Many investors look towards Small Savings Schemes not just as tax-saving options but also as reliable means of investment.
However, you do not always earn a constant rate of return on these investments. The interest rate keeps fluctuating.
Interest rates for the small savings schemes get revised every quarter i.e. the Ministry of Finance notifies these rates every quarter of the financial year.
The rates for January-March, 2018 were notified in the last week of December 2017. The rates were cut for most small savings schemes except Senior Citizens Savings Scheme (SCSS).
The rates have not been modified in April-June, 2018 and July-September, 2018 quarters. Therefore, the rates of January-March, 2018 still apply.
I will keep updating this post when the interest rates for the Small Savings Scheme are notified next.
Latest PPF Interest Rate, Sukanya Samriddhi Yojana Interest Rate and Interest Rate for other Small Savings Scheme
Points to Note
- These interest rates are notified every quarter by the Ministry of Finance every quarter.
- Except for PPF and SSY, the revision in interest rates does not affect old investments.
- For instance, if you have opened a Senior Citizens Savings Scheme deposit when the SCSS interest rate was 8.7% p.a., your investment will earn 8.7% p.a. for the entire duration of 5 years. Changes in interest rates after opening the deposit does not affect your rate of interest.
- However, any fresh investment in SCSS will earn the interest rate as notified for the quarter.
- To put it another way, existing SCSS and Time Deposits will continue to earn the same rate of interest as contracted at time of opening such deposits. There will be impact only if and when your deposits are due for renewal or have to be rolled over.
- For PPF and SSY, the notified interest rate is what you will earn on your entire PPF (or SSY) balance during the current quarter. Therefore, the impact is immediate.