For those who invest money in post office small savings schemes like PPF, SSY, and NSS, the big news has come. The government plans to implement changes to these schemes starting from October 1. For those who have invested in these schemes, this news is crucial. Earlier this week, the Department of Economic Affairs under the Union Finance Ministry issued a guideline regarding the new rules.
The Finance Ministry has issued a guideline regarding small savings accounts. The guideline stipulates that the Finance Ministry must regularize any irregular accounts in accordance with the established rule. Under the guidelines, the department has issued six new rules, which are for the National Savings Scheme, the Public Provident Fund (PPF), and the Sukanya Samriddhi Account.
These six categories divide the rules.
An irregular National Savings Scheme (NSS) account
A minor is the beneficiary of a Public Provident Fund (PPF) account.
When multiple PPF accounts are opened,
NRIs have opened PPF accounts.
Grandparents, not parents, opened Sukanya Samriddhi accounts.
1. An irregular NSS account
It is divided into three categories.
First: Rules under two NSS-87 accounts opened before the DG’s order (2 April 1990). The prevailing scheme rate will be applicable to the first account opened, while the prevailing POSA rate, along with the 200 bps rate, will be applicable to the outstanding balance on the second account. The deposit amount in both of these accounts should not exceed the annual limit. We will return any additional deposit without interest. From October 1, 2024, both accounts will get a zero percent interest rate.
Second: The rules apply to two NSS-87 accounts that were opened following the DG’s order from 2 April 1990. The first account to be opened will benefit from the current scheme. The prevailing POSA rate will be applied to the second account. From October 1, 2024, both accounts will get a zero percent interest rate.
Third, if there are more than two NSS-87 accounts, the principles mentioned for two accounts opened before/after DG’s order will apply. We will not pay any interest on the third account, which is more irregular, and instead return the principal amount to the investor.
2. A PPF account opened on behalf of a minor
For such irregular accounts, we will pay POSA interest until the minor becomes eligible to open the account. In other words, we will pay the applicable interest rate until the person reaches the age of 18. We will calculate the maturity period from the minor’s adulthood date. This refers to the date when the individual becomes qualified to open an account.
3. Multiple PPF accounts
The primary account will earn interest at the scheme rate, provided the deposit amount is within the maximum limit applicable for each year. We will merge the balance from the second account with the first account, as long as the primary account stays within the annual estimated investment limit. 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. NRIs are extending their PPF accounts.
Only those active NRI PPF accounts established in 1968, where Form H does not explicitly request the account holder’s residential status, qualify. These accounts will be eligible for a zero interest rate from October 1.
5. A small savings scheme account opened in the name of a minor (excluding PPF and SSY).
Simple interest can regularize such irregular accounts. The prevailing POSA rate should be used to calculate simple interest on the account.
6. SSY accounts opened by grandparents who are not guardians.
In the case of accounts opened by grandparents, the security will be transferred to the person entitled under applicable law. This implies that the guardian (surviving parent) or legal guardian will receive the account transfer as of October 1.
If a family opens more than two accounts in violation of Paragraph 3 of the Sukanya Samriddhi Account Scheme, 2019, the scheme will close the irregular accounts.