Small Savings Schemes 2023 : The current one-month window for opening an account under the Senior Citizen’s Savings Scheme has been extended to three months. Furthermore, modifications have been made to the PPF account premature closure guidelines.
Overview of small savings schemes
Small Savings Schemes 2023 : The Public Provident Fund (PPF), Senior Citizen’s Savings Scheme (SCSS), and Time Deposit Scheme are among the small savings programs for which the central government has loosened regulations. As per a gazette notification dated November 9, these norms were loosened, according to news agency PTI.
The Center currently provides nine different kinds of small savings plans. On November 7, the Ministry of Finance’s Department of Economic Affairs notified the public of the scheme modifications. PPF, Sukanya Samriddhi Yojana, Senior Citizen’s Savings Scheme (SCSS), Post Office Monthly Income Scheme (POMIS), Kisan Vikas Patra (KVP), Post Office Time Deposit (POTD), Atal Pension Yojana (APY), and Pradhan Mantri Vaya Vandana Yojana (PMVVY) are the nine small savings schemes. It must be remembered that every scheme has a unique combination of features, loan terms, and interest rates.
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Senior citizen’s saving schemes
Small Savings Schemes 2023 : The current one-month account opening period for the Senior Citizen’s Savings Scheme is replaced by three months under the new guidelines. As per the announcement published in the gazette, an individual has three months from the date of receiving retirement benefits and providing documentation of the date of disbursement to open an account under the Senior Citizen’s Savings Scheme.
Senior citizen savings accounts : The Senior Citizen’s Savings Scheme (SCSS) offers a 5-year tenure and is intended for individuals 60 years of age or older, or for employees 55 years of age and younger. Previously, though, it required investments to be made within a month of receiving retirement benefits.
Changes made to small savings plans are as follows:
- Permitted those over 55 but under 60 years old to invest in SCCS for three months.
- The financial assistance amount may now be invested in the scheme by a government employee’s spouse, according to the new regulations.
- Retirement benefit coverage has a well-defined scope. According to the announcement, a retirement benefit is any amount of money an individual receives as a result of retiring or becoming superannuated. In addition to provident fund contributions, these also include the following: leave encashment, commuted value of pension, savings component of group savings linked insurance scheme paid by the employer upon retirement, retirement-cum-withdrawal benefit under Employees’ Pension Scheme (EPS), and ex gratia payments under a voluntary or special voluntary retirement scheme.
- The revised regulations stipulate that if the account is closed before the full year of investment is up, a one percent deduction of the deposit will be made.
- It is now possible for account holders to extend their account for an unlimited number of blocks, each lasting three years. The extension was previously only permitted once.
- Should the SCSS account be extended upon maturity, the deposit will accrue interest at the scheme rate on either the extended maturity date or the maturity date.
- As per the notification, “The deposit made at the time of opening of 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 under paragraph 8 from the date of opening of account. Provided that after the closure of the existing account or accounts, new accounts or accounts may be opened again as required by the depositor subject to the maximum deposit limit.”
New PPF rule
A few changes have been made to the notification regarding the early closure of PPF accounts. According to the notification, this plan may be known as the Public Provident Fund (Amendment) Scheme, 2023.
In the past, there was a penalty for early termination of a Public Provident Fund Account. Interest was permitted, but at a rate that was 1% less than the interest that had been credited to the account since its opening or extension.
But the most recent amendment to the Public Provident Fund Scheme, 2019 removes the phrase “or from the date of commencement of the current block period of five years” from paragraph 13 and the second proviso.
According to this change, interest on early closure will now be permitted at a rate that is 1% lower than the interest that is credited to the account on a periodic basis starting at the beginning of the current five-year block period.
Scheme for national savings time deposits
According to the notification, interest will be paid at the rate that applies to Post Office Savings Accounts if you prematurely withdraw your deposit from a five-year account after four years of account opening.
The current guidelines state that interest will be calculated using the rate allowed for a three-year Time Deposit account if a five-year account is closed four years after the date of deposit.
The following are the interest rates on small savings plans for the months of October through December in 2023:
- 7.1 percent PPF
- 8.2 percent SCSS
- Yojana Sukanya – Eighty percent
- 7.7 percent NSC
- 7.4% of the PO-Monthly Income Scheme
- Vikas Patra Kisan A 7.5% percentage
- Deposit for One Year: 6.9%
- Two-Year Deposit: Seven.0%
- Three-Year Deposit: 7.0%
- A five-year deposit of 7.5%
- 5-Year Rate of Return – 6.7%
Tax Benefits
If you participate in any of these schemes, you may also receive tax benefits. Usually, these fall under different provisions of the Income Tax (I-T) Act. Commonly eligible schemes include PPF and SCSS. Under Section 80C of the Income Tax Act, you are eligible for benefits up to Rs 1.5 lakh.
Time deposit account for five years
The notification states that the Post Office Savings Account’s interest rate will apply if an early withdrawal from the five-year Time Deposit Account is made within four years of the account’s opening.
Currently, the interest rate applicable to a three-year Time Deposit account will be applied for calculating interest when a five-year Time Deposit account is closed four years after the deposit date. The following are the interest rates on different small savings plans for the quarter ending in October 2023:
The rates for the Public Provident Fund (PPF) are 7.1%, Senior Citizen’s Savings Scheme (SCSS) are 8.2%, Sukanya Samriddhi Yojana is 8.0%, National Savings Certificate (NSC) is 7.7%, Post Office Monthly Income Scheme is 7.4%, Kisan Vikas Patra is 7.5%, the 1-Year Deposit is 6.9%, the 2-Year Deposit is 7.0%, the 3-Year Deposit is 7.0%, the 5-Year Recurring Deposit is 6.7%, and the 1-Year Deposit is 6.9%.
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