Maximum Deposit in savings accounts - ceiling removed

SB ORDER NO. 20/2011

No. F.No.113-23/2005-SB

Government of India

Ministry of Communications & IT

Department of Posts

Dak Bhawan, Sansad Marg,

New Delhi-110001,

Dated: 27.09.2011

To All Heads of Circles/Regions Addl. Director General, APS, New Delhi.


Subject:- Removal of ceiling of maximum balance to be retained in a post office savings account- amendment to Rule-4 of the Post Office Savings Account Rules 1981 regarding.

Sir / Madam,

The undersigned is directed to say that issue of removal of ceiling of Rs.1 lac in single savings account and Rs.2 Lac in Joint Savings Account fixed in the year 2000 was under consideration in the Min. of Finance (DEA). This issue was linked to the benefit of exemption in Income Tax on the interest earned in Post Office Savings Account under Section10(15) (i) of Income Tax Act, 1961 by the CBDT and Min. of Finance (DEA). After sustained efforts on the part of this Directorate, Min. of Finance (DEA) has now amended Rule-4 of the Post Office Savings Account Rules 1981 vide G.S.R.681(E) F.No.2/5/2006-NS-II dated 15.9.2011 (copy enclosed). Some major benefits of this amendment are given below:

(i) From 1.10.2011, there will be no limit for retaining balance in single as well as joint savings account.

(ii) A depositor or depositor(s) can deposit any amount into single as well as joint savings account.

(iii) Maturity value of any savings instrument can be credited into savings account of the depositor standing in the same post office irrespective of the balance in the account.

(i) Any cheque either issued by Postmaster or any other authority irrespective of any amount can be credited into post office savings account irrespective of the balance in the account.

(ii) From the Financial year 2011-12, Interest income of Rs.3500/- in the case of single account and Rs.7000/- in case of Joint account will be exempted from Income Tax. (Section 10(15) (i) of Income Tax Act, 1961 amended vide Notification No. 32/2010 {F.No. 173/13/2011-IT A.I}/S.O.1296(E) dated 03.06.2011)

(iii) It is the duty of the depositor(s) to show the interest income earned from Post Office Savings Account(s) beyond the limit prescribed above in the Income Tax return and pay due Income Tax.

1. It is requested that all field units may be directed to give wide publicity to these changes in the shape of Public Notice and printing of leaflets.

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

Yours faithfully,
(Kawal Jit Singh)

Assistant Director (SB)

SMALL SAVINGS SCHEME AT A GLANCE

Sl. No	Name of the Scheme	Rate of Interest	Maturity Period	Minimum Deposit	Other Facilities.
1.	Post Office Savings Bank Account	3.5 % Per Annum		Minimum       Rs.50/  SB cheque account min dep is Rs500/ Maximum Limit Individual – Rs. 1Lakhs Jointly –      Rs.2 Lakhs	Cheque facility available Interest exempt from Income Tax.
2.	Recurring Deposit Account	Rs.10/- account fetches Rs.728.90 on maturity	5 years account can be continued for another 5yr term.	Rs.10/- or Multiple Rs. 5/-	Insurance benefit covered up to Rs.50/- denomination. Premature encashment  available after 3 years.
3.	Term Deposit 1 Year 2 Year 3 Year   5 Year	6.25 % 6.50% 7.25 % 7.50 %		Rs.200/-  and multiple by 200 only Maximum- no limit	Interest payable annually.  But calculated quarterly.
4.	Public Provident fund account	8 % per annum compounded quarterly.	15 years	Minimum Rs.500/- Maximum Rs.70,000/- In a financial year	Interest exempted from Income Tax. Withdrawal  is permissible from 7thFinancial Year.
5.	Post Office Monthly income Scheme	8 % per annum Interest payable monthly	6th years	Minimum Rs.1,500/- Maximum limit- Individual Rs.4.5 Lakhs Jointly      Rs.9 Lakhs	After Completion of 6 years 10 % Bonus also payable on maturity value.
6.	Kisan Vikah Patra	Money double in 8 years 7 month	8 years 7 months	Rs.100/- Maximum- no Limit	Pre mature facility payable after completion of 2 and half  years.
7.	National  Savings CertificatesVIII issue	8 % per annum interest compounded half  yearly	6 years	Rs.100 Maximum- no Limit	Income rebate available under section 80 L & 88 Premature facility available after completion of 3 years.
8.	Senior Citizen Savings Scheme	9 % per annum payable quarterly	5 years	Rs.1,000/- or Multiple thereof . Maximum- 15 Lakhs.	Account can be opened in SBI or selected Nationalized Bank or Post Office.

• Nomination and transferred facilities are available in all schemes.