In order to boost the small savings of countless Indians, the Union Government on Friday hiked interest rates on deposits under the public provident fund (PPF) scheme to 8.6 percent from 8 per cent and post office savings accounts to 4 per cent from 3.5 per cent.

The move expected to benefit millions of depositors.

Some Noteworthy changes:

1) The maximum deposit limit in a PPF account has been raised to Rs.1 Lakh in a financial year from the earlierRs.70, 000. The minimum deposit limit under the scheme remains at Rs.500 per year.

2) Interest rates on post office savings deposits increased to 4 percent from 3.5 per cent.

3) The interest rates on one-year fixed deposits has been increased to 7.7 per cent from 6.25 per cent, the highest increase among different maturity period.

4) Interest rates on other time maturities have also been hiked.

5) The Kisan Vikas Patras (KVPs) will be discontinued.

6) The Government has also lowered the maturity period for National Savings Scheme to five years from six years.

Summary:

• Interest rates on Public Provident Fund scheme hiked to 8.6 per cent from 8 per cent

• Maximum deposit limit in PPF raised to Rs.1 lakh from existing Rs.70,000

• Rates on post office savings deposits raised to 4 per cent from 3 per cent

• Kisan Vikas Patras discontinued

• Maturity period of National Savings Scheme cut to 5 years from 6 years

It’s Good that many of you are trying to get into Government services. But the number of government jobs will always remain insignificantly small. As a consequence, most of the people will have to take jobs in private sector or start their own enterprise/business.

Hence, it’s good to start saving for one’s future, early in life, by opting for the PPF scheme.

Notably, PPF Scheme is a favourite investment option for salaried as well as self-employed individuals; as one can start as soon as one starts earning; as a PPF account can be opened with just Rs 500 a year (which is just Rs 42 a month). Even students taking part time jobs can open a PPF account.

The good thing is, interest earned under the PPF scheme is tax free. PPF deposits are also exempt from wealth tax.

NOTE: The PPF scheme, a statutory scheme of the central government, is for a maturity period up to 15 years.
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