Bringing cheers to those who put their savings in fixed income investment, the government has decided to keep the interest rate on small savings schemes unchanged for the quarter January to March 2021.

The interest rate on PPF remains at 7.1 per cent per annum while for the Senior Citizen Savings Scheme, the interest rate is 7.4 per cent per annum. The 1-year time deposit, the rate of interest stands at 5.5 per cent.

The interest rates on post office savings schemes are revised every quarter by the government on the yield on government bonds. The government had earlier kept the interest rates on small savings unchanged for the quarter of July to September and October to December 2020.

Experts believe, post office schemes will continue to attract investors over bank deposits as the banks are providing interest of around 6 per cent and less across most tenures.

There is no change in the rate of interest on post office small savings investments such as National Savings Certificates (NSC), Kisan Vikas Patra (KVP), Time-deposits, Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY).

For the investor who invests in NSC, KVP, Time deposits, Senior Citizens Savings Scheme (SCSS), the rate of interest remains fixed until maturity. However, investors of PPF and Sukanya Samriddhi Yojana (SSY) see a revision in the rate as and when the government revises the rate at each quarter of any financial year.

The post office schemes carry a sovereign guarantee on the entire amount invested and are, therefore, considered highly safe. However, before investing, one should make sure about the tax liability of the interest that you will earn on PO schemes. Some of the schemes may have a taxable interest. Invest in them by linking to your long term needs and keeping asset allocation across equity and debt into consideration.

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Free Press Journal