Govt Extends PPF and SSA deposit date for FY 2019-20 amid COVID-19 synchronizes with section 80C deduction

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In order to safeguard the interests of small savings depositors of Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA) account holders in view of the lockdown in the country due to the COVID-19 Pandemic, the government has relaxed the provisions for Account holders of PPF, Sukanya Samriddhi Account (SSA) and RD and extended the deposit date for FY 2019-20 to June 30, 2020. An Office Memorandum (OM) dated 11.04.2020 by the Ministry of Finance was issued for this purpose.

The OM states the subscribers of PPF and SSA may now deposit their savings up to 30th June, 2020, which couldn’t be deposited in FY 2019-20 due to lockdown in the country.

This synchronizes with the extension of the due date of making investment in PPF Accounts and SSA accounts for the purpose of claiming a deduction under section 80C for the FY 2019-20. The government has allowed the taxpayers to invest in these accounts till 30.06.2020 to enable them to claim the same as a deduction for FY 2019-20 despite that the extended period falls in a new FY 2020-21. This relief has been given amid lockdown situations prevailing in the country owing to the COVID-19 outbreak.

Last month, the ''Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020'' extended the date for making various investment and payment for claiming deduction under Chapter-VI-A Part B of the Income Tax Act, which includes Section 80C (LIC, PPF, NSC,SSA etc.), 80D (Mediclaim), 80G (Donations), to June 30.

Since the maximum amount of investment is limited to Rs. 1,50,000 for one financial year in case of deposits in PPF and SSA account, the extension given in the Income Tax Act requires suitable modification of the PPF and SSA Rules. With this notification, the ambiguity has now been removed.

To ensure that the depositors do not extend the maximum deposit ceiling the depositors will have to provide an undertaking in this regard. However, since the investment is made in the FY 2020-21 and there is no extension of financial year 2019-20 as such by the government, one needs to file an undertaking that the investment made in the extended period will not breach the limit of the maximum amount of deposit of Rs. 1,50,000 for FY 2019-20. In case the deposits in the extended period exceeds Rs. 1,50,000 for FY 2019-20, such excess amount will be refunded to the depositor without any interest. 


It must be noted that the maximum limit of Rs. 1,50,000 by an individual shall be inclusive of the deposits made in his own account and in the account opened on behalf of the minor.

It is further clarified that no minimum deposit charges will be taken from the depositors if the depositor did not deposit the minimum amount in the PPF or SSA account till 31.03.2020 provided he makes the deposit by June 30, 2020.

Subscribers of PPF and SSA are required to make some minimum amount of deposit in a financial year to keep the accounts operational. In case of a PPF account, the minimum amount of deposit per financial year is Rs. 500 whereas it is Rs. 250 in case of an SSA account.

It must be remembered that the deposit made in the extended period for FY 2019-20 till June 30,2020 will earn interest from the date of deposit as per PPF/SSA rules. As per the Rules, the interest though counted from the date of deposit but is credited on March 31 of the financial year. Since there is no extension of FY 2019-20 and the interest for FY 2019-20 has alrady been credited on March 31, 2020, the interest on these deposits in the extended period though counted for deposits of FY 2019-20 but the interest thereon will be credited on March 31, 2021.

The government has reduced the interest rate on PPF and SSA for the first quarter of FY 2020-21 to 7.1% and 7.6% respectively compared to 7.9% and 8.4% respectively for the last quarter of the FY 2019-20. Hence, the deposits in the extended period will earn a lower rate of interest compared to the actual deposits that were made in FY 2019-20 itself.


Similarly, for the purpose of withdrawal and loan limit in the PPF account the actual outstanding balance as on 31.03.2020 will be considered. Hence, the deposits in the extended p[eriod will not be counted for loan or withdrawal limit in the FY 2020-21.

In a welcome move to provide clarity, it is stated that depositors can deposit in the normal manner for FY 2020-21 even in the period from April 1, 2020 to June 30,2020. It means a deposit made in the first quarter can be for FY 2019-20 and for FY 2020-21. However, the deposits shall be made in two separate transactions. If a person wishes to deposit Rs. 1,50,000 for two years - 2019-20 and 2020-21, he shall deposit the same in two transactions of Rs. 1,50,000 each for the sake of segregation into two financial years. Even though there is a limit of Rs. 1,50,000 deposit in a financial year, this year as an exception Rs. 3,00,000 will be allowed to be deposited in FY 2020-21.

