Agent Commission on Savings Schemes

The payment of commission to agents of Public Provident Fund (PPF) Scheme and Senior Citizens Savings Scheme has been discontinued, with effect from 1st December, 2011. Commission under all other schemes (except MPKBY Agents) has been reduced from 1% to 0.5%. However, commission to Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) agents will continue at the existing rate of 4%.
The Committee set up by the Government for comprehensive review of National Small Savings Fund (NSSF) had, inter-alia, recommended rationalization of commission rate structure. Based on the recommendations, the Government has decided to reduce/ abolish the agency commission, the main, intention for which is to make these schemes more investor centric than agent centric. Market linked rates to investors, market linked interest rates on loans to States and Centre and viability of NSSF can only be ensured if the administrative cost of NSSF, of which this commission is a part, is brought down and the benefit of market alignment of rates is passed on to the investor rather than burdening the structure with higher administrative costs. To this effect, the decision of Government is pro investor and also keeps in mind the interest of agents where required.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.

Source : PIB Release, April 27, 2012

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Revision of Interest Rates for Small Savings Schemes with Effect from 1st April 2012

No.6-1.2011-NS.II(Pt.)

Ministry of Finance

Department of Economic Affairs

(Budget Division)

New Delhi, the 26th March, 2012

OFFICE MEMORANDUM

Sub: Revision of interest rates for small savings schemes.

The undersigned is directed to refer to Ministry of Finance's O.M. of even number dated 11th November, 2011, vide which the various decisions taken by the Government on the recommendations of the Shyamala Gopinath Committee for Comprehensive Review of National Small Savings Fund (NSSF), were communicated to all concerned.

2. One of the decisions of the Government based on the recommendations of the Committee relates to revision of interest rates every financial year, to be notified before 1st April of that year. Accordingly, the rates of interest on various small savings schemes for the financial year 2012-13 effective from 1.4.2012, on the basis of the interest compounding/payment built-in the schemes, shall be as under:

Scheme	Rate of Interest w.e.f. 1.12.2011	Rate of Interest w.e.f. 1.4.2012
Savings Deposit	4.0	4.0
1 year Time Deposit	7.7	8.2
2 year Time Deposit	7.8	8.3
3 year Time Deposit	8.0	8.4
5 year Time Deposit	8.3	8.5
5 year Recurring Deposit	8.0	8.4
5 year SCSS	9.0	9.3
5 year MIS	8.2	8.5
5 year NSC	8.4	8.6
10 year NSC	8.7	8.9
PPF	8.6	8.8

3. Necessary notifications, including those requiring amendments to rules of small savings schemes will be notified separately.

4. This has the approval of Finance Minister.

sd/-

(Shaktikanta Das)

Addl. Secretary to the Govt. of India

Source: www.finmin.nic.in
http://finmin.nic.in/the_ministry/dept_eco_affairs/budget/InterestRate_SmallSaving_26032012.pdf

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Clarification regarding default fee in RD and calculation of Post Maturity Interest

SB ORDER NO. 31/2011

F.No.113-01/2011-SB

Government of India

Ministry of Communications & IT

Department of Posts

Dak Bhawan, Sansad Marg,

New Delhi-110001, Dated: 20.01.2012

CORRIGENDUM-III

To

All Heads of Circles/Regions

Addl. Director General, APS, New Delhi.

Subject:- Clarification regarding default fee in RD and calculation of Post Maturity Interest.

Sir / Madam,

The undersigned is directed to refer to this office letter of even number dated 13.12.2011 (SB Order No.31/2011) and Corrigendum-I issued on 20.12.2011 and Corrigendum-II issued on 02.01.2012 on the subject. This office is still receiving phone calls regarding charging of default fee in RD from 1.1.2012 under modified rules and calculation of PMI. Following further clarifications are issued on the subject:-

In case of RD

Since the rule of default fee and the software have not been amended, no default fee is to be charged if the above rule is not followed till the rule and software is amended. Default fee provision will remain the same. This rules has been got modified to avoid rush of RD work in the last week of a month. Amendment in the rule for charging default fee shall be taken up with Min. of Finance once the work of putting stamps on all the RD Passbooks is completed and depositors become familiar about the change.

In case of PMI

It is further clarified that PMI is to be calculated for the complete month from the date of maturity and remaining part of the month is to be ignored. Revised example is given below:-

if an account was matured on 26.8.2009 and the depositor attends the post office on 30.01.2012, he/she will be paid PMI at the rate 3.5% from 26.08.2009 to 25.12.2011 (28 complete months) and at the rate 4% from 26.12.2011 to 25.01.2012 (one complete month). Period from 26.1.2012 to 30.1.2012 (being part of month) will be ignored.

