In a recent move, the government has eased norms for various small savings schemes, impacting popular avenues like the Public Provident Fund (PPF), Senior Citizen's Savings Scheme (SCSS), and Time Deposit Scheme. This development, outlined in a gazette notification dated November 9, introduces alterations aimed at facilitating more flexible and accessible financial planning for citizens.
Changes in Key Schemes:
Public Provident Fund (PPF):
The PPF now allows changes in premature closure norms. This adjustment is part of the Public Provident Fund (Amendment) Scheme, 2023, as mentioned in the notification.
These modifications aim to provide individuals with additional options regarding the closure of their PPF accounts.
Senior Citizen's Savings Scheme (SCSS):
New norms for the SCSS extend the time frame to open an account. Previously set at one month, individuals now have three months to initiate an account.
The gazette notification specifies that an individual can open an SCSS account within three months from the date of receiving retirement benefits, along with providing proof of the disbursal date of these benefits.
National Savings Time Deposit Scheme:
Changes in the National Savings Time Deposit scheme address premature withdrawals. If a deposit in a five-year account is withdrawn after four years from the account opening, the interest payable would be at the rate applicable to Post Office Savings Account
This alteration simplifies the interest calculation process, streamlining it with the existing withdrawal structure.
Interest Rates for October-December 2023 Quarter:
PPF - 7.1%
SCSS - 8.2%
Sukanya Yojana - 8.0%
NSC - 7.7%
PO-Monthly Income Scheme - 7.4%
Kisan Vikas Patra - 7.5%
1-Year Deposit - 6.9%
2-Year Deposit - 7.0%
3-Year Deposit - 7.0%
5-Year Deposit - 7.5%
5-Year RD - 6.7%
Tax Benefits of Small Savings Scheme:
Many of these schemes offer tax benefits under various sections of the Income Tax Act. Commonly eligible schemes include SCSS and PPF, providing deductions under Section 80C of the Income Tax Act, with benefits extending up to Rs1.5 lakh.
This relaxation in norms is seen as a positive step toward making these savings instruments more user-friendly and aligning them with the evolving financial needs of individuals.