FAQ

Tax Benefit on Housing Loan Interest

Tax Benefit on Principal Amount of Housing Loan

Leave Travel Allowance(LTA)

For employees, company car lease is more tax efficient than owning a car

TIPS ON INVESTMENTS U/S 80 C - TO SAVE INCOME TAX

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Source - Deductions-under-section24-income-from-house-property

Tax Benefit on Housing Loan Interest

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Tax Benefit on Principal Amount of Housing Loan

The amount paid as Repayment of Principal Amount of Home Loan by an Individual is allowed as tax deduction under Section 80C of the Income Tax Act.

The maximum tax deduction allowed under Section 80C is Rs. 1,50,000 only. This tax deduction of Rs. 1,50,000 is the total of the deduction allowed under Section 80C and includes amount invested in PPF Account, Tax Saving Fixed Deposits, ELSS Mutual Funds, LIC Policies etc.

Some Key Points to remember:

a) While buying a house one has to pay stamp duty and registration charges. One can claim deduction on these expenses under Section 80C of income tax in the respective year even if the home loan is not availed.

b) Not Allowed for under construction properties: The tax benefit of home loan under this section for repayment of principal part of the home loan is allowed only after the construction is complete and the completion certificate has been awarded. The deduction is not allowed for an under construction property.

c) No Deduction and Tax Benefit if house sold before 5 years: As per section 80C(5) states that in case the person sells the house property before the expiry of 5 years from the end of the Financial Year in which the possession has been obtained by him, then no deduction and tax benefit on Home Loan shall be allowed under Section 80C. The total amount of tax deduction already claimed in respect of previous years shall be deemed to be the Income of such year in which the property has been sold and the person shall be liable to pay tax on such income.

  • Tax Benefit on Interest Amount under section 24

    • The maximum tax deduction allowed under Section 24 of a self-occupied property is subject to a maximum limit of Rs. 2,00,000/-

  • What is self occupied property?

    • As per Section 23(2) of the Income Tax Act; the term self occupied property includes property that cannot be occupied by the owner due to his business or profession or employment, being carried on at any other place in a building that he does not own. What this means is that a self occupied property should be meant for your occupation and you need not be necessarily living there?

  • Tax Deduction on Self Occupied property example:

    • A person may own a house property, say in Bangalore, which he normally uses for his residence. He is transferred to Chennai where he does not own any house property and stays in a rental accommodation. In such case, the house property in Bangalore cannot be used for self-occupation and notional income therefore would normally have been chargeable although he derives no benefit from the property. To save the taxpayer from hardship in such situations, it has been specifically provided that the annual value of such a property would be taken to be nil subject to the following conditions:

    The assessee must be owner of only one house property. He is not able to occupy the house property because of his employment, business etc. being away from place where the property is situated. The property should not have been actually let. He has to reside at the place of employment in a building not belonging to him [Section 23(2)(b)]. He does not derive any other benefit from the property not occupied.

  • Tax Deduction on let-out or deemed to be let-out property example:

    • If the property is not self-occupied and is let-out or deemed to be let out [The property is vacant because of reasons other then property that cannot be occupied by the owner due to his business or profession or employment, being carried on at any other place in a building that he does not own] the total interest paid during that financial year can be claimed under Section 24B and this can also be set-off against your income from house property, your income from salary or business income. The annual rental value will be the higher value of the following: actual rent received in a year; municipal value; and fair rent fixed by the Income Tax Department. Out of the total annual value, there is standard deduction of 30 per cent available on rental income towards rent collection and maintenance charges and municipal taxes, as well as insurance premiums paid on the property can be deducted.

    Annual Rent 360000
    (Minus) Municipal Tax 10000
    Net Value 350000
    (Minus) 24(a) Standard Deduction [30%] 105000
    (Minus) 24(b) Interest on borrowed capital 300000 405000
    Income from House Property (-) 55000

    In this case I purchased a house by taking a home loan; I rent out the flat at 30,000/- per month which is the fair rent for the apartment. I paid 10,000/- as municipal tax and paid an interest of 300,000/- for the year. In this case I have made a loss from the house property and the same would be set-off against my salary income. Isn't this amazing! I have actually saved tax on the entire 300,000/- paid as interest amount and also have made a loss of 55,000/- which will also be deducted from my annual income.

