The Finance Ministry has issued a guideline regarding small savings accounts. Under which 6 new rules have been introduced, which are for National Savings Scheme, Public Provident Fund and Sukanya Samriddhi Account.
Big news has come for those who invest money in post office small savings schemes like PPF, SSY and NSS. The government is going to change the rules related to these schemes, which will come into effect from October 1. If you have also invested in these schemes or do, then this news is important for you. Earlier this week, the Department of Economic Affairs under the Union Finance Ministry has issued a guideline regarding the new rules.
The Finance Ministry has issued a guideline regarding small savings accounts. It states that if an account is found to be irregular, then it should be sent for necessary regularization by the Finance Ministry in compliance with the established rule. Under the guidelines, the department has issued six new rules, which are for National Savings Scheme, Public Provident Fund (PPF) and Sukanya Samriddhi Account.
Rules are divided into these six categories
- Irregular National Savings Scheme (NSS) account
- Public Provident Fund (PPF) account in the name of a minor
- When multiple PPF accounts are opened
- PPF accounts opened by NRIs
Sukanya Samriddhi accounts opened by grandparents instead of parents
1. Irregular NSS Account
It is divided into three categories.
First – Rules under two NSS-87 accounts opened before DG’s order (2 April 1990). The prevailing scheme rate will be applicable on the first account opened, while the prevailing POSA rate with a rate of 200 bps on the outstanding balance will be applicable on the second account. The deposit amount in both these accounts should not exceed the annual limit. If additional deposit is made, it will be returned without interest. From October 1, 2024, both accounts will get zero percent interest rate.
Second- Rules under two NSS-87 accounts opened after DG’s order (2 April 1990). The first account opened will get the benefit of the prevailing scheme. The prevailing POSA rate will be applicable under the second account. From October 1, 2024, both accounts will get zero percent interest rate.
Third- In case of more than two NSS-87 accounts, the principles mentioned for two accounts opened before/after DG’s order will apply. For the third account which is more irregular, no interest will be paid and the principal amount will be returned to the investor.
2. PPF account opened in the name of a minor
POSA interest will be paid for such irregular accounts till the person (minor) becomes eligible to open the account. That is, the person does not turn 18 years of age, after which the applicable interest rate will be paid. The maturity period will be calculated from the date on which the minor becomes an adult. That is, the date on which the person becomes eligible to open an account.
3. More than one PPF account
The primary account will earn interest at the scheme rate provided the deposit amount is within the maximum limit applicable for each year. The balance in the second account will be merged with the first account, provided the primary account remains within the estimated investment limit each year. After the merger, the primary account will continue to earn interest at the prevailing scheme rate. Any additional account other than the primary and the second account will earn zero percent interest rate from the date of opening the account.
4. Extension of PPF account by NRI
Only for those active NRI PPF accounts opened under 1968 where Form H does not specifically ask for residential status of the account holder. These accounts will be subject to zero interest rate from October 1.
5. Small Savings Scheme account opened in the name of minor (except PPF and SSY)
Such irregular accounts can be regularized with simple interest. The interest rate for calculation of simple interest on the account should be the prevailing POSA rate.
6. SSY opened by grandparents other than guardian
In case of accounts opened under grandparents, the security will be transferred to the person entitled under the applicable law. This means that the account will be transferred to the surviving parent or legal guardian in case of such guardian from October 1.
If more than two accounts are opened in a family in violation of Para 3 of Sukanya Samriddhi Account Scheme, 2019, the irregular accounts will be closed in violation of the scheme guidelines.
