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Government Increases National Savings Profit Rates

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Changes in National Savings Profit Rates

The government recently revised the profit rates for various national saving schemes, effective March 19, 2024. These adjustments, announced through multiple notifications by the Finance Division, reflect increases and decreases in different savings products. Here’s a breakdown of these changes to help you understand how they might affect your investments.

Increased Profit Rates for Long-Term Savings

The good news for those investing in long-term savings schemes is that several rates have been increased. The profit rate for Defence Savings Certificates (DSC) has been raised to 13.78%, slightly up from the previous 13.68 %. Special Saving Certificates, which have a tenure of three years, now offer an average annual profit rate of 15.93%, an increase from the previous 15.77 %.

Regular Income Certificates, which span five years, have seen their annual profit rate increase to 14.78 %from 14.64%. This translates to a monthly profit payment of Rs1,230 for every Rs100,000 invested. Similarly, the Behbood Saving Certificates, designed for a ten-year duration, now offer an annual return of 15.60%, up from 15.36 %, providing a monthly profit of Rs1,300 per Rs100,000 invested.

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The Pensioners’ Benefit Account, also with a ten-year term, has increased its rate to 15.60% from 15.36 %, ensuring the same monthly profit of Rs1,300 per Rs100,000. Furthermore, Shuhada’s Family Welfare Account’s profit rate has risen to 14.60 %, offering the same monthly profit.

Adjustments in Short-Term Savings

While long-term savings schemes have seen increases, short-term savings certificates (STSCs) have experienced a reduction in their rates. The three-month STSC now offers a rate of 19.40 %, down from 19.92%, with a profit payment of Rs4,850 per 100,000. Similarly, the six-month STSC’s rate has decreased to 19.38 % from 19.90 %, with a profit payment of Rs 9,690 per 100,000.

The one-year short-term savings certificate has also been adjusted, with its rate reduced to 19 % from 19.76 %, resulting in a profit of Rs19,000 per Rs100,000. These changes indicate a strategic shift in the government’s approach to short-term savings, likely aiming to balance liquidity and investment flows.

The Sarwa Islamic Term Account, available for three years, has increased its profit rate to 13.25 %, providing a biannual profit of Rs 7,625 per 100,000. However, the one-year and five-year rates remain unchanged. The Sarwa Islamic Saving Account also offers an unchanged annual rate of 20.50 %.

Impact and Considerations

Investors in national savings schemes should carefully review these new rates and consider how they align with their financial goals. For those looking for steady, long-term returns, the increased rates on products like the Defence Savings Certificates and Behbood Saving Certificates might be appealing. The slight increase in national savings profit rates for these products suggests an effort to attract more long-term investors.

On the other hand, those who prefer short-term investments might need to reconsider their strategies due to the reduced rates on short-term savings certificates. The lower returns on these products could impact their overall profit, especially for those relying on short-term savings for liquidity or other immediate financial needs.

Investors must also be aware of the tax implications. The withholding tax deduction is 15 % for filers and 30 % for non-filers, while the Zakat deduction remains at 2.5 %. These factors can significantly affect the net returns from these investments.

National saving Scheme

source: brecorder.com

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