Gujarat Global News Network, New Delhi
Amending rules on small savings schemes like National Savings Certificates (NSC) and Public Provident Fund (PPF), the government has notified that such accounts would be closed prior to maturity in case of holders changing their personal status to become non-resident Indians (NRIs). The investor will be paid interest at the much lower post office savings account rate at 4% p.a, the government said in a notification.
The amended rules were notified in the official gazette earlier this month. The amendment to the PPF Scheme, 1968, said: “If a resident who opened an account under this scheme, subsequently becomes a non-resident during the currency of the maturity period, the account shall be deemed to be closed with effect from the day he becomes non-resident.”
A separate notification on NSCs said that in case of a similar change of status of the certificate holder before the maturity period, “the certificate will be encashed, or deemed to be encashed on the day he becomes non-resident” and interest will be paid accordingly. “Interest shall be paid at the rate applicable to the post office savings account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed,” it stated.
A person is considered resident in India if he is in the country for 182 days or 60 days in a year and 365 days in each of the preceding four years as per Income Tax Act. When a person doesn’t satisfy both these conditions, he is termed as NRI.
The government has kept interest rates on small savings schemes unchanged for the October-December quarter. The interest for both PPF and NSC schemes stands at 7.8% p.a for October-December. Since April last year, interest rates on all small saving schemes are declared on a on a quarterly basis.
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