    Had it been the self occupied property I would be only eligible for a deduction of maximum 150,000/- on the interest amount under section 24(b).

  • Tax Treatment for an Under Construction Property:

    • For an under construction property one cannot claim the deduction till the time construction is complete and possession is received. Once the possession is received one can claim deduction for the interest paid during pre-construction period.The Interest that has been paid before the completion of construction is allowed as tax deduction in 5 equal installments for 5 successive Financial Years starting from the year in which the construction has been completed.

  • Tax Implication in case the property is jointly owned?

    • Joint borrowers, who have purchased property in joint name, are eligible for the tax rebate in the proportion to their share in the loan. In case of joint loans also, all the co-borrowers can get tax benefits. The maximum limit of Rs.2, 00,000 will apply individually to both of you (i.e. the total deduction will be limited to Rs.4, 00,000).

    It needs to be ensured that both should be co-owners of the property. A co-owner of a house must be a co-borrower as well. It is essential for a co-borrower to be a co-owner in order to claim tax benefits. You cannot get tax benefits if you are only a co-borrower and not a co-owner.

    In case say me and wife pay Rs.400,000/- as interest and Rs. 100,000 as principal, each one us has an equal share in the borrowing, then each one of us can claim Rs. 2,00,000 towards interest (subject to maximum of Rs. 200,000) and Rs.50,000 towards principal in our respective income tax returns.

    Source - http://www.care2earn.in/blog/income-tax-benefits-on-housing-loan-interest-and-principle/

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Leave Travel Allowance (LTA) Source

LTA Is one of best Tax saving tools available to employees.

As per the Rules, you can claim the LTA benefit only twice during the block of 4 years. For this purpose, following condition should be satisfied:

  • 1.You should be on leave.
  • 2. You should travel anywhere in India.
  • 3. During such travel you may have your family with you.
  • 4. LTA is part of your salary component.

Family includes spouse, children as well as dependent parents, brothers and sisters. In respect of children born on or after 1.10.98, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births. The travel expense incurred by you is exempt up to the LTA received. Obviously, if your wife and other family members travel, without you accompanying them, no LTA can be claimed.

FAQ on claiming LTA benefit and Income tax planning is answered below:

  • 1. Can we Claim LTA Every Year?

    • One of the most common questions about LTA is whether it can be claimed every year or not? The answer is Yes - you can claim LTA every year, but you will not be able to claim LTA exemption ever year. Other Points About Tax On LTA

    a) If you do not wish to claim LTA in one particular year you can have your employer carry forward your LTA for thenext year.

  • 2. Is entire cost of travel covered under LTA?

    • A The entire cost of the holiday is not covered. Only the travel costs are covered. So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.

    Also LTA benefit is limited to LTA given by your employer in your salary.

  • 3. Can I claim LTA for my elder Brother?

    • A LTA covers travel for yourself and your family. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children. For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets).

    If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.

  • 4. What is Concept of Block years for getting LTA benefit?

    • A LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).The current block is 2010-13 - January 2010 to December 2013.During this time period, a person is entitled to two LTA claims.

  • 5. I was not able to claim Leave in last block. Can I claim it now?

    • A You can carry forward your LTA. One LTA can be brought forward and claimed in the first year of the next block.Let's say you do not take your LTA in 2006-09. Or that you use only one LTA. Don't worry, you will be able to take the pending LTA in 2010. This means that, in the 2010-13 block, you will be totally entitled to the three journeys.

  • 6. I am entitled for LTA of Rs 45000/- but I have made travel of Rs 25000 /-. How can I claim balance?

    • A If your LTA is not utilised, it gets added to your salary and you will be taxed on it.Rs 20000/- short utilised would be paid as normal part of your salary after deducting income tax as per your Income tax slab.

  • 7. I have changed job and i was not able to claim LTA for last year? Can i do it now?

    • A If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the concession is lying unutilized.For example: in the 2006-09 block, you claimed LTA in 2007. In 2008, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.

  • 8. I performed journey by plane. Will I get LTA benefit?

    • A In case of journey performed by air, then you can get the LTA benefit for :Economy Air fare of National carrier by the shortest route or the amount spent which ever is less.

