SBI, HDFC Bank, PNB FDs vs Kisan Vikas Patra (KVP): Which offers highest interest rate
Are you looking for long term investment with assured returns? Are you confused between investing in Kisan Vikas Patra (KVP) or bank fixed deposits? Big banks including SBI, HDFC Bank, PNB have been increasing fixed deposit interest rates, and the government, too, has hiked the rates of KVP for the current quarter.Here is a comparison of interest rates and maturity value of bank FDs and KVP.
(Note: For bank FD interest rates we are considering the 10 year tenure. The reason being we are assuming that the person is investing for 10 years and is evaluating alternatives to KVP. Bank FD interest calculations done using bank website calculators and the reinvestment option has been selected, this is because KVP payout is only at maturity.)
Kisan Vikas Patra
One of the well-known small savings plans offered by the Post Office is called Kisan Vikas Patra, offering an interest rate of 7.2% for the period of January through March 2023. The interest rate is changed every three months by the Union Government. Any investment made into a KVP account will double in value after ten years.
There is no maximum KVP amount; the minimum is Rs 1,000. The offered interest rate is 7.2% for this January- March quarter and rates are revised every quarter by the government. Invested amount doubles in 10 years.
KVP maturity value
If you are a regular citizen and invest Rs 100,000 in KVP for 10 years, the maturity value Rs 2,00000 when interest is compounded annually.
KVP taxation
The returns are entirely taxable because KVP is not eligible for 80C deductions. On the other hand, withdrawals made after the scheme's maturity are exempt from Tax Deducted at Source (TDS)
SBI
SBI offers 6.8 percent interest for a period of 10 years. These interest rates apply to deposits under Rs 2 crore. You can earn around Rs 1,90,555 lakh on a deposit of Rs 1 lakh in ten years when interest is compounded on a quarterly basis, according to the SBI FD calculator.
HDFC Bank
HDFC Bank offers 7% interest for 10 years for deposits below Rs 2 crore. According to HDFC Bank FD calculator, your invested amount is Rs 1,00,000 and the interest earned on your investment will be Rs 1,00,160 on 23-Mar-2033. The maturity value will be Rs 2,00,160
PNB
PNB offers 6.5% interest on tenure of 10 years for deposits below Rs 2 crore. Your invested amount is Rs 1,00,000.00 along with interest earned on your investment, maturity value will be Rs 190556 as on 23-Mar-2033
Bank FD taxation
If the interest on an FD is greater than 40,000, PAN users must pay 10% tax and non-PAN users must pay 20% tax on interest. This interest would be deducted as TDS when the yearly interest was credited (tax deducted at source).
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This story originally appeared on: India Times - Author:Faqs of Insurances
