Revised Interest Rates on Financial Schemes

Context:

The Union government has announced an increase in returns for the Sukanya Samriddhi Account Scheme (SSAS) from 8% to 8.2% and for the 3-year Post Office Time Deposit Scheme (POTDS) from 7% to 7.1% for the first quarter of 2024. The interest rates for all other small savings schemes remain unchanged.

Relevance:

GS II: Government policies and Intervention

Dimensions of the Article:

1. Sukanya Samriddhi Account Scheme (SSAS)
2. Post Office Time Deposit Scheme (POTDS)

Sukanya Samriddhi Account Scheme (SSAS)

• SSAS is a small deposit scheme launched by the Ministry of Finance, designed exclusively for girl children.
• It is a part of the Beti Bachao Beti Padhao Campaign with the aim of providing financial support for a girl child’s education and marriage expenses.

Eligibility:

• Any resident Indian girl child can be a beneficiary from the time of opening the account until maturity or closure.
• The account can be opened by a guardian in the name of a girl child who is below ten years of age at the time of account initiation.
• Families can open a maximum of two accounts for girl children, with exceptions for twins or triplets, supported by affidavits and birth certificates.

Benefits:

• Minimum annual investment is Rs 250, with a maximum limit of Rs 1,50,000 per annum.
• The maturity period is 21 years.
• SSAS offers various tax benefits and boasts the highest interest rate among all Small Savings Schemes.

Post Office Time Deposit Scheme (POTDS)

• POTDS, also known as National Savings Time Deposit scheme, is a government-backed savings option offered by India Post Payments Bank (IPPB).
• It allows individuals to deposit a specific amount for a fixed tenure and earn a predetermined interest rate on their investment.

Features:

• Four account types are available with maturity periods of 1 year, 2 years, 3 years, and 5 years.
• Deposits can range from Rs. 1,000 to any amount, in multiples of Rs. 100.
• Allows joint accounts, minor accounts, and nomination facility.
• Provides income tax benefits for the 5-year account under Section 80C of the Income Tax Act, 1961.
• Section 80C permits deductions from gross total income for specific investments and expenses, encouraging savings and investments while reducing taxable income.

Objective:

• Aims to promote savings and investments in designated avenues, offering taxpayers the dual benefit of reducing taxable income and providing tax savings.

-Source: The Hindu