  • 9. I performed journey by first Class Rail . Will I get LTA benefit?

    • A In case of journey performed by rail, then you can get the LTA benefit for : A.C. first class rail fare by shortest route or amount spent whichever is less.

  • 10. What if Place of origin and destination place of journey connected by rail but journey performed by other mode of transport.. Will I get LTA benefit?

    • A Amount exempted for LTA will be - A.C. first class rail fare by shortest route or amount spent whichever is less.

  • 11. Can a holiday package be claimed for LTA exemption?

    • A Holiday package can be claimed for LTA exemption.LTA exemption can be claimed only for travel - if your holiday package included hotel and sightseeing (which it normally does) - you won't be able to take an exemption for that.Also, LTA exemption can be availed for family - i.e your spouse, dependent children, dependent brothers or sisters only, so if you have taken a holiday with your extended family or children who are no longer dependent on you, then you can't claim LTA exemption on that part of the expense.

  • 12. Can both husband and wife claim LTA exemption?

    • A If you and your wife both get LTA - both of you can't claim exemption for the same travel but you can avail LTA benefit for different travel.So effectively between the two of you, you can claim exemptions four times in four years.

    Source - http://incometaxreturnindia.com/claim-leave-travel-allowance-lta-and-save-tax/#.U6AYHMQW1RZ

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For employees, company car lease is more tax efficient than owning a car

Salaried employees often ask us about the tax liability of owning a car and using it for both personal and official purpose. Here is a detailed analysis of tax benefits of leasing a car from your company vs. owning a car. In case the car is owned by employee and the expenses are reimbursed by the employer the perquisite value will be computed. The tax liability on perquisite for reimbursement of fuel and driver expenses will be as below:

  • 1. In case car used for official purpose only

    • the value of perquisite will be NIL hence there will be no addition in your taxable salary. Below conditions need to be fulfilled for claiming higher expenses if used for official purposes:

    A) The employer should maintain complete details of visits made for official purpose which include - date, place visited, mileage, and, expenditure

    B) The employer certificate is necessary to confirm that the expenditure were incurred for official purposes.

  • 2. In case car is used for private purpose only

    • The taxable perquisite will be the amount actually paid by employer i.e., Rs 10,000 p.m. will be added in your taxable salary (minus the amount recovered from employee, if any for car expense)

  • 3. If the car is used partly for office purposes and partly for private purpose

    • The taxable perquisite will be computed as below:

    a) amount actual incurred by employer

    b) Less: Rs 1800 p.m. (for car below 1.6 litres) or Rs 2,400 p.m. (for car above 1.6 litres) and Rs 900 p.m. for driver

    Taxable perquisite without records will be Rs 10,000 - Rs 1,800- Rs 900 = Rs 7,300 p.m. for 1.6L and Taxable perquisite without records will be Rs 10,000- Rs 2,400-Rs 900 = 6,700 p.m. for above 1.6L

    The taxable amount can be NIL. The higher amount can be deductible if the records are kept to prove expense were for official purposes.

    Below conditions need to be fulfilled for claiming higher expenses if used for official purposes:

    A) The employer should maintain complete details of visits made for official purpose which should have - Date, Place visited, mileage, amount of expenditure.

    B) The employer certificate is necessary to confirm that the expenditure was incurred for official purposes.

  • GO for company leased car

    • We recommend that you ask your employer and get car lease from the employer for tax optimization. In case the car is used partly for office purpose and partly for self use, its tax efficient to have car on company lease instead of owning a car.

    Only Rs 2,700 p.m. (1.6 litres) and Rs 3,300 p.m. (above 1.6 litres) will be added as perquisite for car and driver in your taxable salary. The actual expense incurred by employer could be Rs 10,000 or even higher.

