Small savings scheme interest rates: The Central government has opted to maintain the interest rates for various small savings schemes unchanged for the fourth consecutive quarter, starting from January 1, 2025. This decision, disclosed by the Finance Ministry on Tuesday, signifies that the rates will continue to be steady throughout the last quarter of FY2025, following the pattern set in last four quarters.
As per the official notice, the interest rates for the fourth quarter of FY 2024-25 will be in alignment with those of the third quarter, spanning from October 1, 2024, to December 31, 2024.
“The rates of interest on various small savings schemes for the fourth quarter of FY 2024-25, starting from January 1, 2025, and ending on March 31, 2025, shall remain unchanged from those notified for the third quarter (October 1, 2024, to December 31, 2024) of FY 2024-25,” said the ministry notification.
This means, the interest rate for popular scheme, Public Provident Fund (PPF), will be unchanged at 7.1%. Similarly, the popular Sukanya Samriddhi Yojana, aimed at promoting the welfare of the girl child, will continue to offer an attractive interest rate of 8.2%. The interest rate for sought-after Senior Citizen Savings Scheme will be 8.2% per annum.
Here are more details on these popular savings scheme:
Public Provident Fund (PPF)
The Public Provident Fund (PPF) scheme, backed by the government, is a long-term investment option aimed at promoting savings and wealth accumulation. It provides investors with a competitive interest rate and potential returns on their investment over time.
A significant advantage of the PPF scheme is that the interest earned and returns generated are exempt from taxation as per the Income Tax laws of the nation. This feature renders it a tax-efficient investment opportunity for those looking to secure their financial future.
The PPF scheme requires a minimum tenure of 15 years, with the option to extend in 5-year increments as desired. Investments in a PPF account can range from a minimum of Rs 500 to a maximum of Rs 1.5 lakh per financial year. Investors can choose to invest in a lump sum or in up to 12 installments annually.
A minimum monthly contribution of Rs 100 is needed to open a PPF account. Any investments exceeding Rs 1.5 lakh annually will not earn interest or qualify for tax benefits. Deposits must be made at least once per year throughout the chosen tenure, which starts at 15 years and can be extended in 5-year intervals.
It’s essential to remember that a PPF account can only be under a single individual’s name, as joint accounts are not allowed.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a government-endorsed investment option popular among retirees, offering an attractive interest rate of 8.2% per annum for investments made during the January-March quarter. Individuals aged 60 and above can invest up to Rs 30 lakh in an SCSS account, with the flexibility to make deposits in a lump sum or through multiple contributions, with a minimum deposit amount of Rs 1,000.
The interest rate for the savings scheme is reviewed and adjusted by the government every quarter. For the January-March quarter, the government has chosen to maintain the interest rate at 8.2%. Interest is computed and disbursed quarterly, starting from the date of deposit until the end of each quarter: 31st March, 30th June, 30th September, and 31st December, as detailed on the IndiaPost website.
The account opening process for the Senior Citizen Savings Scheme (SCSS) requires a minimum deposit of Rs 1,000 or any amount in multiples of Rs 1,000, not exceeding Rs 30,00,000. Any excess deposit made will be promptly refunded to the depositor.
The SCSS has a five-year tenure, with the option to extend for an additional three years upon maturity. While it is intended as a long-term investment, the scheme allows for premature withdrawals after one year. However, there are penalties for early withdrawals: a 1.5% deduction if withdrawn between one and two years, and a 1% deduction if withdrawn after two years. This flexibility provides financial options for seniors who may need to access their funds unexpectedly.
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana (SSY) is a savings scheme that was introduced in 2015 as part of the Government’s Beti Bachao, Beti Padhao campaign. This scheme allows guardians to open a savings account for their daughter with an authorized commercial bank or India Post branch.
SSY accounts offer a competitive interest rate of 8.2%. The minimum deposit required to open an SSY account is now reduced to Rs 250, down from the previous minimum of Rs 1,000 (before 5th July 2018). The maximum deposit limit for SSY accounts is Rs 1.5 lakh per year. Deposits must be made for 15 years, otherwise, the account may be categorized as “under default.” To reactivate the account, a penalty of Rs 50 per year of missed deposits must be paid within the 15-year period.
Investments in the SSY scheme qualify for deductions under Section 80C, up to a maximum of Rs 1.5 lakh. The interest earned on this account, compounded annually, is also tax-exempt under Section 10 of the Income Tax Act. Furthermore, any proceeds received upon maturity or withdrawal are exempt from income tax.
Interest rates for other Small Savings schemes
The interest rates for post office savings schemes have remained unchanged since April 2024. The government last adjusted the interest rates for small savings schemes in the January-March 2024 quarter, with not all schemes being revised at that time. Specifically, the interest rates for the 3-year post office time deposit and Sukanya Samriddhi Yojana were revised during that period.
The interest rates for the January-March quarter are as follows:
Savings Scheme Interest rate
> Post Office Savings Account 4%
> Post Office Recurring Deposit 6.7%
> Post Office Monthly Income Scheme 7.4%
> Post Office Time Deposit (1 year) 6.9%
> Post Office Time Deposit (2 years) 7%
> Post Office Time Deposit (3 years) 7.1%
> Post Office Time Deposit (5 years) 7.5%
> Kisan Vikas Patra (KVP) 7.5%
> Public Provident Fund (PPF) 7.1%
> Sukanya Samriddhi Yojana 8.2%
> National Savings Certificate 7.7%
> Senior Citizens’ Saving Scheme (SCSS) 8.2%