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Recent changes in some popular small saving schemes. |
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Recent changes in some popular small saving schemes. |
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Recently some changes are made in relation to small saving instruments and schemes. Some of them are discussed below by reproducing text of relevant notifications with highlights and observations of the author:
It is notified for general information that the sale of Kisan Vikas Patras shall be discontinued with effect from the close of business on Wednesday, the 30th November, 2011. Observations of the author: KVP HAVE BEEN DISCONTINUED . there will be no new issued W.E.F. 01.12.2011. However, the old KVP issued up to 30the November, 2011 will be governed by the applicable terms and conditions.
G.S.R. 868(E)-In exercise of the powers conferred by sub-section (3) of section 1 of the Government Savings Certificates Act, 1959 (46 of 1959), the Central Government hereby specifies that the National Savings Certificates-IX Issue shall be the class of Savings Certificates to which the said Act applies. Observations of the author: These NSC IX issue will also be considered as Government Saving Certificates under the said Act of 1959. Let us hope that these NSC will also qualify for deduction u/s 80C vide clause (ix) of sub-section (2) thereof. It is hoped that for clarity a separate notification shall also be issued for the purpose of section 80C.
In pursuance of section 5 of the Public Provident Fund Act, 1968 (23 of 1968) the Central Government hereby notifies that the subscriptions made to the fund on or after the 1st day of December, 2011 and balances at the credit of the subscriber shall bear interest at the rate of 8.6 percent, per annum. [F.No.1/9/2011-NS.(II), Dated 25-11-2011.
Observations of the author: The rate of interest on PPF stand increased to 8.6 per cent per annum for the balance as on 1st December 2011 and also for deposits made on or after 1st Decenber,2011. When rate of interest has been increased, it would have been proper to provide for new rate on balance including interest accumulated till 30.11.2011 However, as per practice, interest is calculated yearly on 31st March, so it is expected that interest for the FY 2011-12 will be credited @ 8.6% per annum on 31.03.2012. In case interest till 30.11.2011 will be at old rate, then a clarification is desirable.
National Savings Certificates (VIII Issue) (Second Amendment Rules, 2011 - Amendment in rules 15 and 16. NOTIFICATION [F.No.1/7/2011-NS-II], dated 25-11-2011 In exercise of the powers conferred by section 12 of the Government Savings Certificates Act, 1959 (46 of 1959), the Central Government hereby makes the following rules further to amend the National Savings Certificates (VIII Issue) Rules, 1989, namely:- 1. (1) These rules; may be called the National Savings Certificates (VIII Issue) Second Amendment Rules, 2011. (2) They shall come into force on the 1st day of December 2011. 2. In the National Savings Certificates (VIII Issue) Rules, 1989 (hereinafter referred to as the said rules), in rule 15,— (a) in sub-rule (6), for the figures, letters and words "1st day of March, 2003", the figures, letters and words "1st day of March, 2003 but before the 1st day of December, 2011," shall be substituted; (b) after sub-rule (6) and the Table relating thereto, the following shall be inserted, namely:- "(6A) Where a certificate has been purchased on or after the 1st day of December, 2011 the maturity period of a certificate of any denomination, shall be five years, commencing from the date of issue of the certificate. The amount inclusive of interest, payable on encashment of the certificate at any time after the expiry of its maturity period shall be Rs 150.90 for denomination of Rs. 100 and at proportionate rate for any other denomination. The interest as specified in the Table below shall accrue to the holder or holders of the certificate at the end of each year and the interest so accrued at the end of each year up to the end of the fourth year shall be deemed to have been reinvested on behalf of the holder and aggregated with the amount of face value of the certificate. TABLE
Note: The amount of interest accruing on a certificate of any other denomination shall be proportionate to the amount specified in the Table above". 3. In rule 16 of the said rules, in sub-rule (4),- (a) in clause (iv), for the figures, words and letters "1st day of March, 2003", the figures, words and letters "1st day of March, 2003 but before the 1st day of December, 2011" shall be substituted; (b) after clause (iv) and the Table relating thereto, the following shall be inserted, namely:- "(v) If a certificate is encashed under sub-rule (1) after the expiry of three years from the date of certificate purchased on or after the 1st day of December, 2011, the amount payable, inclusive of interest accrued under rule 15 and after adjustment of discount, shall be as specified in the Table below for a certificate of Rs. 100 denomination and at a proportionate rate for a certificate of any other denomination. TABLE
The changes in NSC VIII issue seems due to introduction of NSC IX issue and some changes in terms of interest payable at different time of maturity, due to change in rate of interest, which will apply to NSC VIII series issued on or after 01.12.2011. The rate of interest, maturity and amount payable at different maturity period for NSC VIII series issued till 30.11.2011 shall not be changed.
