Investment In Small Savings Schemes To Fetch These Returns In July-September Quarter
The government on Friday reduced interest rates of small savings schemes by 0.1 per cent for the second quarter of the financial year 2019-20, starting from July 1, 2019 and ending on September 30, 2019. However, interest rate on savings account has been retained at 4 per cent annually, the Finance Ministry said while notifying the rates for the second quarter of financial year 2019-20. Investment or deposit in any of the remaining small savings schemes will fetch a return to the tune of 7.2-8.6 per cent for the September quarter.
India Post, which operates a network of more than 1.5 lakh post offices across the country, offers nine options under its small savings scheme portfolio. These include fixed deposit or time deposit (available in four options of maturities), recurring deposit, Public Provident Fund (PPF), Senior Citizen Savings Scheme, National Savings Certificate and Kisan Vikas Patra (KVP).
Here's a comparison of the interest rate and investment limits applicable to these small savings schemes:
| Small savings scheme | Interest rate | Minimum amount required for opening account | Maximum investment allowed |
|---|---|---|---|
| Savings account | 4% | Rs 20 | |
| Five-year recurring deposit account | 7.20% | Rs 10 per month | No limit |
| One-year time deposit (fixed deposit) account | 6.9% | Rs 200 | No limit |
| Two-year time deposit (fixed deposit) account | 6.9% | Rs 200 | No limit |
| Three-year time deposit (fixed deposit) account | 6.9% | Rs 200 | No limit |
| Five-year time deposit (fixed deposit) account | 7.70% | Rs 200 | |
| Monthly income scheme | 7.60% | Rs 1,500 | Rs 4.5 lakh |
| Senior citizen savings scheme (SCSS) | 8.60% | Rs 1,000 | Rs 15 lakh |
| 15-year public provident fund | 7.9% | Rs 500 | Rs 1.5 lakh per financial year |
| National savings certificate (NSC) | 7.9% | Rs 100 | No limit |
| Kisan Vikas Patra (KVP) | 7.60% | Rs 1,000 | No limit |
| Sukanya Samriddhi | 8.40% | Rs 1,000 | Rs 1.5 lakh per financial year |
Interest rates on the nine small savings schemes (including four types of time deposit or fixed deposit) are currently revised every quarter.
Out of these small savings schemes, investment in the five-year term deposit (fixed deposit), Senior Citizen Savings Scheme (SCSS), 15 year Public Provident Fund and National Savings Certificates (NSC) qualifies for income tax benefit under Section 80C of the Income Tax Act.
