PremiumListen to this article |
Interest rates on deposit products are trending higher since the Monetary Policy Committee (MPC) of the RBI raised the repo rate to 4.90 per cent in June, but they are still below the inflation range. Since the increase in the repo rate, we have seen an increase in the interest rates on short-term deposits, which has disabled long-term investors to benefit from the rising trend in interest rates. However, while increasing, bank fixed deposit interest rates remained lower than those of post office schemes in 2022. We have determined that the interest rates on fixed deposits offered by top banks like SBI, ICICI, HDFC, Axis Bank, PNB, BoB, and more are significantly lower than the interest rates on post office schemes like Senior Citizen Savings Scheme (SCSS), Public Provident Fund Account (PPF), and Sukanya Samriddhi Account. Accordingly, in the current rising interest rate period, individuals seeking to make more safe returns than fixed deposits can consider the following post office savings schemes for long-term investments.
Senior Citizen Savings Scheme (SCSS) is a small savings scheme that is a well-liked investment option amidst NPS and PMVVY among senior citizens who are hoping to earn better returns than fixed deposits. Adults over the age of 60, retired civil employees over the age of 55 but under the age of 60, and retired military personnel over the age of 50 but under the age of 60 can establish an SCSS account.
A senior citizen can open an account individually or jointly with his spouse by making a minimum deposit of INR 1000 with a maximum deposit of INR 15 lakh. Senior citizens can also claim tax benefits up to ₹1.5 lakh under section 80C on investments made under SCSS and currently Senior Citizen Savings Scheme is offering a return of 7.4 % per annum payable on a quarterly basis. The SCSS has a 5-year maturity term, however, premature withdrawals are permitted any time after the date of opening with a penalty.
Due to its exempt-exempt-exempt (EEE) status, PPF is among the most well-liked investment products for long-term investors. With a minimum deposit of Rs. 500 and a maximum annual contribution of Rs. 1.5 lakh, a single adult resident Indian can or a guardian on behalf of a minor/ person of unsound mind can establish a PPF account. Investors should be aware that deposits are eligible for section 80C of the Income Tax Act deductions. PPF has a 15-year maturity period, and on deposits, investors can currently receive interest at a rate of 7.1 per cent annually compounded.
Additionally, under the Income Tax Act, interest earned is completely tax-free. After five years, except for the year of account activation and for depositors with maturity desire, a subscriber can withdraw up to 50% of the amount once per financial period. One may choose to extend the PPF account for an additional 5-year block, keep the maturity value in the account without making a deposit, or take the tax-free maturity amount, upon maturity. Only after five years have passed since the account's establishment, a PPF account can be prematurely withdrawn for emergencies.
This post office scheme is specifically for parents who wish to save financially for their daughter's future. The name suggests that SSA accounts can be established by guardians on behalf of their girl children under the age of 10 and that only one account can be registered in India in a girl's name for up to two daughters in a family. A deposit of a minimum of INR 250 and up to INR 1,50,000 can be made to create an SSA account, and deposits can be made for a maximum of 15 years after the account is first formed. Sukanya Samriddhi Account deposits are tax-deductible up to ₹1.5 lakh annually under section 80C.
The Sukanya Samriddhi Account now offers an annual interest rate of 7.6%, which is compounded annually and is subject to income tax deductions under Section 80C of the Income Tax Act. The guardian will manage the account until the daughter reaches the age of 18 years, and a girl kid can close the account and get maturity benefits when 21 years have passed since the account was opened. Alternatively, the SSA account may well be closed for maturity proceeds at the time a female child marries after becoming 18 years old, i.e., one month before or three months after the day of marriage. After a girl child reaches the age of 18 or has completed the tenth grade, withdrawals from the account are permitted up to 50% of the balance, and SSA accounts may be prematurely closed after five years of account establishment in case of emergencies.