new Delhi. The Employees’ Provident Fund Organization (EPFO) has reduced the interest rate on PF for the financial year 2021-22 to 8.1. This is the lowest interest rate in 40 years.
Despite this deduction, PF is still giving the highest return as compared to government savings schemes and FDs. Finance Minister Nirmala Sitharaman also said on the cut in the interest rates of PF that the rates of other schemes are very low and the interest of PF is still attractive. However, the proposal to reduce the rates has not yet gone to the Finance Ministry.
It is mandatory for a salaried person to contribute to PF and there is no option for it. Therefore, you will have to pay 12 percent of your basic salary in this. There is also an option of higher contribution for retirement planners and they can deposit the desired amount through VPF. On this also a return of 8.1 percent will be given. Apart from this, tax exemption will be available under section 80C of Income Tax, while the interest received every year will also be tax-free.
In this government scheme being run for girls, the interest of 7.6 percent is being received at present. This account can be opened in her name after the daughter completes one year. Apart from the post office, this facility is available in almost all the big banks. The maturity of the plan is completed in 15 years, due to which a large amount of money gets accumulated. In this scheme also, the benefit of tax exemption is available under Section 80C of Income Tax. However, it can only be run in the name of girls.
A special savings scheme is run by the government for senior citizens. It is currently getting an interest of 7.4 percent annually. Although this is much higher than other FDs, but considering the current inflation rate, the actual return on it becomes very low. The second thing is that only senior citizens get the opportunity to invest in it. However, the money invested in it also gets tax exemption from the Income Tax Department.
Investing in Public Provident Fund (PPF) is considered better for retirement planning. This account can be opened by anyone employed or non-employed. At present, the government is paying 7.10 percent annual interest on the PPF account. The maturity period of PPF account is also 15 years, but you can also take a loan on it at the time of need. Tax exemption is also given on PPF under Section 80C of Income Tax.
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