Circular No. DGBA.CDD. No. H- 6506/15.02.001/2011-12

What this is

Circular No. DGBA.CDD. No. H- 6506/15.02.001/2011-12 was issued by the Central Board of Direct Taxes on 3 April 2012. Its subject is Small Savings Schemes - Public Provident Fund Scheme, 1968 (PPF, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) - Revision of interest rates.

What it does

Tells banks the revised interest rates on two small savings schemes for financial year 2012-13, following the Government's Office Memorandum No. 6-1/2011-NS.II (Pt.) dated 26 March 2012. With effect from 1 April 2012 the five year Senior Citizens Savings Scheme, 2004 carries 9.3 per cent a year against the 9.0 per cent that had applied from 1 December 2011, and the Public Provident Fund Scheme, 1968 carries 8.8 per cent against 8.6 per cent, in each case on the compounding or payment basis built into the scheme. Banks are to inform the branches operating these schemes and to display the rates on their notice boards. It also recalls that under the Government's decision the rates for every financial year are to be notified before 1 April of that year.

Why it was issued

The Government advised the rates for the year by its Office Memorandum of 26 March 2012, and the banking regulator passed them on to the banks operating the schemes.

Who it reaches

• Subscribers to the Public Provident Fund Scheme, 1968
• Depositors under the Senior Citizens Savings Scheme, 2004
• Bank branches operating these schemes

The instrument, as the Board published it

Small Savings Schemes - Public Provident Fund Scheme, 1968 (PPF, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) - Revision of interest rates
Circular DGBA.CDD. No. H- 6506/15.02.001/2011-12, dated 3-4-2012
Please refer to our circular RBI/2011-12/359, dated January 20, 2012 regarding interest rates on small savings schemes, wherein it was indicated that as per Government's decision on revision of interest on small savings schemes, the interest rates on various small savings schemes for every financial year will be notified by the Government before April 1st of that year.
2. The Government of India have vide their Office Memorandum (OM) No. 6-1/2011-NS.II (Pt.), dated March 26, 2012, advised the rate of interest on various small savings schemes for the financial year 2012-13. Accordingly, the rates of interest on PPF, 1968 and SCSS, 2004 for the financial year 2012-13 effective from April 1, 2012, on the basis of the interest compounding/payment built-in in the schemes, will be as under:

Scheme
Rate of interest w.e.f. 01.12.2011
Rate of interest w.e.f. 01.04.2012

5 year SCSS, 2004
9.0% p.a
9.3% p.a

PPF, 1968
8.6% p.a
8.8% p.a

3. The contents of this circular may be brought to the notice of the branches of your bank operating the PPF, 1968 and SCSS, 2004 schemes. These should also be displayed on the notice boards of your branches for information of the PPF, 1968 and SCSS, 2004 subscribers.
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What to watch

• This is a banking circular on interest rates, not a tax circular; it says nothing about the taxability of the interest or about deduction at source on it.
• The rates apply from 1 April 2012 and are set year by year, so a rate cannot be carried into another financial year.
• Each rate works on the compounding or payment pattern built into the scheme, which differs between the two schemes.

Where you meet it

When computing interest credited on a Public Provident Fund or Senior Citizens Savings Scheme account for financial year 2012-13.

← Circular No. 01/2012  ·  Order [F.NO.225/138/2011/ITA.II →