New rules for post office savings schemes: Major changes in PPF, POTD, POMIS, SCSS

Post Office Savings Schemes: In 2023, the Government of India made significant changes to its small savings schemes, introducing a new scheme, adjusting the investment limit and changing the interest calculation. Here are all the main updates on various post office schemes that you should be aware of:

  • Post Office Savings Account (SB)
  • National Savings Recurring Deposit Account (RD)
  • National Savings Time Deposit Account (TD)
  • National Savings Monthly Income Account (MIS)
  • Senior Citizens Savings Scheme Account (SCSS)
  • Public Provident Fund Account (PPF)
  • Sukanya Samriddhi Account (SSA)
  • National Savings Certificate (Eighth Issue) (NSC)
  • Kisan Vikas Patra (KVP)
  • Mahila Samman Savings Card

The new limited period scheme, introduced in the Union Budget 2023, Mahila Samman Savings Certificate targets women investors.

According to ET, this one-time scheme runs for two years, ending in March 2025. It offers 7.5% annual interest rate, allows partial withdrawals and has a maximum deposit limit of Rs 2 lakh.

Post Office Monthly Income Scheme (POMIS) Update In Budget 2023, the limit was increased from Rs 4 lakh to Rs 9 lakh for single account users and from Rs 9 lakh to Rs 15 lakh for joint account holders.

Senior Citizens Savings Scheme (SCSS) Enhancements The maximum investment limit for SCSS has been increased from Rs 15 lakh to Rs 30 lakh, giving senior citizens the opportunity of higher interest rates and larger deposits.

Changes in PPF premature interest calculation Under the Public Provident Fund Scheme, 2019, interest on premature termination will now be 1% less than the regular deposit interest, calculated from the beginning of the current five-year block period.

Penalty on premature withdrawal from Post Office FD In case of premature withdrawal after four years from a five-year account, interest will be paid at Post Office Savings Account rate (4%).

Changes in SCSS1. Extended period for investment of retirement benefits

Individuals over 55 but under 60 now have three months to invest their retirement benefits.

  1. Spouse’s investment

Spouses of government employees can invest in the program.

  1. Defined scope of retirement benefits

The notification outlines the components to be considered as retirement benefits.

  1. Deduction on premature withdrawal: One percent of the deposit amount is deducted if the account is closed before one year.
  2. No limits on SCSS extension. The account can be extended for multiple three-year blocks subject to periodic applications.
  3. Interest on expansion

Extended SCSS accounts earn interest based on the rates prevailing at maturity or extended maturity.

Maximum Deposit As per the notification, the amount deposited at account opening can be withdrawn after five years or every next three-year block, subject to the maximum deposit limit.

These changes are aimed at enhancing the flexibility, accessibility and attractiveness of Post Office Savings Schemes for a wider range of investors.