ISLAMABAD: The Central Directorate of National Savings (CDNS) has made a significant decision to adjust the profit rates on Short Term Savings Certificates (STSCs), effective from March 2025. This move comes as part of the federal government's ongoing efforts to cater to the short-term funding needs of investors, a program that has been in place since its introduction in 2012.
Short Term Savings Certificates offer maturity options of three months, six months, and one year, making them accessible to both Pakistani nationals and Overseas Pakistanis. Investors can initiate their investments with a minimum of Rs10,000, and there is no upper limit imposed. Moreover, these certificates can be pledged as security, providing additional flexibility for investors.
Under the newly revised rates for March 2025, the profit for three-month maturity certificates has been set at 11.12 percent, yielding Rs2,780 on an investment of Rs100,000. This represents a slight increase from the previous rate of 11.08 percent. For six-month maturity certificates, the profit rate remains unchanged at 11.08 percent, resulting in a yield of Rs5,540. Notably, the one-year maturity certificates now offer a return of Rs10,960 on the same investment amount.
Taxation on profits from these certificates is determined by the investor’s tax status. Individuals listed in the Active Taxpayer List (ATL) face a withholding tax rate of 15 percent on their yield, while non-filers, who do not appear in the ATL, are taxed at a higher rate of 30 percent. These tax rates are uniformly applied, irrespective of the investment date or profit amount.
Previously, in February 2025, the CDNS had also revised the rates for Short Term Savings Certificates. At that time, the profit for three-month maturity certificates was set at 11.24 percent, yielding Rs2,810 on an investment of Rs100,000, a decrease from an earlier rate of 12.76 percent. For six-month maturity certificates, the profit rate was set at 11.32 percent, yielding Rs5,660, down from the previous rate of 12.74 percent, which had provided Rs6,370.
In a related development, the government has decided to maintain the interest rates for various small savings schemes for the first quarter of the financial year 2025-26, which runs from April 1 to June 30, 2025. This marks the fifth consecutive quarter without any adjustments to these rates.
According to a recent announcement, the Sukanya Samriddhi Yojana will continue to offer an interest rate of 8.2 percent on deposits. The three-year fixed deposit rate will remain unchanged at 7.1 percent, consistent with the current quarter. Additionally, the Public Provident Fund (PPF) and post office savings deposit schemes will maintain their rates at 7.1 percent and 4 percent, respectively.
For Kisan Vikas Patra, the interest rate will be set at 7.5 percent, with investments maturing in 115 months. The National Savings Certificate (NSC) will also keep its interest rate at 7.7 percent for the April-June 2025 period. Similarly, the interest rate for Monthly Income Scheme investors will remain steady at 7.4 percent.
The last adjustment to the interest rates for some of these savings schemes occurred in the fourth quarter of the 2023-24 financial year. The Department of Economic Affairs, under the Ministry of Finance, issued a circular on March 28, 2025, confirming that there will be no changes to the interest rates for the first quarter of the financial year 2025-26. This decision reflects the government's approach to aligning interest rates for small savings schemes with the yields of government-issued bonds.
The committee responsible for these recommendations suggests that the interest rates for small savings schemes should be set 25 to 100 basis points above the yield of government bonds, ensuring these schemes remain attractive to investors.
As the financial landscape continues to evolve, these adjustments in profit rates and interest rates are crucial for investors looking to maximize their returns. The government's commitment to maintaining stability in these financial instruments will play a significant role in shaping investor confidence and participation in the savings schemes.
With these changes, the CDNS aims to provide a balanced approach to savings and investment opportunities for both local and overseas investors, reinforcing the importance of short-term savings in the broader economic framework.
