PPF And Small Saving Schemes Rules Relaxed Amid Covid 19: Here's All You Need To Know

Amid lockdown situation in the country, the government has provided a breather on some of the rules relating to small savings schemes including PPF. For the April-June quarter, the interest rate on small savings scheme has been cut steeply by up to 1.4%. Also, the timeline for making investments under 80C to claim tax deduction for FY19-20 has been extended.

So, below are listed few of the rule changes in respect of PPF account that need your attention:

1. Extension of timeline for Investment to Claim Deduction for FY19-20:

In view of the ongoing lockdown to curb the spread of coronavirus infection, the government has extended the timeline for investment as well as payments including those under section 80C (insurance, PPF etc), 80D (health insurance) and 80G (donations) up till June 30 for claiming tax benefit for FY2019-2020.

2. Non-deposit of Mandated Minimum amount to not Attract Penalty or Revival charges:

Relief amid the coronavirus outbreak has been provided to PPF account holders as well as subscribers of other small savings scheme by way of waiver of penalty implications on non-deposit of mandated minimum amount for the financial year 2019-20. So, without any penalty or revival charges, deposit in the PPF account can be made until June 30, 2020.

In a general case, if the minimum mandated deposit of Rs. 500 is not made in any of the financial year, the PPF account is suspended. And for reviving the same, accountholder needs to pay a revival fee of Rs. 50 together with arrears of minimum Rs. 500 per year of default.

"The subscribers of RD A/c/ SSA/ PPF A/c may deposit the mandated due amount, if any of Current FY (2019-20) and April, 2020 (as the case may be) in their respective accounts till 30th June, 2020 and no penalty/ revival fee shall be charged," said the Department of Posts.

3. March 31, 2020 to be considered for Deposit payment made until the extended time for Interest calculation:

And for this minimum payment made until June 30, 2020 towards different small savings schemes including PPF, March 31, 2020 shall be considered for interest calculation.

4. As part of the various procedural changes made in the previous fiscal year, PPF account holders can now make 'n' number of deposits in a year in multiples of Rs. 50, with a maximum limit set at Rs. 1.5 lakh per financial year. Earlier, PPF account allowed a maximum of only 12 deposits in a year. Also, the interest rate on loan secured against balance in the PPF account now stands slashed to 1% from earlier 2% above the interest rate on PPF account.

Amid falling interest rates which are likely to trend still lower given the economic slump due to coronavirus pandemic, investment in public provident fund (PPF) still remains attractive despite an 80 basis point rate cut in April-June quarter to 7.1%. It is to be noted that after the recent rate cut State Bank of India on its FD across tenures fetches a maximum interest rate of 5.7%.

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