The Union government has recently announced substantial changes to the returns on two of its small deposit schemes. The Sukanya Samriddhi Account Scheme (SSAS) and the 3-year Post Office Time Deposit Scheme (POTDS) will see interest rate increases for the first quarter of 2024. While other small savings schemes will maintain their current interest rates, the SSAS will increase from 8% to 8.2%, and the POTDS from 7% to 7.1%.
Understanding the Sukanya Samriddhi Account Scheme
The Sukanya Samriddhi Account Scheme (SSAS) is an initiative of the Ministry of Finance designed exclusively for a girl child. Launching as part of the Beti Bachao Beti Padhao Campaign, this scheme aims to fund the education and marriage expenses of a girl child.
The eligibility criteria for SSAS states that any girl child who remains a resident Indian from the time the account opens until its maturity or closure can benefit from this scheme. A guardian may open an account in the name of a girl child below ten years old. Each family can open a maximum of two accounts for different girl children. However, families with twins or triplets can create additional accounts, provided they have an affidavit and birth certificates to support this.
The benefits of SSAS are manifold. It allows a minimum investment of Rs 250 per annum up to a maximum of Rs 1,50,000 per annum, with a maturity period of 21 years. Currently, SSAS provides several tax benefits and offers the highest interest rate among all the Small Savings Schemes.
Unpacking the Post Office Time Deposit Scheme
The POTDS, also known as the National Savings Time Deposit scheme, is another government-backed savings option. It facilitates individuals to deposit a sum for a fixed term and earn a predetermined interest on their investment, courtesy of the India Post Payments Bank (IPPB).
The POTDS offers four types of accounts based on different maturity periods: 1 year, 2 years, 3 years, and 5 years. It accepts deposits from Rs. 1,000 up to any amount, in multiples of Rs. 100. The POTDS provides multiple features including joint accounts, minor accounts, and a nomination facility.
Tax benefits are a significant feature of the 5-year account under Section 80C of the Income Tax Act of 1961. This section allows for deductions from gross total income for certain investments and expenses made by individuals and Hindu Undivided Families (HUFs). The act aims to motivate savings and investments in particular avenues, ultimately cutting down taxable income and offering taxpayers tax benefits.
With these recent revisions, the Indian government continues its commitment to encourage savings and ensure financial security for its citizens. These schemes not only offer attractive interest rates but also provide flexibility and tax benefits, making them an ideal choice for savers and investors alike.