 5 years 1 day to 10 years.
Resident Senior Citizen customers will get an additional interest rate of 0.25% for a limited period of time in addition to the existing additional rate of 0.50% p.a. for tenures exceeding 5 years.