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 be implemented from October 1. If you have also invested or are investing in these schemes, then this news is important for you. Earlier this week, the Department of Economic Affairs under the Union Finance Ministry has issued guidelines regarding the new rules.
The Finance Ministry has issued a guideline regarding small savings accounts. It states that if any account is found irregular, it should be sent for necessary regularization by the Finance Ministry in compliance with the established rules. 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) accounts
- Public Provident Fund (PPF) account in the name of a minor
- When multiple PPF accounts are opened
- PPF accounts opened by NRIs
- Sukanya Samriddhi Account opened by grandparents instead of guardian
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 first account opened will be charged the prevailing scheme rate, while the second account will be charged the prevailing POSA rate plus 200 bps on the outstanding balance. The deposit amount in both these accounts should not exceed the annual limit. If excess deposit is made, it will be refunded without interest. From October 1, 2024, both accounts will get zero percent interest rate.
Second- Rules under NSS-87 account 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 same principles as for the two accounts opened before/after the DG’s order will apply. For the third account which is more irregular, no interest will be paid and the principal amount will be refunded to the investor.
2. PPF account opened in the name of a minor
For such irregular accounts, POSA interest will be paid till the person (minor) becomes eligible to open the account. That is, the person does not attain the age of 18 years, 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 from which the person becomes eligible to open the 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 projected 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 secondary account, will earn zero percent interest 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 the residential status of the account holder. These accounts will be eligible for zero interest rate from October 1.
5. Small savings scheme account opened in the name of a minor (except PPF and SSY)
Such irregular accounts can be regularized with simple interest. The interest rate for calculating simple interest on the account should be the prevailing POSA rate.
6. SSY opened by grandparents other than parents
In case of accounts opened under grandparents, the security will be transferred to the person entitled under the applicable law. This means that in case of such parent (surviving parent) or legal guardian, the account will be transferred from 1st October.
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.