Small Saving Schemes: In some small savings schemes the returns are lower than the formula based returns. For example based on the formula, PPF return should be 7.51 percent but it is getting 7.1 percent. There is no change after April 2020. Let us tell you that in 2016, a formula-based return system was chosen for small savings schemes.
In the last 5 quarters, the government has increased interest on small savings schemes by 40 basis points to 150 basis points. 100 basis points is 1 percent. This increase in percentage will be from 0.40 percent to 1.50 percent. The RBI has said that due to this hike, the interest on small savings schemes is now in line with the formula based rates.
2 plans are still behind
According to a report, this does not seem to be true of two small savings schemes. It is 41 basis points lower as per the PPF interest rate formula. At the same time, the interest rate on Recurring Deposit or RD which should be 6.91 per cent, is currently only 6.7 per cent.
Restriction on PPF interest rate
After October 2022, the interest rates of most of the schemes were revised. However, the hike in PPF interest rates was stopped. Officials said that the returns on these are tax free, while other small savings schemes have to pay tax. This is also not entirely correct. Sukanya Samriddhi Yojana is also tax free but has a return of 8 percent. It was increased to 8 percent only last April.
There was an increase before the election
In 2019, the rate of PPF was increased before the elections. It was decided to increase it in January. In the next year i.e. April 2020, it was announced to reduce the interest rate of various schemes. This was followed by a further 40 to 110 basis points cut in interest rates in April-June 2021, but was soon withdrawn.