    Source- http://www.taxspanner.com/taxspan/for-employees-company-car-lease-is-more-tax-efficient-than-owning-a-car/

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TIPS ON INVESTMENTS U/S 80 C - TO SAVE INCOME TAX

Most of the Income Tax payee try to save tax by saving under Section 80C of the Income Tax Act. However, it is important to know the Section in toto so that one can make best use of the options available for exemption under income tax Act. One important point to note here is that one can not only save tax by undertaking the specified investments, but some expenditure which you normally incur can also give you the tax exemptions. Here are some tips for you : -

You are saving every year and while saving you normally have some goal in mind, e.g. to meet the expenditure on education of children, purchase of a vehicle or house or marriage of your children. Therefore, you should always look at the investments from the angle whether it will meet your specific requirements on maturity. You should also try to diversify your savings in different instruments.For instance, if you have already invested a fair portion of your money in equity (shares and mutual funds that invest in shares), avoid an ELSS. Opting for an ELSS means a huge portion of your investments will be in equity and that may not be what you want.

  • (1) Always Check YOUR FORCED SAVINGS / EXPENDITURE ELIGIBLE FOR DEDUCTION :

    • (A) Home Loan :

    There is a provision that the payment made for repayment of the principal amount (not interest payment) of the Home Loan is eligible for a deduction under Section 80C if you have taken a home loan and you fulfill certain conditions.

    (B) Payment towards Education Fee of the children :

    Most of the young couples and middle aged income tax payee incur quite high payments towards the education fees of their children. The expenditure incurred on education fees is also eligible for a deduction under Income Tax Act, Thus, if you are incurring expenditure towards education fee of your children, please check whether these are eligible for deduction under the IT Act.

    (C) Payment towards Provident Fund :

    Salaried income tax payee are usually have a forced saving which are eligible for deduction under section 80C. A fixed percentage of basic salary (ranges from 8.33% 12%) is deducted by your employer towards the Employees Provident Fund (EPF). Some employers allow higher deduction towards EPF. Thus, you should first of all check the total amount that is expected to be deducted towards EPF during the financial year. The total amount deducted from your salary will be eligible for investments under Section 80C.

    (D) Interest on National Saving Certificates :

    In case you have purchased NSCs during some earlier years, then the accrued interest as per the tables released by authorities is eligible for deductions under Section 80C.

  • (2) Always Check the Lock-In Period of the Investments

    • Tax saving investments have a minimum lock-in period i.e. the period during which withdrawals are usually not allowed. If the same are withdrawn, these will be taxable in the year of withdrawal. For example, National Savings Certificates (NSC) have a lock-in period of five years (earlier it was six years), Public Provident Fund (PPF) has a lock-in of 15 years, Equity Linked Saving Schemes (ELSS) have a lock-in period of three years. Insurance policies have even greater period of lock in.

  • (3) Always Check Whether the investment you intend to make will meet your goals :

    • Background to Section 80C in the Income Tax Act OR KNOW EVERYTHING ABOUT SECTION 80C OF INCOME TAX ACT - INDIA:

    Earlier there used to be Section 88 providing certain tax benefits. However, now Section 80C has replaced the old Section 88. However, the investment mix available in Section 88 has remained more or less the same.

    The new section 80C became effective w.e.f. 1st April, 2020. Moreover, earlier section 80CCC on pension scheme contributions has also been merged with the new 80C. However, unlike Section 88, there are no sub-limits and is irrespective of how much you earn and under which tax bracket you fall.

    Sec 80C of the Income Tax Act states that qualifying investments, up to a maximum of Rs.1.5 Lakh, are deductible from your income. Thus, it means actually your income gets reduced by this investment amount (up to Rs.1.5 Lakh), and you end up paying no tax on it at all! Most of the lower and medium Income Tax payee try to save tax by saving under Section 80C of the Income Tax Act.

    Source- https://cleartax.in/s/80c-80-deductions

    A review of the various options for savings under section indicates that you can not only save tax by investing your savings in specified investment options, but also on certain types of expenditure which you have to normally incur. Therefore, it is necessary to understand the full section so that in case you are short of funds, you can claim tax benefits even for certain expenditure incurred by you.

    There are many small savings schemes like NSC, PPF and other pension plans which are eligible under this Section. Moreover, the payments towards the principal amount of housing loan are also eligible for an income deduction. Similarly, there is provision wherein the payments made towards education fees for children are also eligible for an income deduction. However, in case of premium paid for insurance;-

    . The benefit for premium is restricted to 20% of actual Sum Assured

    . The policy has to be continued for at least 2 years or it will result in reversal of benefits taken.

    As the benefits under Section 80C are available across all income levels, thus, people who are in the highest tax bracket of 30%, save higher tax.