Yours faithfully,

(Kawal Jit Singh)

Assistant Director (SB

Clarification regarding calculation of Post Maturity Interest

Clarification regarding calculation of Post Maturity Interest.

SB ORDER NO. 31/2011

F.No.113-01/2011-SB

Government of India

Ministry of Communications & IT

Department of Posts

Dak Bhawan, Sansad Marg,

New Delhi-110001, Dated: 02.01.2012

CORRIGENDUM-II

To

All Heads of Circles/Regions

Subject:- Clarification regarding calculation of Post Maturity Interest.

Sir / Madam,

The undersigned is directed to refer to this office letter of even number dated 13.12.2011 (SB Order No.31/2011) and Corrigendum issued on 20.12.2011 on the subject. Text mentioned under Point (5) of SB Order No. 31/2011 may be replaced with the following:-

(5) Maximum limit of 2 years fixed for admissibility of Post Maturity Interest has been removed.

Procedure:- Now PMI should be paid at the simple interest rate applicable to savings account from time to time from the date of maturity to date of payment. Limit of maximum of two years has been removed. The rate of interest shall be equal to the rate applicable from the date of maturity to the date of payment at different times. For example, if an account was matured on 26.8.2010 and the depositor attends the post office on 15.01.2012, he will be paid PMI at the rate 3.5% from 01.09.2010 to 30.11.2011 and at the rate 4% from 1.12.2011 to 31.12.2011. This shall be applicable to the existing as well as new investments in all schemes. Calculations’ are to be made manually and recorded in the Register to be maintained in manuscript for future reference till software is amended. All other conditions mentioned in the relevant rules shall remain unchanged.

Note:- For the purpose of payment of interest, any part of the period which is less than one month shall be ignored

This issues with the approval of DDG(FS).

Yours faithfully,

Sd/-

(Kawal Jit Singh)

Assistant Director (SB)

Clarification on Interest Rates on Small Savings Schemes

Clarification on Interest Rates on Small Savings Schemes

Ministry of Finance has clarified that although the rate of interest on small savings schemes will be aligned every year with rates of Government securities of similar maturity, with suitable spread, the rates are fixed and not floating so far as individual investments except PPF are concerned. This is in response to news items appearing in certain sections of the Press that the interest rates on small saving schemes, revised by the Government w.e.f. 1.12.2011, are floating rates, which will undergo change according to fluctuations in the yield on the Government securities.

It has been clarified that the rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revisions in interest rates in subsequent years will only be applicable to the investments made in the relevant period. For instance, investment made in an instrument other than PPF on 1.12.2011 will remain valid till the maturity of that instrument, irrespective of revision of interest rate with effect from 1.4.2012. As regards PPF, the interest rate fixed every year will be applicable to all PPF accounts

Source: pib

PPF an attractive option for all categories of Investors

For small investors, the Public Provident Fund (PPF) is one of the most trusted investment avenues. It is a 'must have' in the investment portfolio. The recent enhancement of limit and increase in interest rates has made this instrument even more attractive. The PPF offers safety, good returns, and tax savings . The interest earned on these deposits is tax free.

In the present volatile situation, where many stocks and funds are yielding negative returns, it is better to invest your hard earned money in safer bets such as the PPF. Due to the recent increase in interest rates on small savings schemes, the biggest beneficiaries are PPF investors. The interest rate is being increased from eight to 8.6 percent.

Moreover, the investment limit is being increased from the present Rs 70,000 to Rs 1 lakh. For investors who do not want to take risks or dabble in the stock markets, the PPF is the best option. Although the PPF is a preferred option of conservative investors, in the present-day market scenario, even aggressive investors may like to opt for this avenue.

The interest rate will be announced in the beginning of every financial year. The tenure of a PPF account is 15 years. After the initial 15 years, you can keep extending the deposit for five years at a time. In case a person starts contributing Rs 1 lakh every year, he can build a tax-free corpus of about Rs 31 lakhs over 15 years, if the interest rate remains 8.6 percent.

Even considering a marginal decrease or increase in the interest rate (of say between 8-9 percent range) the corpus may vary between Rs 29 lakhs and Rs 32 lakhs. With the enhanced investment limit from Rs 70,000 to Rs 1 lakh, you can earn an additional tax-free interest of Rs 2,580. On an investment of Rs 1 lakh, you can get a tax deduction of Rs 30,000 (if you are in the 30 percent tax bracket). The interest earned will be 8.6 percent on Rs 1 lakh, i.e. Rs 8,600.

So, considering the tax benefit under Section 80C, the effective interest return translates to almost 12.29 percent, and fully secured. PPF is a voluntary contribution by an individual. On maturity, the proceeds received are tax-free . Being a statutory scheme of the central government, it is fully secured. The interest is compounded annually. The deposit can be in a lump sum or in convenient instalments , but not more than 12 instalments in a year.

