The most recent PPF, SCSS and Submit Workplace Time period Deposit Modification Guidelines 2023 had been launched on seventh November 2023. Few guidelines are investor-friendly and few are harsh.
The federal government notified these modifications on seventh November 2023. As I discussed above, few guidelines with respect to PPF and SCSS look investor-friendly. Nevertheless, the brand new guidelines with respect to a 5-year time period deposit look too harsh. Allow us to see all these modifications intimately.
PPF, SCSS and Submit Workplace Time period Deposit Modification Guidelines 2023
1) PPF or Public Provident Fund (Modification) Scheme, 2023
Let me clarify to you at first the prevailing guidelines of PPF untimely withdrawal guidelines (I wrote an article on this “Untimely Closure Of PPF Account – New Guidelines 2016“).
You might be allowed for untimely closure of your account or for the account the place you’re a guardian for minors or an individual of unsound thoughts by submitting Kind-5. You might be allowed for untimely closure just for the beneath causes.
(a) Remedy for a life-threatening illness of the account holder, his partner or dependent kids or dad and mom, on the manufacturing of supporting paperwork and medical studies confirming such illness from the treating medical authority.
(b) Greater training of the account holder, or dependent kids on the manufacturing of paperwork and price payments in affirmation of admission in a acknowledged institute of upper training in India or overseas.
(c) In case your residential standing modifications, then you might be allowed for untimely closure on the manufacturing of the copy of your Passport and visa or Earnings-tax return.
Together with that, please be aware the beneath factors to grasp extra concerning the untimely shut of PPF account guidelines.
# You might be allowed to shut the account earlier than maturity if the account is accomplished 5 years from the tip of the 12 months by which the account was opened. This rule will not be relevant to the loss of life of the account holder.
# Concerning the quantity required for the therapy of significant illnesses or life-threatening ailments, you need to produce supporting paperwork from the competent medical authority.
# Concerning the quantity required for greater training, you need to produce the paperwork of price payments in affirmation of admission in a acknowledged institute of upper training in India or ABROAD.
The outdated guidelines will be tabulated with the beneath instance.
What has modified NOW?
The sooner sentence was “Supplied additional that on such untimely closure, curiosity within the account shall be allowed at a fee which shall be decrease by one %. than the speed at which curiosity has been credited within the account on occasion because the date of opening of the account, or the date of extension of the account, because the case could also be“.
The brand new sentence can be “Supplied additional that on such untimely closure, curiosity within the account shall be allowed at a fee which shall be decrease by one %. than the speed at which curiosity has been credited within the account on occasion because the date of opening of the account, or from the date of graduation of the present block interval of 5 years“.
It means earlier allow us to assume that your account is round 17 years outdated, and in the event you want to shut the account, then you’ll obtain 1% much less curiosity on regardless of the curiosity credited for the entire 17 years. Nevertheless, as a result of new rule, there is not going to be any 1% deduction for the 15-year interval. The curiosity credited on the sixteenth and seventeenth 12 months will solely be lower than 1%.
Similar method allow us to assume that your account is round 24 years outdated, and in the event you want to shut the account, then you’ll obtain 1% much less curiosity on regardless of the curiosity credit score is for the interval of the twenty first 12 months to the twenty fourth 12 months. There is not going to be any change in curiosity for no matter you earned as much as 20 years (15 years common time period and 5 years 1st extension).
The penalty of 1% much less curiosity can be relevant for the present block solely. The sooner curiosity accrued both from the 15 years or from the sooner block of 5 years is not going to be impacted.
This appears to be a BIG reduction for these whose PPF account accomplished greater than 15 years. Nevertheless, this new change is not going to influence to these whose account is lower than 15 years outdated.
2) Senior Citizen’s Financial savings (Fourth Modification) Scheme, 2023
When it comes to SCSS, there are few modifications in guidelines launched and I’ll share the identical one after the other.
a) You may prolong SCSS so long as you WISH!!
Earlier the extension for SCSS was allowed solely as soon as. Now you’ll be able to prolong the SCSS after the completion of 5 years as many instances as you want for within the block of three years. That is actually a great transfer for senior residents.
b) Penalty and liquidity for untimely withdrawal throughout prolonged SCSS
Earlier in the course of the prolonged SCSS interval, you might be allowed to withdraw the quantity after one 12 months with none penalty. Nevertheless, now you might be allowed to withdraw earlier than one 12 months. However you must pay a 1% penalty on the deposited quantity.
This implies liquidity is offered within the sixth 12 months which was not there earlier however comes with a 1% penalty.
c) Leisure to open the account for these whose age is 55 years to 60 years and who obtained retirement advantages
The sooner rule of eligibility to open SCSS was as beneath.