    Saving Scheme Sec. under which Tax Benefit available Return Tax benefits for earnings (i.e. interest received / dividend received) Lock in Period and other Remarks
    NSCs :- There are two types of National Saving Certificates -
    (a) For 5 Years maturity
    (b) For 10 years maturity     		Section 80C 8.0% for 5 years Maturity NSCs; (wef 01/10/2016) i.e. applicable for FY 2016-17 Accrued Interest is Taxable in the year in which it has accrued Now we have NSCs of 5 years maturities (earlier there used to be only one type of NSCs maturing in 6 years). In NSC interest is Compounded Half Yearly. While the minimum investment amount is Rs 100, there is no maximum amount. Premature withdrawals are permitted only in specific circumstances such as death of the holder. Interestingly, , the accrued interest which is deemed to be reinvested qualifies for deduction under Section 80C
    Old Scheme :National Saving Certificates - ( NSC scheme ) Section 80C 8.40% (increased from 8.00% to 8.40%wef Dec 2011);
    On 10 year NSCs rate of interest was fixed as 8.70% in December, 2011    		 Taxable 5 years (reduced wef Dec 2011 from 6 years to 5 years for new investments). - See PS note below
    Equity Linked Savings Schemes (ELSS) -
    ELSS stands for an Equity Linked Savings Scheme, which is actually an open-ended Equity Mutual Fund. It gives an opportunity to invest in equities and get high returns and at the time save tax. Moreover, long-term capital gains from these funds are tax free. Dividend payout option enables gains even during lock-in period     		Section 80C Varies from year to year Dividend is tax free 3 years
    Life Insurance Policies -
    The amount paid by you towards life insurance premium for yourself, your spouse or your children are allowed to be included in Section 80C deduction. However, life insurance premium paid by you for your parents (father / mother / both) or your in-laws is NOT eligible for deduction under this section    		 Section 80C Varies from year to year Varies from scheme to scheme Varies from scheme to scheme
    Unit Linked Insurance Plan (ULIP) Section 80C Varies from year to year Varies from scheme to scheme Varies from scheme to scheme (15 to 20 years)
    Infrastructure Bonds - (From FY 2012-13, the separate limit u/s 80 ccf of Rs 20,000/- was withdrawn. Thus, these are not popular now as they offer low rate of return). Section 80C Varies from year to year Taxable 3 to 10 years
    Contribution to Provident Fund (viz EPF / GPF / VPF ) - PF is usually automatically deducted from the salary. As per PF laws, it is you and your employer that contribute to it. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. The employee has the option to contribute additional amounts through voluntary contributions (VPF). Section 80C 8.80% Interest earned is tax free Till retirement (loans are permitted)
    Public Provident Fund (PPF) -
    This scheme is the most popular among middle class as it gives good returns and interest income is tax-free, thought interest is compounded Yearly only.     		Section 80C Decreased from 8.0 to 7.9% wef 01/04/2017 for FY 2017-18 (reviewed quarterly) Interest earned is tax free 15 years and extendable. Withdrawals allowed after 7 years. The government has also permitted premature closure of PPF accounts "in genuine cases", like serious ailment or higher education of children.This shall be permitted with a penalty of 1 per cent reduction in interest payable on the whole deposit and only for the accounts having completed five years from the date of opening. Yield on PPF will vary and will be fixed at 25 basis point above the 10 year government bonds. - See PS Note below
    Interest accrued in respect of NSC VIII issue Section 80C See NSCs above Taxable Till maturity of NSCs
    Tuition Fees including admission fees or college fees paid for full time education of any two children of the assessee. The provision under this section provide that payments towards the education fees for children eligible for an income deduction. Section 80C Not applicable Not applicable Not applicable
    Repayment of Housing Loan (Principal) -
    Once your repayment of HL starts, EMIs consists of two components - Principal and Interest. The principal component of the EMI qualifies for deduction under Sec 80C. However, you can claim tax benefits on the home loan only if your home is ready to live in during that financial year. [ Remember that the saving of tax on interest component is available under Section 24 of the Income Tax Act ]. The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house. - See more at:

    http://taxguru.in/income-tax/all-about-deduction-under-section-80c-and-tax-planning.html#sthash.rPK9BOoM.dpuf

