Home » Current Affairs » 3 Post Office Schemes give more returns than Bank FDs with 80C Deduction

3 Post Office Schemes give more returns than Bank FDs with 80C Deduction

3 Post Office Schemes give more returns

Debt investors are scrambling to find banks that offer better interest rates as fixed bank deposit rates increase, but small savings schemes or post office savings schemes are government-backed investments they now make compared to fixed bank deposits. provide higher yield. Small savings schemes are preferable to bank fixed deposits in a rising interest rate environment as they have quarterly interest rate review instead of fixed interest rates on bank fixed deposits. Ever since the RBI raised the repo rate in August, all major banks have increased their interest rates on fixed deposits in an effort to attract investors. Major banks like SBI offer 5.65% interest rate, HDFC Bank 6.10% interest rate, ICICI Bank 6.10% interest rate, Axis Bank offers up to 6.05% interest rate, and PNB offers maximum interest rate. at the rate of 6.10%. Yet all these interest rates, even with the recent hike from the above institutions, are still widely popular small savings schemes like Senior Citizens Savings Scheme (SCSS), Public Welfare Fund Accounts (PPF) And there are very few as compared to Sukanya. Prosperity Pearl.

Savings Scheme for Elderly (SCSS)

Senior citizens in search of safe investments that can generate higher returns than bank fixed deposits often opt for Savings Schemes for Senior Citizens (SCSS). SCSS currently offers an annual interest rate of 7.4% payable in quarterly payments. In the current environment of rising interest rates, this SCSS interest rate is much higher than the fixed deposit rates offered by banks. A person above 60 years of age can set up a SCSS account either individually or jointly with his/her spouse.

The minimum deposit amount in all SCSS accounts opened by an individual is Rs. 1000 and in multiples of Rs. 1000 subject to a maximum deposit amount of Rs. 15 lakh fixed deposits, investments made under this scheme are attractive tax-saving investments for old residents, as they qualify for the benefits of Section 80C of the Income Tax Act of 1961. However, if the total interest in all the SCSS accounts exceeds Rs. 50,000 in a tax year, the interest earned is taxable and will attract TDS deduction. Senior Citizen Savings Scheme (SCSS) offers options for early withdrawal and account extension along with a maturity period of 5 years.

Public Provident Fund (PPF) Account

Exempt-Exempt-Exempt on Investment (EEA) PPF loan for tax benefit seekers is a very popular small savings scheme among investors. It is a highly coveted investment option for tax savers due to the investment made and the fact that the interest and maturity amount are tax free. Compared to the fixed deposit interest rates offered by banks like SBI, HDFC, PNB, BoB, Axis, HDFC Bank, Kotak Mahindra Bank and many more, PPF now offers 7.1% per annum (compounded annually).

The minimum deposit amount required to open a PPF account is Rs. 500, and maximum annual limit of Rs. 1.5 lakh. PPF is generally more suitable for long-term investors as the scheme has a maturity period of 15 years and offers the investor three options on maturity: withdrawal of maturity amount, extension of account for a block of five years, or Retention termination benefit. to the account without additional deposits. After five years of account opening, PPF also allows early withdrawal, and the account holder can make one partial withdrawal every financial year after five years, excluding the year of account opening.

Account Sukanya Samriddhi

Sukanya Samriddhi Account (SSA) is the most popular small savings plan for parents who want to save money for their daughter’s future. SSA now offers a 7.6% CAGR, which is again much higher than those banks’ fixed deposit interest rates. To open an SSA account in the name of a girl under the age of 10, the guardian must pay a minimum of Rs. 25 and maximum INR. 1,50,000 in a fiscal year. The amount deposited in this account is eligible for tax exemption under section 80C.

The guardian will be responsible for managing the account until the girl turns 18, at which point she will be allowed to manage it independently. However, after turning 18 or passing the 10th standard, she can only make partial withdrawals of up to 50% of the account balance. The account can be closed after 21 years from the date of opening the account or by depositing the maturity at the time of the girl’s marriage after 18 years. After five years of account opening, SSA accounts also allow early withdrawals for unexpected expenses.

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