PPF investment ceiling up to 1 lakh, will earn more interest from Dec 1


The government today decided to increase the interest on Public Provident Fund (PPF) deposits to 8.6 per cent from 8 per cent, and raise the annual investment ceiling to Rs 1 lakh from Rs 70,000. The new rates will be effective December 1.

The move is well timed, given that most people start their tax-planning for the year in the last quarter of the financial year.

Rationalising the entire set of small savings schemes, the government also proposed to introduce a new National Savings Certificate (NSC) instrument with a 10-year maturity that would fetch an interest of 8.7 per cent. The post-tax yield on the new 10-year NSC would be 12.42 per cent in the highest tax bracket of 30 per cent.

The government has, however, done away with the Kisan Vikas Patra.

Small saving schemes attract tax benefits. With RBI deregulating interest rates on savings bank deposits, restructuring of the savings schemes was on the cards.

For the current year, the government has budgeted for receipts of Rs 6,900 crore through PPF. In the first six months of the current fiscal, the actual revenue mobilised through PPF, however, stood at Rs 1,324.32 crore, less than a fifth of the target.

The finance ministry has also reduced the maturity period for Monthly Income Scheme (MIS) and National Savings Certificate (NSC) from 6 years to 5. The rate of interest paid under Post Office Savings Account is up from 3.5 per cent to 4.

The government has aligned the rate of interest on small savings schemes with government securities of similar maturity, with a spread of 25 basis points except in certain conditions.

Please read our terms of use before posting comments
TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).
comments powered by Disqus