This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in
New Post for FY 2016-17 – Post Office Small Savings Schemes – FY 2016-17 Interest Rates – PPF @ 8.10% & Sukanya Samriddhi Yojana @ 8.60%
The Finance Ministry on March 31st announced the applicable interest rates for all the Post Office Small Savings Schemes, including PPF, Sukanya Samriddhi Yojana and Senior Citizens Savings Scheme (SCSS). These rates would be applicable for the current financial year, 2015-2016 and have come into effect immediately from 1st April, 2015.
Positive Surprise for Small Savers
To make these schemes more attractive, the interest rate for Sukanya Samriddhi Yojana has been increased to 9.2% from 9.1% earlier and for Senior Citizens Savings Scheme, the rate has been hiked to 9.3% from 9.2% earlier. The interest rates on all other schemes have been left unchanged, including PPF which is going to earn 8.7% for you this financial year.
At a time when interest rates are falling sharply and the Government is putting considerable pressure on the RBI to lower down its policy rates, this move of keeping small savings rates higher/unchanged has left me stunned. I did not expect such a move from a government which seems to me a progressive government as far as its economic reforms are concerned.
If there is a scientific method of calculating interest rates on these small saving schemes, then I think the current rates have been fixed abnormally higher. In the last 12 months or so, the yields on Government Securities (G-Secs) have fallen from a high of around 9.1% to 7.65% recently. Though keeping interest rates higher has left me disappointed, this move by the government would make small savers & senior citizens happier, for at least one more year.
The increase of 0.10% interest rate on Sukanya Samriddhi Yojana (SSY) should encourage more and more investors and parents to join this scheme now. In fact, the interest rate differential of 0.50% between PPF and SSY would make some of the investors to contribute more towards SSY now.
Here you have the table having all the small saving schemes with their applicable interest rates and tax benefits for the current financial year:
Public Provident Fund (PPF) – There has been no change in the interest rate offered by PPF, India’s most popular small savings scheme. PPF will earn you 8.70% for the current financial year as well. Interest rate will continue to remain tax-exempt on maturity and investment up to Rs. 1,50,000 will keep getting exemption under section 80C.
Sukanya Samriddhi Accounts (SSA) – Sukanya Samriddhi Yojana accounts will carry 9.20% for the current financial year, 2015-16. I was expecting the government to marginally reduce the rate here, say between 8.80% to 9%. But, in a surprise move, they have actually gone ahead and increased the rate to 9.20% from 9.10% till March 31st. I think the government’s move will increase the popularity of this scheme.
Moreover, like PPF, the interest earned will be tax-free on maturity and the investment amount up to Rs. 1,50,000 will get you tax deduction under section 80C.
PPF vs. Sukanya Samriddhi Yojana vs. Senior Citizen Savings Scheme
Senior Citizens Savings Scheme (SCSS) – Senior citizens will also feel happy about the changes announced by the Government as the interest rate on Senior Citizen Savings Scheme has also been increased by 0.10% to 9.30% from 9.20% earlier. Though your investment amount will get you deduction under section 80C, the interest earned is taxable and subject to TDS as well.
Post Office Monthly Income Scheme (POMIS) – Once quite popular with a terminal bonus of 10% and then 5%, Post Office Monthly Income Scheme is getting more and more unpopular these days. As against MIS, investors are getting attracted towards bank fixed deposits (FDs) these days as they get a higher rate of interest, better liquidity and quarterly interest payments. Interest rate has been kept unchanged at 8.40% for MIS.
National Savings Certificates (NSCs) – 5-year NSCs & 10-year NSCs will keep earning 8.50% and 8.80% respectively in the current financial year. Also, your investment will earn you tax exemption under section 80C.
Kisan Vikas Patra (KVP) – Your investment in KVP can double your money in 100 months, which makes its effective annual return to be 8.67% if held till maturity. Investment certificates in this scheme bear no name and can easily be transferred from one person to another.
Recurring Deposits (RDs)/Term Deposits (TDs) – Interest rates on recurring deposits and term deposits have also been kept unchanged at 8.40% for all tenures, except term deposit of 5 years tenure which will yield 8.50% per annum. 5-year term deposit with a lock-in clause will provide you tax deduction under section 80C.
Post Office Savings Account – Your savings account in a post office will continue to earn 4% annual interest and interest amount up to Rs. 10,000 will be tax exempt under section 80TTA.
At a time when banks are already struggling to keep their credit growth in double digits, I think keeping interest rates higher on these small savings schemes is not a wise move. It will make it really difficult for the banks to lower their deposit rates and hence there will be pressure on their net interest margins (NIMs) and profitability. I don’t know what exactly is the logic behind this move, but small savers will definitely benefit out of it. You should take full advantage of these high rates till the time the government realises its mistake.
can nri invest ? any clarity now ?
Hi Yogesh,
NRIs cannot invest in this scheme.
