Failure to make yearly deposits into small savings accounts will not be penalised

Many subscribers to savings schemes will not be able to make the minimum deposit in their small savings accounts due to the outbreak of COVID-19. A subscriber or account holder of a small savings account has to make a minimum deposit to keep the account running. A failure to make the minimum deposit also entails a penalty for the subscribers. 

The government has extended the time for making small savings deposits until 30 June 2020. Many of the small savings schemes also qualify for tax deduction under section 80C of the Income Tax Act.

Also Read: Can PPF and SCSS Survive Without Tax Benefits?

Small savings schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY) and so on require a minimum subscription to keep the account running. The account holders of PPF and SSY schemes have to make a minimum deposit of Rs 500 and Rs 250 respectively. 

The banks or post offices also levy a penalty for failure to make the minimum deposits. The government has also waived the penalty for failure due to the COVID-19 lockdown.

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in

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