3 post office systems give higher returns than bank FDs with 80C deductions

Bond investors are scrambling to find banks offering better interest rates as bank fixed deposit rates rise, but small savings schemes or postal savings schemes are government-backed investments that now offer higher returns than bank fixed deposits. Small savings schemes are preferable to fixed bank deposits in rising interest rate environments because they have quarterly interest rate resets as opposed to fixed interest rate fixed bank deposits. Since the RBI raised the repo rate in August, all major banks have raised their interest rates on fixed deposits in a bid to attract investors. Major banks such as SBI offer interest rate up to 5.65%, HDFC Bank offers interest rate up to 6.10%, ICICI Bank offers interest rate up to 6.10 %, Axis Bank offers an interest rate of up to 6.05%, and PNB offers a maximum interest rate of 6.10%. However, all of these interest rates, even with recent increases from the aforementioned institutions, are still well below those of very popular small savings schemes, such as the Senior Citizen Savings Scheme (SCSS), the Public Provident Fund Account (PPF ) and the Sukanya. Samriddhi Accounts.

Seniors Savings Plan (SCSS)

Seniors looking for a safe investment that can generate higher returns than bank term deposits generally opt for the Senior Citizen Savings Scheme (SCSS). Currently, SCSS offers an annual interest rate of 7.4% payable in quarterly installments. In the current environment of rising interest rates, this SCSS interest rate is significantly higher than the fixed deposit rates offered by banks. A person over 60 can open an SCSS account individually or jointly with their spouse.

The minimum deposit in all SCSS accounts opened by an individual must be Rs. 1000 and in multiples of Rs. 1000, subject to a maximum deposit of Rs. 15,000,000. After fixed deposits, investments made in the under this plan are attractive tax-saving investments for elderly residents, as they are eligible for the benefits of Section 80C of the Income Tax Act 1961. However, if the total interest on all SCSS accounts exceeds Rs. 50,000 in a fiscal year, the interest earned is taxable and will be subject to TDS deduction. The Senior Citizen Savings Scheme (SCSS) offers options for early withdrawals and account extension, as well as a 5-year maturity.

Public Provident Account (PPF)

The PPF is a small savings plan popular with bond investors for those seeking tax-exempt-exempt-exempt (EEE) benefits on investments. It is a popular investment choice for tax savers because of the investments made and the fact that interest and maturity are tax exempt. Compared to interest rates on fixed deposits offered by banks such as SBI, HDFC, PNB, BOB, Axis, HDFC Bank, Kotak Mahindra Bank and many others, PPF now gives 7.1% per annum (composed annually).

The minimum deposit required to open a PPF account is Rs. 500, and the maximum annual limit is Rs. 1.5 million. The PPF is generally better suited to long-term investors because the plan has a 15-year maturity period and offers the investor three options at maturity: withdrawal of the amount at maturity, extension of the account for a block five years or continuation of the benefit at maturity. into the account without further deposit. After five years from account opening, the PPF also allows early withdrawals, and the account holder is allowed to make one partial withdrawal per fiscal year after five years, omitting the year of account opening.

Sukanya Samriddhi Accounts

The Sukanya Samriddhi Account (SSA) is the most popular small savings scheme for parents who want to save money for their daughter’s future. SSA now offers an annual compound interest rate of 7.6%, which is again significantly higher than the fixed deposit interest rates of the aforementioned banks. In order to open an SSA account in the name of a girl under the age of 10, the guardian must deposit a minimum of Rs. 25 and a maximum of INR. 1,50,000 in a single fiscal year. Deposits made to this account are eligible for tax deductions under Section 80C.

The guardian will be responsible for managing the account until the girl reaches the age of 18, at which time she will be allowed to manage it independently. However, after reaching the age of 18 or past the 10th year, she can only make partial withdrawals up to 50% of the account balance. The account can be closed by collecting the due date once 21 years have passed since the account was opened or when a girl gets married after reaching the age of 18. Five years after account opening, SSA accounts also allow for premature withdrawals for unforeseen expenses.

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