It is further clarified that in case of PPF accounts which matured on 31.03.2020 including the one year extended period, the depositor has the option to extend their PPF accounts by 30.06.2020 by submitting the prescribed form by June 30, 2020.

Prior to this directive, the Department of Posts vide an Order No. 14/2020 dated 31.03.2020 clarified that there will be no charges for failure to deposit the minimum deposit amount in the PPF/SSA/RD account if the same is deposited by June 30, 2020. Necessary amendments have been made in the software accordingly.

The OM reiterated the same and provided that the revival fee/ penalty charges are waived off on the PPF, SSA/ RD accounts in which mandatory minimum deposit is not made upto 31st March, 2020 subject to such deposit are made upto 30th June, 2020.

However, please note that there is no option or relaxation given for any premature closure of PPF accounts.


Earlier, the Government had extended the premium payment period for Postal Life Insurance and Rural Postal Life Insurance till 30th of June this year in view of lockdown across the country, the customers of Postal Life Insurance and Rural Postal Life Insurance were facing difficulty in approaching post offices for payment of premium. The Government had given an extension of period for payment of their due premium of March, April and May 2020 upto 30th June without charging any penalty and default fee.

Prior to this, the Premium payment period for Postal Life Insurance and Rural Postal Life Insurance was extended up to 30th April 2020.



Read the full text of the OM dated 11.04.2020


F.No. 14/6/2020-NS 
Ministry of Finance 
Department of Economic Affairs 
(Budget Division)

North Block, New Delhi 
Dated: 11.04.2020 

OFFICE MEMORANDUM

Subject: Relaxation guidelines for Small Savings Schemes — reg. 

The undersigned is directed to inform that the regulatory provisions to operate the Small Savings Schemes are further relaxed in continuation to this office OM of even no. dated 30.03.2020. The decision is taken to safeguard the interests of small savings depositors in view of the lockdown in the country due to COVID-19 pandemic. 

2. The following relaxation provisions in reference to specified Small Savings Schemes will be operationalized with immediate effect and shall accordingly be adhered to by all operating agencies: 

a. The Public Provident Fund (PPF) account/ Sukanya Samriddhi Account (SSA) holders will be eligible to make a single deposit each in account(s) opened in his own name and/or account(s) opened in the name of minor(s), as the case may be for FY 2019-20 till 30.06.2020 subject to the condition of maximum deposit ceilings prescribed in the PPF/ SSA scheme provisions.

b. For this purpose, the subscriber will have to give an undertaking to the accounts office that "The maximum deposit ceiling applicable to PPF account/ SSA scheme (as per the relevant statute) opened by me in my own name and/or in the name of the minor, as the case may be, will not be breached with this deposit for FY 2019-20. At any stage, if it is found that the ceiling has been breached, then the excess deposit will be treated as irregular and shall be returned to me without any interest." 

c. The deposit will earn interest from the date of actual deposit and will be calculated as per the provisions of the PPF/ SSA scheme. 

d. If no deposit was made in the PPF accounts/ SSA maintained by an individual in FY 2019-20, no default fee for FY 2019-20 will be charged if the account is regularized by making deposit before 30.06.2020. However, default fee shall be charged for defaults pertaining to Financial Years other than FY 2019-20. 

e. For the purpose of deciding the withdrawal/ loan limit in the PPF account, the outstanding balance on 31.03.2020 would be considered. 

f. The subscribers of PPF account/ SSA may continue to make deposit for FY 2020-21 in the usual manner. However, the subscriber of the PPF Account/ SSA shall deposit the amount for FY 2019-20 and 2020-21 separately in his account. 

g. All those PPF subscribers, whose accounts were matured on 31.03.2020 (including the period of one year for extension) and couldn't be extended due to lockdown despite willingness, may now extend their PPF account by submitting the prescribed form before 30.06.2020. 

h. The Department of Post/ Banks shall allow the subscribers to submit the duly filled signed scanned copy of prescribed form of extension of PPF account through registered email id. However, the original copy of the same shall be submitted to the concerned account office, once the lock-down is lifted in the country or concerned area, as the case may be. 

3. These issues with the approval of competent authority. 


(Rajesh Panwar) 
Dy. Director 
Ph. 011-2309 3170 

Download Copy of the OM dated 11.04.2020 in pdf format.

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