    The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house. - See more at:

    http://taxguru.in/income-tax/all-about-deduction-under-section-80c-and-tax-planning.html#sthash.rPK9BOoM.dpuf

    		 Section 80C Not applicable Not applicable Not applicable
    Stamp Duty & Registration Charges on Purchase of the House : The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house. Section 80C Varies (around 8.00%) Nil 5 Years
    Bank Deposits - Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled for section 80C deduction Section 80C Varies (around 7.00%) Nil 5 Years
    Senior Citizens Savings Scheme -
    SCSS is one of the most popular schemes among the senior citizens. As per the scheme, the interest is payable quarterly, thus interest is received on quarterly basis and not compounded.     		Section 80C Decreased to 8.50% wef 01/10/2016 for FY 2016-17 & beyond Taxable See PS below
    Post Office Time Deposit Account (POTDs) -
    POTDs are quite similar to bank fixed deposits, but are available for varying time duration like one year, two year, three year and five year. However, remember that only 5-Yr post-office time deposit (POTD) qualifies for tax saving under section 80C. Interest is compounded quarterly but paid annually.     		Section 80C 6.9% for 1-year deposit
    7.0% for 2-year deposit
    7.2% for 3-year deposit
    and 7.7% for 5-year
    deposit for FY 2017-18 (w.e.f 01/04/2017)    		 The Interest is taxable. 5 years
    Sukanya Samriddhi Account :-
    ThisAccount can be opened at any time from the birth of a girl child till she attains the age of 10 years, with a minimum deposit of Rs 1000. A maximum of Rs 1.5 lakh can be deposited during the financial year. Per girl child only single account is allowed. Parents can open this account for maximum two girl child. In case of twins this facility will be extended to third child. The account shall mature on completion of twenty-one years from the date of opening of the account. However, premature withdrawal is allowed in case of death of the girl child or on permission of central government. In case child is married after the age of 18 years, there is a provision to stop operation of the account.     		Section 80C 8.40% (wef from 1.04.2017) for FY 2017-18 (Yearly compounded) Interest on this account is fully exempt from tax in the year of accrual as well as in the year of receipt Maturity of the account is after 21 years from the date of opening the account. However, partial withdrawal, maximum up to 50% of balance standing at the end of the preceding financial year can be taken after Account holder's attaining age of 18 years

    PS Note: On 4th January, 2012 the Centre clarified that, barring the Public Provident Fund (PPF), the rates of interest on all small savings schemes will remain fixed throughout the tenure of investment. In an official statement here, the Finance Ministry said that the interest rates applicable on small savings instruments schemes would be announced on April 1 each year and that the rate would remain valid till the maturity of the scheme.

    In the case of the 15-year PPF scheme, however, the rate of interest would NOT remain fixed for the entire period as the interest accruals in the PPF account each year would vary, depending on the interest rate announced for that particular year. ". although the rate of interest on small savings schemes will be aligned every year with rates of government securities of similar maturity, with suitable spread, the rates are fixed and not floating so far as individual investments except PPF are concerned," the statement said.

    To clear the confusion over the returns on investment in small savings schemes, the Finance Ministry pointed out that the rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revisions in interest rates in the subsequent years, it said, would only be applicable to the investments made in the relevant period.

    "For instance, investment made in an instrument other than PPF on December 1, 2011, will remain valid till the maturity of that instrument, irrespective of the revision of the interest rate with effect from April 1, 2012. As regards PPF, the interest rate fixed every year will be applicable to all PPF accounts," the statement said.

Revision of Interest Rates wef 01/04/2013 for Small Saving Schemes :

Scheme Rate of interest w.e.f.1.04.2012 to 31/03/2013 Rate of interest w.e.f.1.4.2013
Saving deposit 4.0 4.00
1 year time deposit 8.2 8.20
2 year time deposit 8.3 8.20
3 year time deposit 8.4 8.30
5 year time deposit 8.5 8.40
5year recurring deposit 8.4 8.30
5year SCSS 9.3 9.20
5year MIS 8.5 8.40
5year NSC 8.6 8.50
10 year NSC 8.9 8.80
PPF 8.8 8.70

(Source - http://www.allbankingsolutions.com/fin-section80c.htm)

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