Press Release

Modification in PPF Scheme : Deposit Limit Raised from RS. 70,000 to RS. ONE LAC While Rate of Interest on Advances Against Deposits in PPF Scheme Raised from 1 PER Cent to 2 Percentage Points

What this is

Press Release was issued by the Central Board of Direct Taxes on 6 September 2011. Its subject is Modification in PPF Scheme : Deposit Limit Raised from RS. 70,000 to RS. ONE LAC While Rate of Interest on Advances Against Deposits in PPF Scheme Raised from 1 PER Cent to 2 Percentage Points.

What it does

Reports the recommendations of the Committee on Comprehensive Review of the National Small Savings Fund, headed by a Deputy Governor of the Reserve Bank of India, as told to the Rajya Sabha by the Minister of State for Finance. The committee recommended raising the annual deposit limit under the Public Provident Fund Scheme, 1968 from seventy thousand rupees to one lakh rupees, and fixing the rate on advances against Public Provident Fund deposits at two percentage points instead of the prevailing one per cent. It also recommended benchmarking small savings interest rates to yields on Central Government securities of similar maturity, with a spread of 25 basis points on all schemes except 50 basis points for the 10-year National Savings Certificate and 100 basis points for the Senior Citizens Savings Scheme. The recommendations were referred to State Governments and the Ministries and Departments concerned for comments.

Why it was issued

It reproduces a written reply given in the Rajya Sabha on the committee's recommendations; it states no other reason.

Who it reaches

Public Provident Fund subscribers watching the deposit ceiling
Holders of small savings instruments whose rates were to be benchmarked
State Governments and Ministries asked to comment

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

MODIFICATION IN PPF SCHEME : DEPOSIT LIMIT RAISED FROM RS. 70,000 TO RS. ONE LAC WHILE RATE OF INTEREST ON ADVANCES AGAINST DEPOSITS IN PPF SCHEME RAISED FROM 1 PER CENT TO 2 PERCENTAGE POINTS
PRESS RELEASE, DATED 6-9-2011
The Committee on Comprehensive Review of National Small Savings Fund (NSSF) headed by Deputy Governor, RBI has recommended revision of certain provisions of PPF Scheme, 1968 and benchmarking of interest rates on various small savings schemes with the secondary market yields on Central Government securities of comparable maturities with suitable spread.
The Committee has recommended increasing the deposit limit under PPF Scheme from existing Rs. 70,000 to Rs. 1 lakh per annum and fixing of rate of interest on advances against deposits in PPF scheme at 2 percentage points as against the prevailing interest rate on such advances at 1 per cent.
The Committee has further recommended benchmarking interest rate on small saving schemes to interest rate on Government securities of similar maturities with a positive spread of 25 basis points on all schemes except for 50 basis points for 10 year NSC and 100 basis point for Senior citizens Savings Scheme. Recommendations of the Committee have been referred to State Governments and concerned Ministries/Departments of Central Government for their comments.
This information was given by the Minister of State for Finance Shri Namo Narain Meena in a written reply to a question raised in Rajya Sabha today.

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What to watch

This is a press release recording a parliamentary reply on committee recommendations; it is not a circular of the Central Board of Direct Taxes and not Board authority.
At this stage nothing was decided; the recommendations had only been referred for comments, so no deposit limit or rate changed by this document.
Any change to the Public Provident Fund Scheme, 1968 takes effect by amendment to that scheme, not by this release.
The deduction available for a Public Provident Fund deposit is governed by the Income-tax Act and is not addressed here.

Where you meet it

You meet it only as background on how the small savings deposit limits and rates came to be revised; it settles nothing for a tax computation.

← Circular No. No.402/92/2006-MC (21 of 2011) · Press Release →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.