NOTIFICATION [F.No.1/11/2011-NS-II], dated 25-11-2011 In exercise of the powers conferred by section 15 of the Government Savings Banks Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Post Office Time Deposit Rules, 1981, namely:- 1. (1) These rules may be called the Post Office Time Deposit (Second Amendment) Rules, 2011. (2) They shall come into force on the 1st day of December 2011. 2. In the Post Office Time Deposit Rules, 1981:- (a) In rule 7,- (A) under the heading Table-Q, for the brackets, words, figures and letters "[For deposits made on or after 1st March, 2003]", the brackets words, figures and letters, "[For deposits made on or after 1st March, 2003 but before 30th November, 2011]" shall be substituted; (B) after Table-Q, the following Table shall be inserted, namely:- "Table-R [For deposits made on or after 1st December, 2011]
(C) in the Notes, in paragraph (2), for the word and letter "Table Q", the words and letters "Table Q or Table R" shall be substituted; (b) in rule 8, for clause (aa) and clause (b) the following shall be substituted, namely:- (aa) where a deposit in 1-year, 2-year, 3-year or 5-year account is withdrawn prematurely after 6 months but before the expiry of one year from the date of deposit, simple interest at the rate applicable from time to time to post office savings account shall be payable; (b) where a deposit in a 2-year, 3-year and 5-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable to the depositor for the completed years and months falling in the period commencing on the date of deposit and ending with the date of withdrawal and such interest shall be calculated at the rate, which shall be one per cent, less than the rate specified for a deposit of 1 year 2 year or 3 years, as the case may be, in the relevant Table under rule 7. Author’s observation: Rate of interest has been changed for deposits made on or after 01.12.2011. There is some change in terms and condition about reduction in interest payable in case of premature withdrawal of such deposits.
In exercise of the powers conferred by section 15 of the Government Savings Banks Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Post Office (Monthly Income Account) Rules, 1987, namely:- 1. (1) These rules may be called the Post Office (Monthly Income Account) Second Amendment Rules, 2011. (2) They shall come into force on the 1st day of December 2011. 2. In the Post Office (Monthly Income Account) Rules, 1987,— (a) in rule 8, in sub-rule (1), after clause (h) the following clause shall be inserted, namely: - "(i) 8.2 per cent, per annum in respect of deposits made on or after the first day of December, 2011."; (b) in rule 9, in sub-rule (1], the following proviso shall be inserted, namely:- "Provided also that in respect of deposits made, at the time of opening of account on or after the first day of December, 2011, shall be paid by the post office at which the account stands to depositor on or after expiry of five years from the date of the opening of the account.: Provided also that no bonus shall be paid on the deposits made in the accounts opened on or after the 1st day of December, 2011." Author’s observation: Rate of interest has been changed for deposits made on or after 01.12.2011. Any bonus shall not be payable in respect of deposits made on or after 01.12.2011. Repayment shall be made from the Post Office where the saving account stands at the time of maturity and not necessarily where the account was opened.
In exercise of the powers conferred by sub-section (4) of section 3 of the Public Provident Fund Act, 1968 (23 of 1958), the Central Government hereby makes the following further amendment to the Public Provident Fund Scheme, 1968, namely :- 1. (1) This Scheme may be called the Public Provident Fund (Amendment) Scheme, 2011. (2) It shall come into force on the 1st day of December 2011. 2. In the Public Provident Fund Scheme, 1968, - (i) in paragraph 3, in sub-paragraph (1), for the letters and figures "Rs 70,000/-", the letters and figures "Rs 1,00,000" shall be substituted; (ii) in paragraph 11, in sub-paragraph (2), for the words "one per cent, per annum", the words "two per cent, per annum" shall be substituted; (iii) in Form-A, in paragraph (iv), for the letters and figures "Rs 70,000/-", the letters and figures "Rs 1,00,000" shall be substituted. Authors observations: Maximum amount which can be deposited by one person is increased to Rs. one lakh from Rs. seventy thousand. This is w.e.f. 01.12.2011. Therefore, benefit can be availed for the current financial year 2011-12. In case of borrowing against PPF the rate of interest will be rate applicable on PPF + 2%. Earlier add on was of 1%. Amendment rule 9 in National Small Savings Fund (Custody and Investment) Rules, 2001 NOTIFICATION [F.No.1/12/2011-NS-II], dated 25-11-2011 In exercise of the powers conferred by clause (1) of article 283 of the Constitution, the President hereby makes the following further amendments in the National Small Savings Fund (Custody and Investment) Rules, 2001, namely:- 1. (1) These rules may be called the National Small Savings Fund (Custody and Investment) Amendment Rules, 2011. (2) They shall come into force on the 1st day of December 2011. 2. In the National Small Savings Fund (Custody and Investment) Rules, 2001, in rule 9,- (a) In sub-rule (1),- (i) after the words "State Government Securities", the words "or in any other instrument" shall be inserted; (ii) proviso shall be omitted; (b) For sub-rule (10), the following shall be substituted, namely:- "(10) The amount received on maturity of the investments shall be invested in the Central Government and State Government securities. Such securities shall be issued in accordance with the provision contained in sub-rule (3). Suitable accounting entries as mentioned in sub-rule (5) and sub-rule (6) shall be made by the Chief Controller of Accounts, Ministry of Finance". Authors observations: Some relaxation in investment pattern will be made . This is by insertion of "or in any other instrument". However, when it comes to reinvestment of amount received on maturity of investment the old restrictions still continue. There seems no relaxation by insertion of "or in any other instrument". Is there any mistake in drafting of the notification? Need to be examined and corrected.
By: C.A. DEV KUMAR KOTHARI - December 28, 2011
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