Dear sir maine 15 may ko account. Open kiya to uski next deposit 15th June ke bad hogi ya June start hone ke bad b kar sakte h please clear kare
Hi Ravi,
Is scheme mein saal mein sirf ek baar deposit karna zaroori hai.
Sir,
I have 2 girls.Elder one is 7yrs and younger one is 3yrs. Can I do the scheme for both.And one thing what will happen if I am not able to deposit continuously in every month???? In that case can i continue and will my daughter get the benefit after 21 yrs.
Hi Jayant,
Both your daughters are eligible for this scheme. Also, you need not deposit money every month in this account, once in a year is sufficient.
which is best,secure post scheme for age 55? investment amt 4 lakh.preference for cumulative scheme & pre maturity facility.
Pleas give me some idiyas my girl 5years
Sir….
Maine post office me iske lia enquire kiya,
Wahan batya gaya ki is tarah ke iskim ka koi letter nahi aaya hai.
Sir, plz. Iske bare me detail se bataye
Kahan khulega….
Hi Alok,
Ye account post offices aur banks mein open ho raha hai. Agar post office account nahin khol raha, to aap kisi bank mein ja ke pata keejiye.
hello sir mujhe apni beti ka SSA account khul wana hai meri beti 3 years ki h abhi may monthly 1000 deposit kar skate hu please help sir Thank You.
please call me 9867587961 Shiv kukreja thank you
Mere husband ne 150lac yearly wala sukanyasaridhi yojna bharte h. …
Ab mai v ek or 12000 wala isi beti k name se sukanyasaridhi yojna krna chahati hu kya ek hi beti k liye alg. ….alg dono mammi papa kr skte h…….plzzzzzzz sir answer me
my daughter’s age is one month so plz can you tell me in 21 years what I will get if I deposit 500 per month.
Hi Shiv,
With Rs. 500 per month deposit, you will get Rs. 317,327 @ 9.20% per annum after 21 years –
http://www.onemint.com/2015/04/03/sukanya-samriddhi-yojana-calculating-maturity-values-9-2-interest-rate-applicable-for-fy-2015-16/
Sir…agar hum 10sal kai age mai karvate hai to is plane ka maturity kab hogi….agar eucation ka liya pre mature withdraw karte hai to interest milega..
Hi Surya Prakashji,
Is scheme ki maturity account khulne se 21 saal baad ya phir beti ki shaadi hone pe hogi. Agar beti ki age 18 saal hone pe education ke liye withdraw karte hain to 50% balance withdraw kar sakte hain, jispe aapko poora interest milega.
I .e I m deposit 100 only .after 18 yrs old how much.
Please any reply me
Hi Raaz,
Ye post check keejiye, ismein maturity values di hui hain – http://www.onemint.com/2015/04/03/sukanya-samriddhi-yojana-calculating-maturity-values-9-2-interest-rate-applicable-for-fy-2015-16/
If we exclude Senior Citizens Savings Scheme (SCSS), SSA has the highest interest rate among all small deposit schemes. And from the words of Mr. A.K. Chauhan, Joint Director of National Savings Institute, we can expect that Sukanya scheme will have preferential interest rates in future also.
This is indeed a very good initiative & Govt. is trying their level best to promote this scheme. Hope to see more such initiatives in coming days.
Yes Manidipa, it is a good scheme and hope we have such good schemes from the government.
sir ye bataye ki meri bati 8 saal ki ho gaie h agar uske sadi 18 ke hone per karte h to pase mil jayege kay
Hi Geeta,
Yes, aapki beti shaadi ke time saara balance amount withdraw kar sakti hai.
I would like to invest Rs 900000/-. Which one is better MIS or SCSS. Please advise.
I think SCSS is better than MIS.
can a husband can invest 15 lacs separately & her wife also can invest 15 lacs separately I a post office senior citizens saving scheme
Yes, both husband and wife can have their individual investments of Rs. 15 lakhs each in Senior Citizens Savings Scheme.
can a husband can invest 15 lacs separately & her wife can invest 15 lacs in a post office senior saving scheme
My guess is that government will come up with formula to offer high coupon rates for upcoming tax free bonds. It will be like G-sec+1%.
Hi Amit, how have you guessed it, any indications?
My daughter is 4yrs old ..I need to deposit money for 14years till she is 18years right and then maturity will be at 21years of her age ..
No, maturity will be after 21 years from the account opening date or when your daughter gets married, whichever is earlier.
NRI can open this account ?
It is still not clear Yogesh.
scheme looks very similar to PPF and its advantage is that it has higher rate of return.
Yes, that’s right!
this is great news
Yes, it is a great feature which is making this scheme quite popular as well.
Is there any scheme for boys, age -12yrs
Are you sure sukanya samriddhi scheme is having EEE status ?
Which means interest earned and amount at maturity is not taxable.
pls confirm.
Yes Yogesh, it is confirmed, Sukanya Samriddhi Yojana qualifies to be an Exempt-Exempt-Exempt (EEE) scheme.
Do we have any schemes for 1 year baby boy