In the recent times there are lot of changes in the interest rates of debt instruments. It includes the interest rates changes on public provident fund(ppf), post office savings, employee provident(epf), etc.This is the main investment options for the people who are ready to take less risk. 2011 has been very bad year for the stock market because of the uncertainty on global economy, this creates huge demand for the safe investment options among the investors. This article summarizes some of the popular investment options with the latest interest rates and its tax benefits. This would be good refresh for the investors to know the latest interest rates on these schemes. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.
Employee Provident Fund (EPF)
I have written about this many times in our blog. It is one of the traditional savings scheme in our country for enforcing the salaried employees to save for their retirement planning. Following are the few points to consider about the EPF:
- At present interest rates on EPF is 9.5% p.a.
- There is no tax liability of you withdraw money after the 5 years in the EPF account.
- When you are changing job, you can transfer your EPF account to new employer by submitting the form 13 or withdraw the money by submitting the form 19.
- Amount contributed towards EPF account would eligible for the tax exemption under section 80C.
- You can receive the SMS on your EPF balance by registering here.
Public Provident Fund (PPF)
If you are not salaried person and don’t have the option to save in EPF, open PPF account and save for your long term goals.
- It is 15 years lock-in period.
- At present PPF offers 8.6% interest on the investment, the income is not taxable.
- Minimum amount is Rs. 500 and Maximum Rs.100000 can be deposited in an single year.
- The investments are eligible for the tax exemption under section 80C.
- It is good idea to save in the PPF for your long term goals like retirement and children education or marriage.
New Pension Scheme (NPS)
The following are the important points to consider.
- NPS is available for people aged between 18 years and 55 years.
- The minimum amount per contribution is Rs 500, to be paid at least four times in a year. The minimum amount to be contributed in a year is Rs 6,000.
- If the subscriber exits the scheme before the age of 60, s/he may keep one fifth of the accumulated saving and invest the rest in annuities offered by insurance companies.
- Since the NPS is meant for post-retirement financial security, it does not permit flexible withdrawals as are possible
Senior Citizen Savings Scheme (SCSS)
The following are the important points to consider:
- Duration of the scheme is 5 years and can be extended to three years.
- Interest rate is 9% and compounded quarterly.
- The interest income on this scheme is fully taxable.
- The maximum investment on this scheme is Rs.15 lakhs.
- The application forms are available with post offices and nationalized banks.
- You can read our previous article about SCSS scheme.
National Savings Certificate (NSC)
It is one of the oldest traditional savings scheme. The following are the important points to consider:
- NSC is available in 5 years and 10 years duration.
- This investment is available in the post offices.
- The interest rate is 8.40 for 5 years and 8.70 for the 10 years investment.
- The interest income on NSC is entirely taxable.
Comparison Table
The following table lists the above savings schemes and its features.
Summary
Many of the product in this article has been already discussed in our earlier articles. This is a refreshing article to update with the latest interest rates on the each scheme. If I have missed any of the popular scheme in the list, please post it in the comments section. If you have any doubts, please post it in the comments section.
Subscribe to our future articles here.
February 11, 2012 at 12:26 am
Thanks for summarising these Tax Saving Instruments in such a simple form to facilitate easy comparison… The Table showing the Interest Rates and the Taxability is very useful..
February 26, 2013 at 7:17 pm
Hello Karan,
Thank you for reading my blog.
Thanks,
Krishna
February 11, 2012 at 9:17 am
Hi Krishna
I do not have PF in my company
Can i start EPF in the nationalized banks?
If i start EPF on my wife (homemaker) name can i get tax benefit out of it?
Regards,
Jay
February 12, 2012 at 5:27 pm
Very informative and very useful. Thanks.
February 13, 2012 at 6:02 pm
HI Jayaraman,
We can not start PF outside company. It is only maintained by the companies for their employees. You may start PPF instead of EPF.
Thanks,
Krishna
February 14, 2012 at 11:44 pm
Hi Krishna, leave me your contact to call back or call me on 9886242944
February 15, 2012 at 7:04 am
Thanks for the summarized information.
I am regular reader of this site and this is very helpful for me to understand and get information about various investment/tax/finance related stuff.
Thanks again.
February 15, 2012 at 8:04 am
HI Vikas,
Thank you for the comments!!
Thanks,
Krishna
February 18, 2012 at 12:42 am
We can not start PF outside company. It is only maintained by the companies for their employees. You may start PPF instead of EPF.
March 26, 2012 at 4:13 am
Hi,
Can a homemaker take money from her hubby and invest in PPF? Since the PPF interest is tax-free, she need not show the source of income, is my understanding correct?
Thanks much.
March 26, 2012 at 10:44 pm
Aditi, I think you are right. It is ‘Public’ Provident Fund. So any public can invest in that. No need to show source of income.
April 9, 2012 at 4:26 am
Yes you can open PPF account. My wife is homemaker and has opened PPF account.
July 24, 2012 at 11:11 am
Hello Krishna,
Could you please write article about EPS?
I really don’t have any idea about the EPS amount which is deducting from my salary as part of EPF and some portion is alloted to EPS.
Thanks in advance.
August 13, 2012 at 9:41 am
Is NPS tax free .What about Annuities details in planning.
February 20, 2013 at 5:37 pm
@ Moderator, Please delete previous comment & post this updated & corrected comment :
Dear Sir,
I had changed my job & moved to another city for new job. At that time I had applied for closing of EPF account & fund transfer to my bank account. But I did not received money for two years. In betweenthis spam I completely forgot about it closed my back account because of no use of it (Salary account of previous employer) which I given to transfer the fund . I
Recently (after 2 years) I came to know that cheques are disbursed by PF office but could not received to me (as my account no. was not exist.) Cheques returned to EPF office.
What should I do to get my money? I already contacted my previous employer & wrote a letter to EPF office mentioning my new account no & requested to reissue of cheques, but still nothing happened from 5 months. EPF officers are not reachable on phone & I have already changed the city, so not possible to visit PF office regularly.
Please help me in this matter.
My details are below:
Prasad Kulkarni
Pune.
Mob. 7588541627, Email -ppk1982@gmail.com
EPF no. KD/MAL/93098/113
February 22, 2013 at 1:31 pm
Hello Prasad,
Yes. Govt. offices are slow in processing the EPF queries. It may take few months to process your request. In your case, we can’t say where is the problem. You need to visit the office in person with details and get the status. That should be the only solution.
Thanks,
Krishna
February 26, 2013 at 6:01 pm
Hi,
I am thinking of two options for my pension plans. I already have EPF.
1) Buying NSC Certificates (Demat) on monthly basis and reinvesting the same till retirement.
2) Joining NPS Scheme.
Which one do you think is beneficial?
February 26, 2013 at 7:11 pm
Hello mms,
It depends on your current savings.
If you already have EPF and you are making the significant contribution to that, there is no need for another debt instruments like NPS or NSC. You may consider the equity investments like Mutual Funds. This depends on your age and risk factor.
Provide me more details, I can suggest you better option.
Thanks,
Krishna