Section 23 of The Government Securities Act, 2006
- (1)Where no shorter period of limitation is fixed by any law for the time being in force, the liability of the Government in respect of any interest payment due on a Government security shall terminate on the expiry of six years from the date on which the amount due by way of interest became payable: Provided that the Government may allow a bona fide claim for payment of interest after the expiry of the period of six years in those cases where the holders of securities could not prefer their claims within the said period of six years.
- (2)Notwithstanding anything contained in sub-section (1), the Bank may specify the securities in respect of which, the circumstances under which, and the terms and conditions subject to which, interest may be paid even after the expiry of the period specified in the said sub-section.
Summary
- This section sets a time limit for claiming unpaid interest on a government security.
- Usually, a person has a maximum of six years from the date the interest became payable to claim it, after which the government's liability ends.
- However, the government can choose to accept an honest claim after six years if the person had a valid reason for not claiming it earlier.
- The Reserve Bank of India also has the power to outline specific circumstances and rules where interest can be paid beyond this six-year limit.
Practical examples
FAQ
1. What is the standard time limit to claim interest on a government security?
Unless another law sets a shorter period, the standard limit is six years from the date the interest became payable.
2. What happens if I miss the six-year deadline?
Generally, the government's liability ends. However, if you have a genuine reason for the delay, the government might still allow your claim.
3. Can the Reserve Bank of India change this six-year rule?
Yes, the bank can specify certain securities and set different terms allowing interest to be paid even after the six years have passed.
Test yourself
Q1.Under Section 23 of The Government Securities Act, 2006, what is the default time limit for the government's liability regarding unpaid interest on a security, assuming no shorter limit exists in another law?
Q2.Under Section 23 of The Government Securities Act, 2006, under what condition can the government allow a claim for interest after the six-year period has expired?
Q3.Under Section 23 of The Government Securities Act, 2006, who has the authority to specify securities and terms where interest might be paid beyond the standard six-year expiry period?
Q4.Under Section 23 of The Government Securities Act, 2006, what happens if another active law sets a shorter limitation period for claiming interest, such as three years?