Wednesday, March 7, 2012


on Wednesday, March 7, 2012

One very important change regarding Deposit in PPF(Public Provident Fund FAQ) has been notified on 29.03.2010.Its Normally assumed that whenever we deposit a Local cheque or demand draft to a tax saving scheme and cheque is cleared then saving date is counted from the tender Date (submission of the cheque).But this is not as simple as it looks.All the schemes has its own rules regarding date of deposit in case of cheque and demand draft.

At present when a subscriber makes a deposit in to PPF through cheque /demand draft then date of tender of cheque is considered as date of deposit subject to cheque/demand draft is realised (not dishonoured) .but from 29.03.2010 the rules has been changed and now date of realisation of cheque/draft will be deemed date of deposit of PPF.

Suppose :If you have issued a cheque on 29.03.2011 to deposit 20000/- in PPF but cheque is cleared and amount is realised on 01.04.2012.Then deposit date will be considered 01.04.2012 not 29.03.2012 and accordingly the tax deduction under 80C will be available in FY 2012-13 instead of 2011-12.So if you are in a process to deposit the PPF in last two days of the year then please note following points.
  1. Avoid deposit in PPF (public provident Fund) through cheque other than in Home branch in Last two days of saving in FY 2011-12 .Normally Banks clears Local cheque in one-two days .
  2. If you can not avoid issue of cheque to deposit amount in PPF then kindly ensure that cheque is cleared by 31.03.2012.To clear the cheque ,talk with Bank manager .
  3. Deposit amount in PPF through cheque at Home Branch and cash in other than Home branch .
  4. In PPF account month's Interest is payable only if amount is deposited before 5th of the month .so in cut off days deposit through cash only or use internet banking transfers where ever that you can earn full month interest

Further The above rules is also applicable in case of

  1. Senior Citizens Savings Scheme, 2004 (SCSS)
  2. Post Office Savings Schemes (POSS) Like NSC,Post office time deposit ,KVP(kissan vikas patra ) etc etc
So even if you are thinking of deposit in NSC ,post of Time Deposit or any other saving scheme by Post office for tax savings then please do not use cheque ,pay by cash only in this days.

Notification is reproduced hereunder for your ready reference

Public Provident Fund Scheme, 1968 : (1) Clarification regarding reckoning of the date of deposit (2) Reiteration of instructions on opening of an account for a minor

Circular No. DGBA.CDD. H-7530/15.02.001/2009-10, dated 29-3-2010

1. Reckoning the date of deposit in case of cheque payment:

  • (a) As you are aware, in terms of Ministry of Finance letter No. F. 3(9)-PD/72 dated September 4, 1972, in the case of Public Provident Fund Scheme, 1968 (PPF) "when a subscriber makes a deposit by local cheque or demand draft, the date of tender of cheque or draft at the Accounting Office is treated as date of deposit,provided the related cheque is honoured on presentation for encashment." However, in case of all other Small Savings Schemes of the Government of India (GoI), such as, Post Office Savings Schemes (POSS), as also Senior Citizens Savings Scheme, 2004 (SCSS), if the money is deposited in the account by means of a cheque (local or outstation), the date of encashment of the cheque is treated as the date of deposit.
  • (b) In order to bring uniformity in the reckoning of the date of deposit in the PPF vis-à-vis POSS and SCSS, the GoI, vide their letter F. No.7/7/2008/NS-II dated February 10, 2010, have decided that hereafter in modification of Ministry of Finance letter No.F.3(9)-PD/72 dated September 4, 1972 "when a deposit is made in the PPF account by means of a local cheque or demand draft by the subscriber, the date of realization of the amount will be the date of deposit."
  • (c) You may bring this to the notice of your branches undertaking PPF business and ensure that the same is also incorporated in the computerized system. The information should also be duly displayed at the branches for awareness of the customers.

2. Opening of an account for a minor:

  • (a) In view of complaints being received about non-opening of accounts for minor by some Agency banks, it is reiterated that as per Rule 3 (1) of PPF Scheme, 1968, an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. Further it is reiterated that as clarified, vide Ministry of Finance letter F.7/34/88/-NS II dated November 17, 1989, either father or mother can open a PPF account on behalf of his/her minor child but not both.
  • (b) You are advised to reiterate these instructions to your branches operating the PPF Scheme.

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