# A person who attained the age of 60 years of age or above on the date of account opening.
# A person who attained the age of 55 years or extra however lower than 60 years of age and has retired on superannuation or beneath a voluntary or particular voluntary scheme. However they will open this account solely on the situation that the account is opened inside one month of receipt of retirement advantages and the quantity mustn’t exceed the quantity of retirement profit.
# Retired personnel of Defence Companies (excluding civilian Defence staff) on attaining the age of fifty years topic to the success of different specified circumstances.
# NRIs and HUF will not be eligible to open this account.
What has modified NOW?
Under are the modifications.
# A person who attained the age of 55 years or extra however lower than 60 years of age and has retired on superannuation or beneath a voluntary or particular voluntary scheme. However they will open this account solely on the situation that the account is opened inside THREE MONTHS of receipt of retirement advantages and the quantity mustn’t exceed the quantity of retirement profit.
Earlier the time restrict was one month to open however not it’s elevated to 3 months. Extra flexibility for senior residents.
b) The partner of a Authorities worker can open the SCSS account
The sooner rule was as beneath.
“The successor or authorized inheritor of a deceased serving personnel shall not be eligible to deposit the terminal
advantages of such deceased personnel beneath this Scheme.”
The present rule is as beneath.
“The partner of the federal government worker shall be allowed to open an account beneath this Scheme, if the federal government worker who has attained the age of fifty years and has died in harness, topic to the success of different specified circumstances.”
It means if a authorities worker dies whereas working and is 50 years and above, then his partner is allowed to open the account.
Due to this, the definition of retirement advantages has additionally modified. The sooner definition was ” “retirement advantages” means any cost as a result of account holder on account of retirement on superannuation or in any other case and contains Provident Fund dues, retirement or superannuation gratuity, commuted worth of pension, money equal of go away, financial savings factor of Group Financial savings Linked Insurance coverage Scheme payable by the employer on retirement, retirement-cum withdrawal profit beneath the Workers’ Household Pension Scheme and ex-gratia funds beneath a voluntary or a particular voluntary retirement scheme.”.
The brand new definition of retirement profit is “retirement advantages” means any cost as a result of account holder on account of retirement on superannuation or in any other case and contains Provident Fund dues, retirement or superannuation or loss of life gratuity, commuted worth of pension, money equal of go away, financial savings factor of Group Financial savings Linked Insurance coverage Scheme payable by the employer on retirement, retirement-cum-withdrawal profit beneath the Workers’ Household Pension Scheme and ex-gratia funds beneath a voluntary or a particular voluntary retirement scheme and in case, if the worker died in harness, the “retirement advantages” shall additionally imply the above-mentioned advantages to worker who died in harness.”
c) Default continuation not allowed in joint account SCSS
The sooner rule was “Supplied additional that in case of a joint account, or the place the partner is the only nominee, the partner could proceed the account on the identical phrases and circumstances as specified beneath this Scheme if the partner meets eligibility circumstances beneath the Scheme on the date of loss of life of the account holder.”
The brand new rule is “Supplied additional that in case of a joint account, or the place the partner is the only nominee, the partner could proceed the account by making use of to the accounts workplace, on the identical phrases and circumstances as specified beneath this Scheme, if the partner meets eligibility circumstances beneath the Scheme on the date of loss of life of the account holder”.
It means the surviving partner has to use for the continuation of the account with out which I feel it isn’t acceptable.
3) Nationwide Financial savings Time Deposit (Fourth Modification) Scheme, 2023
Below this, the brand new guidelines are launched strictly in direction of the 5 12 months time period deposit liquidity. I feel it’s too harsh.
a) 5 years time period deposit liquidity curtailed
The sooner rule was “the place a deposit in a one-year, two-year, three-year or five-year account is withdrawn prematurely after six months, however earlier than the expiry of 1 12 months from the date of deposit, curiosity shall be payable to the account holder on the fee relevant to Submit Workplace Financial savings Account for the finished months;”
The rule is “the place a deposit in a one-year, two-year or three-year account is withdrawn prematurely after six months, however earlier than the expiry of 1 12 months from the date of deposit, curiosity shall be payable to the account holder on the fee relevant to Submit Workplace Financial savings Account for the finished months;”.
Therefore, it’s now clear {that a} 5-year time period deposit can’t be liquidated after six months however earlier than the expiry of a 12 months. Even a 5-year deposit withdrawal situation after one 12 months can also be eliminated.
Based on a brand new rule, the liquidity for a 5-year deposit is allowed solely after 4 years of completion. However once more the foundations are stricter now with large penalties. Earlier in the event you shut the deposit after 4th 12 months, then you might be allowed to earn the rate of interest relevant for 3 years time period deposit. Nevertheless, now you’ll earn the rate of interest relevant to the Submit Workplace Financial savings Account.