Public Provident Fund (PPF) Interest Rate July-September 2023: The PPF interest rate for the July-September quarter of FY 2023-24 will be announced today (June 30).
Public Provident Fund (PPF) Interest Rate July-September 2023: The PPF interest rate for the July-September quarter of FY 2023-24 will be announced today (June 30). PPF account holders are expecting a hike in the interest rate as it has remained unchanged since April 2020 (See PPF interest rate history).
Read More: EPFO: How to apply for higher pension scheme? Know eligibility
In the April-June quarter of FY 2023-24, the PPF interest rate was 7.1%. The account allows investors to deposit up to Rs 1.5 lakh in a year and claim tax deductions under Section 80C of the Income Tax Act. The interest earned from PPF deposits and the amount withdrawn on maturity are also tax-free.
In the last two quarters, the Government has increased interest rates for Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY) account, Kisan Vikas Patra (KVP), and Post Office deposit schemes like Post Office Time Deposit, Post Office Monthly Income Scheme (POMIS) and Post Office Recurring Deposit (RD).
As the Reserve Bank of India (RBI) has increased the repo rate by 2.5% since May 2022, depositors are hoping that the PPF interest rate may be increased further.
Read More: EPF Interest Update: How Long Can You Accrue Interest On Your PF Account?
To understand, whether the PPF interest rate will go up or not, it is important to understand how the interest rates of various small savings schemes are decided.
The interest rates of various post office small savings schemes, including PPF, are linked to yields of 10-year Government Securities (G-Secs). The Finance Ministry reviews the interest rates of small savings schemes like the Public Provident Fund every quarter of a financial year. The review is done basis G-Secs yields of the previous three months, as per recommendations of the Shyamala Gopinath Committee, 2011. This exercise ensures the interest rates for small savings schemes are linked to the market.
Between March and June 2023, the G-Secs yield averaged between 7.3%. As per the set formula for small savings interest rate calculation adopted by the Government, the PPF rate should be 25 basis points higher than the average 10-year G-sec yield of the corresponding maturity. If the Finance Ministry strictly goes by the formula, the PPF interest rate should be increased to 7.55%.
Read More: When employers default on Employees’ Provident Fund Organisation dues
However, there has been a gradual decline in G-Secs yield, which means there is a very low possibility of a hike in PPF interest rates.
During the January-March quarter, 10-year G-Secs yield ranged between 7.3% to 7.5%. But it gradually declined to 7- 7.1% in the April-June quarter.
The interest rates of most of the small savings schemes are already at par with long-term fixed deposits offered by banks. Moreover, in view of RBI’s repo rate hike pause and falling inflation, experts believe there is not much room for an upward revision of the PPF interest rate.
