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Post Office Scheme: Many small savings schemes are operated under the post office, the rules under which keep changing. Now another new change has emerged. It has been decided to stop paying interest on deposits under one scheme. Actually, the Central Government had issued an instruction regarding the National Savings Scheme (NSS) earlier this year. In this, depositors were asked to withdraw their money by 30 September. It was also told that interest payment will stop from October 1, 2024. That means now people will not get interest under NSS scheme.
instructions to withdraw money
According to the guidelines issued by the government, depositors who had invested in the National Savings Scheme (NSS) more than 37 years ago with the intention of securing their financial future and future generations, will have to withdraw their entire amount by September 30, 2024. It has been advised to withdraw the amount. Because the payment of interest on their deposits will be stopped. Customers have also been asked to update KYC information.
NSS scheme is different from NSC
Investors should not be confused with the small savings scheme National Savings Certificate (NSC). National Savings Scheme (NSS) is a completely different scheme, which was closed for new investments in 1992, so that no one can invest under this scheme after 1992. However, the government was giving compound interest under this scheme and now this interest has also been stopped from October 1, 2024. The interest rate of NSS was 7.5% per annum for the period from March 2003 to September 30, 2024. Let us tell you that no changes have been made in NSC. In such a situation, people investing here do not need to panic.
When was this scheme started?
The National Savings Scheme (NSS) was launched in 1987 and continued until 1992, after which it was temporarily reopened in the same year. However, it was finally closed in 2002. Despite its closure, the government continued to pay interest on existing deposits. During the scheme, many depositors opted to withdraw their investments, close their accounts and declare the amount as part of their taxable income. Also, some investors chose to keep their funds in active accounts, which continues to this day.
Under NSS, depositors got the opportunity to invest up to Rs 40,000 annually, with the amount invested being eligible for tax deduction under Section 80C of the Income Tax Act, 1961. After a lock-in period of four years, depositors were allowed to withdraw both their original deposit amount and the interest earned. Earlier the interest rate under this scheme was 11 percent, which later became 7.5 percent per year.
Accounts before October 2024
If you have contributed to your NSS account before October 1, 2024, you will get interest at 7.5% per annum till the end of September 2024.
Accounts after October 2024
No interest will be paid on any new deposits or accounts opened after October 1, 2024. This information may influence your decision whether you should continue investing in NSS or consider other savings and investment options.
tax rules
As per official rules, funds withdrawn from NSS are subject to tax in the year they are withdrawn. However, if the depositor does not want to withdraw the funds, the interest earned will remain tax-free as long as it remains in the account. If the depositor dies and his heirs withdraw the funds, the entire amount will be considered tax-free.
