PPF Scheme: People invest in many different schemes in the country, PPF is also included in these schemes. People get interest in PPF scheme. However, its interest rate has not increased for a long time.
In such a situation, people are expecting whether the interest rate in PPF will increase this time or not? Let us know…
PPF Investment: Many people in the country invest in the PPF scheme. Quarterly review of interest rates for small savings schemes like PPF is going to be done this month through the Finance Ministry. Even though PPF account holders are expecting an increase in the interest rate, there has been no change in it since April 2020.
The interest rates of small savings schemes are to be reviewed again by the end of the current month, in such a situation PPF and other small savings account holders are expecting an increase in interest rates. However, in the current economic environment, there appears to be little hope of increasing interest rates.
PPF scheme
Small savings programs like PPF, SCSS and NSC are likely to maintain the status quo, given the current economic environment and the fact that the interest rate cycle has not yet peaked. Even though an increase is always a possibility, the current situation, especially due to the need for economic stability, makes it unlikely that interest rates will be increased at this time. It is reasonable to assume that rates will remain the same to support fiscal responsibility and economic recovery.
Interest Rate
The tax benefits of PPF make it an attractive scheme for investors. It is estimated that even at 7.1% interest, the effective post-tax return from PPF works out to 10.32% for taxpayers in the high tax bracket. This is also one of the reasons why the government has kept the PPF interest rate unchanged, while the rates of many other small savings schemes have increased in the last two quarters.
Small Savings Schemes
The difference between PPF and small savings schemes like SCSS and NSC is that the income from PPF is tax free compared to others. This means that even though PPF gives lower returns than other schemes, your post-tax income on withdrawal can still be higher. So far, small savings schemes have received more support from the government because they generally assist people who are saving for others. Like- Sukanya Samriddhi Yojana.
Why can’t the PPF rate change?
Experts believe that the interest rate of PPF may remain stable for some more time. This includes the condition of the financial markets, budgetary policies of the government and the general condition of the economy. This can have a significant impact on interest rates.
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