Public Provident Fund (PPF) interest rate revision: The quarterly revision of interest rates of small savings schemes will take place by the end of this month.
Public Provident Fund (PPF) interest rate revision: The quarterly revision of interest rates of small savings schemes will take place by the end of this month.
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The Government has not changed the PPF interest rate since April 2020, when it was cut to 7.1% from 7.9%. The PPF interest has thus remained at 7.1% since 01.04.2020.
As the interest rates for various small savings schemes were increased in the last revision announced in March 2023, expectations are high that Government will finally hike the PPF interest rate after almost 3 years.
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According to Government officials, one of the reasons why the PPF interest rate has not been hiked much is that the post-tax returns from this scheme are higher. It almost works out to be 10.32% in the case of taxpayers in the highest (31.2%) tax bracket. Given this argument, the Government may once again keep the PPF interest rate unchanged. However, depositors are hoping that the rates will be revised upwards this month.
PPF is one of the few schemes that provide “E-E-E” tax benefits. Investments up to Rs 1.5 lakh in a PPF account qualify for deduction under Section 80C of the Income Tax Act. Moreover, the interest earned and the amount withdrawn on maturity are also tax-free.
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In past, the PPF scheme has given up to 9.5% interest to depositors. The scheme comes with a lock-in period of 15 years and is considered a good option for savings aimed at retirement, especially for those who do not contribute to schemes like EPF or NPS.
In the fourth quarter of FY 2022-23, the Government increased the interest rates for other small savings schemes like Senior Citizens Savings Scheme (SCSS), Sukanya Samriddhi Yojana, Kisan Vikas Patra, Post Office Fixed Deposits, Post Office Monthly Income Scheme and Post Office Recurring Deposit.
