The Ministry of Finance announced Wednesday a drop in interest rates for small savings plans. According to the ministry circular dated March 31, interest rates on small savings have been reduced by 50-100 basis points for the April-June quarter of fiscal year 2021-22. The interest rates for small savings plans are reviewed and communicated by the Ministry of Finance on a quarterly basis.
From April 1, the Public Provident Fund (PPF) will benefit from an interest rate of 6.4%. Interest on the National Savings Card (NSC) was reduced to 5.9%. Among other small savings programs, the Sukanya Samriddhi Yojana will get the interest rate of 6.9%.
Likewise, the interest rate of the 5-year Seniors Savings Plan was lowered to 6.5%. The interests of the senior citizens’ scheme are paid quarterly. The interest rate of Kisan Vikas Patra (KVP) was lowered to 6.2%.
The interest rate on post office savings deposits was lowered to 3.5%. On the other hand, term deposits from one to five years will yield interest rates of around 4.4 to 5.8%, to be paid quarterly, while the interest rate on deposits recurring at five years is set at 5.3%.
The government continues to rely on small savings to finance its budget deficit, economists say. “For fiscal year 22, again, funding from small economies is pegged to a ??3.9 lakh crore or 26% of the budget deficit, “SBI economists said earlier in a note.
For the April-June quarter of last year, the government cut interest rates on small savings plans by up to 140 basis points and since then they have remained stable. With this decrease, interest rates for small savings plans have been lowered from 120 basis points to 250 basis points in total during the current fiscal year.
The Ministry of Finance has also extended the deadline for linking the Permanent Account Number (PAN) to Aadhaar by three months. difficulties arising from the COVID-19 pandemic, ”tweeted the income tax service.
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