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Updated December 30th, 2023 at 18:54 IST

Govt ups Sukanya Samriddhi Yojana interest rates to 8.2%

Sukanya Samriddhi Yojana provides guaranteed returns and tax benefits under Section 80C, with contributions ranging from Rs 250 to Rs 1.5 lakh annually.

Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana | Image:Republic

The Finance Ministry announced adjustments to interest rates for various small savings schemes, with changes impacting the Sukanya Samriddhi Yojana (SSY). Effective for the January-March quarter, the interest rate for SSY has been raised by 20 basis points, moving from 8 per cent to 8.2 per cent. This government-backed scheme, designed to secure the financial future of girl children, offers guaranteed returns and provides investors with tax benefits on contributions up to Rs 1.50 lakh within a financial year under Section 80C of the Income Tax Act. The interest generated through the Sukanya Samriddhi Account remains tax-free, and investors can contribute a minimum of Rs 250 and a maximum of Rs 1.5 lakh annually.

In addition to the adjustments in SSY, the government increased the interest rate for the three-year term deposit scheme by 10 basis points, reaching 7.1 per cent. However, the rates for other small savings schemes remain unchanged for the January-March 2024 quarter. The economic context of these adjustments lies in the recent increase in the Reserve Bank of India's repo rate to 6.5 per cent, prompting banks to raise deposit rates. This move provides investors with alternative options for positive returns amid changing interest rate dynamics.

The impact of these adjustments on individual financial planning strategies is yet to be seen as investors evaluate their options. The revised rates of Sukanya Samriddhi Yojana and other small savings schemes are likely to influence investment decisions, with an eye on the approaching Lok Sabha elections in 2024.

Published December 30th, 2023 at 18:54 IST

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