Interest rates of small savings schemes raised

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TOPICS macro economics interest rate

Interest rates on time deposits of various maturities have been raised by 10 to 20 basis points.
The Union government has raised the interest rates on select fixed deposit schemes offered by post offices. Interest rates on time deposits of various maturities have been raised by 10 to 20 basis points. The rate hike comes just ahead of the Lok Sabha poll announcement by the Election Commission. The rate hike will come into effect from April 1, 2014. The interest rates on the five-year senior citizens savings scheme, the five-year monthly income scheme, five-year and 10-year National Savings Certificates and Public Provident Funds have been kept unchanged. A communiqu from the Ministry of Finance has stated that necessary notifications will be issued separately in due course. The rate hike decision is in line with the recommendations of the Shyamala Gopinath Committee for Comprehensive Review of National Savings Fund (NSSF).

Post Office Monthly Income Scheme (MIS) National Savings Certificate (NSC)
Salient Features:
NSC VIII Issue (5 years) Interest rate of 8.5% per annum w.e.f. 01-04-2013 NSC IX Issue (10 years) - Interest rate of 8.8% per annum w.e.f. 01-04-2013 Minimum investment Rs. 100/-. No maximum limit for investment. No tax deduction at source. Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under NSC - section 80C of IT Act. Certificates can be kept as collateral security to get loan from banks. Trust and HUF cannot invest. A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. The interest accruing annually but deemed to be reinvested will also qualify for deduction under NSC section 80C of IT Act.