In the recent times there are lot of changes in the interest rates of debt instruments. It includes the interest rates changes on public provident fund(ppf), post office savings, employee provident(epf)
, etc.This is the main investment options for the people who are ready to take less risk. 2011 has been very bad year for the stock market because of the uncertainty on global economy, this creates huge demand for the safe investment options among the investors. This Post summarizes some of the popular investment options with the latest interest rates and its tax benefits. This would be good refresh for the investors to know the latest interest rates on these schemes.
Employee Provident Fund (EPF)
It is one of the traditional savings scheme in our country for enforcing the salaried employees to save for their retirement planning Following are the few points to consider about the EPF:
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At present interest rates on EPF is 9.5% p.a.
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There is no tax liability of you withdraw money after the 5 years in the EPF account.
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When you are changing job, you can transfer your EPF account to new employer by submitting the form 13
or withdraw the money by submitting the form 19.
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Amount contributed towards EPF account would eligible for the tax exemption under section 80C.
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You can receive the SMS on your EPF balance.
Public Provident Fund (PPF)
If you are not salaried person and don’t have the option to save in EPF, open PPF account and save for your long term goals.
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It is 15 years lock-in period.
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At present PPF offers 8.6% interest on the investment, the income is not taxable.
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Minimum amount is Rs. 500 and Maximum Rs.100000 can be deposited in an single year.
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The investments are eligible for the tax exemption under section 80C.
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It is good idea to save in the PPF for your long term goals like retirement and children education or marriage.
New Pension Scheme (NPS)
The following are the important points to consider.
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NPS is available for people aged between 18 years and 55 years.
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The minimum amount per contribution is Rs 500, to be paid at least four times in a year. The minimum amount to be contributed in a year is Rs 6,000.
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If the subscriber exits the scheme before the age of 60, s/he may keep one fifth of the accumulated saving and invest the rest in annuities offered by insurance companies.
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Since the NPS is meant for post-retirement financial security, it does not permit flexible withdrawals as are possible
Senior Citizen Savings Scheme (SCSS)
The following are the important points to consider:
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Duration of the scheme is 5 years and can be extended to three years.
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Interest rate is 9% and compounded quarterly.
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The interest income on this scheme is fully taxable.
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The maximum investment on this scheme is Rs.15 lakhs.
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The application forms are available with post offices and nationalized banks.
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National Savings Certificate (NSC)
It is one of the oldest traditional savings scheme. The following are the important points to consider:
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NSC is available in 5 years and 10 years duration.
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This investment is available in the post offices.
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The interest rate is 8.40 for 5 years and 8.70 for the 10 years investment.
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The interest income on NSC is entirely taxable.
Comparison Table
The following table lists the above savings schemes and its features.
If I have missed any of the popular scheme in the list, please post it in the comments section.
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