An account in which no deposits are made is treated as a discontinued account. A discontinued account can be activated by paying the minimum deposit along with a default fee for each defaulted year. A PPF account can be opened by an individual or a minor through a guardian. Those who are contributing to the GPF Fund or EDF account can also open a PPF account. No age is prescribed for opening a PPF account.

There is a facility of withdrawal in the seventh year of the account, subject to a limit of 50 percent of the amount at credit, in the preceding three years. Thereafter, one withdrawal in every year is permissible . Premature closure of a PPF account is not permissible except in case of death.

Source: ET

courtesy : centralgovernmentemployeesportal.blogspot.com

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SB ORDER NO. 21/2011 - Attestation of Annexure-II and Annexure-III in case of deceased claim case preferred where there is no nomination- a clarificat

Attestation of Annexure-II (Affidavit) and Annexure-III (Disclaimer on Affidavit) in case of deceased claim case preferred where there is no nomination- a clarification regarding.

SB ORDER NO. 21/2011

No. F.No.113-07/2008-SB

Government of India

Ministry of Communications & IT

Department of Posts

Dak Bhawan, Sansad Marg,

New Delhi-110001, Dated: 12.10.2011

To

All Heads of Circles/Regions

Addl. Director General, APS, New Delhi.

Subject:- Attestation of Annexure-II (Affidavit) and Annexure-III (Disclaimer on Affidavit) in case of deceased claim case preferred where there is no nomination- a clarification regarding.

Sir / Madam,

The undersigned is directed to say that after issue of new procedure for payment of amount of Savings Bank/Certificates in the name of deceased depositor/holders circulated vide SB Order No.25/2010 dated 24.12.2010, this office was receiving many references from the field units regarding attestation of Annexure-II and III by the Notary Public. The matter was referred to Min..of Finance, Department of Economic Affairs for clarification.

2. Min. of Finance (DEA) has now clarified that the matter was referred to Min. of Law and Justice who opined that Annexure-II and III may be attested either by Oath Commissioner or by Notary Public. Therefore, it is requested that necessary amendment may be made in these forms accordingly. Amendment to the forms notified by Min. of Finance in respect of PPF and Sr. Citizen Savings Scheme will be made by the ministry shortly.

3. It is requested that this clarification may be circulated to all all field units and all deceased claim cases kept pending for this reason should be settled urgently.

4. This issues with the approval of DDG(FS).

Yours faithfully,

(Kawal Jit Singh)

Assistant Director (SB)

When to Withdraw money from PF,PPF

Any financial planner will tell you that the best way to face a financial emergency is to be prepared for it by making adequate arrangements to tackle it. Often, creating a contingency fund is the first step in financial planning. But very few adopt such a systematic approach and end up scraping the bottom of the barrel to meet exigencies.

They don't hesitate to even tap expensive sources of funds like credit cards and personal loans, failing to realise the harm such costly source of funds can do to their finances over a period of time. Instead, they can turn to their long-term savings, if any, to tide over the financial emergency. For instance, you can look at liquidating your investments or withdrawing from your provident fund (PF) and public provident fund (PPF). Loans, too, can be availed of against such investments.

PROVIDENT FUND

Being a mandatory form of investment in most organisations, a salaried individual is likely to have some savings in his/her PF account. You can dip into it in times of crises. Donote though that if you make a withdrawal within five years of continuous employment, it will be liable to tax, unless you demonstrate that it is being done to fund the purchase of a house or your daughter's wedding.

A tax free withdrawal is also allowed if you are unemployed due to ill health. This apart, you can also avail of a loan against your PF.

PUBLIC PROVIDENT FUND

Now, PPF is made up of voluntary contribution made by an individual with the objective of building a retirement corpus. Unlike PF, this does not entail any employer contribution. Contributions made to PPF can be claimed as deductions under section 80C, subject to the overall ceiling. On maturity, the proceeds received are tax-free as well, making it the most attractive and popular avenue for retirement planning. Like PF, this can be used during financial emergencies.

For the purpose, the account needs to be at least seven years old. You are allowed to make one withdrawal every year from the seventh year, subject to a formula – roughly 50% of your PPF balance three years prior to the date of withdrawal. Again, you can borrow against your PPF from the third financial year of opening the account.

You are permitted to borrow upto 25% of the balance two years before the withdrawal. Though you can exercise these options in times of desperate need,you need to remember that it is best to create a contingency fund to meet financial exigencies . By withdrawing from the PF and PPF accounts, you stand to lose out on the compounding effect which is essential for your investment to acquire a decent size by the time you retire.

Source: Economic Times & www.investmentkit.com