Just a day before the start of the Diwali festival, the government of India has eased rules for small savings schemes including senior citizen savings, public provident funds, and national savings time deposit accounts. This is expected to make these saving schemes attractive during the festive season.
Currently, the government offers nine small saving schemes and these are -- senior citizens savings accounts (SCSS), National Savings Certificates (NSC), Kisan Vikas Patra (KVP), Public Provident Fund (PPF), Sukanya Samriddhi Account, Mahila Samman Saving Certificate, Recurring Deposit (RD), and
1-5 year time deposits.
Senior Citizen Savings Scheme (SCSS):
Senior citizens will continue to earn 8.2% per annum from their SCSS account. The interest rates here are paid from the date of deposit to 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 1st April, 1st July, 1st October and 1st January. This account can be opened with a minimum of Rs 1,000 to a maximum of Rs 30 lakh.
In the latest notification, the government has announced the following provisions:
The retired personnel of Defence Services (excluding Civilian Defence employees) shall be eligible to open an account under this Scheme upon attaining the age of fifty years subject to the fulfilment of other specified conditions.
- the spouse of the government employee shall be allowed to open an account under this Scheme, if the government employee has attained the age of fifty years and has died in harness, subject to the fulfilment of other specified conditions.
- the deposit in such account shall earn interest at the rate applicable to the Scheme on the date of maturity or the date of extended maturity.
In case the account is closed before the expiry of one year from the date of extension, an amount equal to one per cent. of the deposit shall be deducted and the balance shall be paid to the account holder.
- The deposit made at the time of opening of the account shall be paid on or after the expiry of five years or after the expiry of each block period of three years where the account was extended.
- In case of a joint account, or where the spouse is the sole nominee, the spouse may continue the account by applying to the accounts office, on the same terms and conditions as specified under this Scheme, if the spouse meets eligibility conditions under the Scheme on the date of death of the account holder.
- The account holder may extend the account for a further block period of three years by making an application in Form-4 within one year from the date of maturity or the date of the end of each block period of three years.
- The extension of the account shall be deemed to have been made from the date of maturity or the date of the end of each block period of three years, irrespective of the date of application.
The retirement benefits in this account mean any payment due to the account holder on account of retirement on superannuation or otherwise and include Provident Fund dues, retirement or superannuation or death gratuity, commuted value of pension, cash equivalent of leave, savings element of Group Savings Linked Insurance Scheme payable by the employer on retirement, retirement-cum-withdrawal benefit under the Employees’ Family Pension Scheme and ex-gratia payments under a voluntary or a special voluntary retirement scheme and in case if the employee died in harness, the "retirement benefits" shall also mean the above-mentioned benefits to an employee who died in harness.
Public Provident Fund (PPF): As per the latest guidelines, it is said that in the PPF accounts, for the words "or the date of extension of the account", the words "or from the date of commencement of the current block period of five years" shall be substituted.
The interest rate for the PPF account is kept at 7.4% for Q3 of FY24, unchanged from the previous quarter. PPF is among the most popular and top retirement tax benefits saving schemes available in India. A PPF account can be opened with a minimum of Rs 500 to a maximum of Rs 1.5 lakh in a year, either lump-sum or in instalments.
Deposits here qualify for a tax deduction of up to Rs 1.5 lakh under section 80C of the Income Tax Act. The account also offers a loan/withdrawal facility that is not available on discontinued accounts. The interest rates are compounded annually.
National Savings Time Deposit Scheme: Further, amendments were made to this scheme as well. Here’s what they are:
No deposit shall be withdrawn before the expiry of six months from the date of deposit.
Where a deposit in a one-year, two-year or three-year account is withdrawn prematurely after six months, but before the expiry of one year from the date of deposit, interest shall be payable to the account holder at the rate applicable to the Post Office Savings Account for the completed months.
Where a deposit in a two-year or three-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the account holder for the completed years and months, commencing on the date of deposit and ending with the date of withdrawal, and such interest shall be calculated at the rate which shall be less by two per cent. points than the rate specified for a deposit of one year or two-year, as the case may be, and interest for the completed year shall be calculated on a quarterly compounding basis in accordance with the provisions, and for any part of a year, interest shall be payable as per the provisions.
where a deposit in a five-year account is withdrawn prematurely after four years from the date of opening of an account, interest shall be payable at the rate applicable to the Post Office Savings Account.