Monday, February 27, 2017


National Pension System (NPS) (previously called New Pension Scheme) was introduced with effect from 01.01.2004 replacing the earlier system of defined pension under CCS (Pension) Rules, 1972. Those central government employees appointed on after this date will be covered under the new scheme. Under the earlier system, assured pension and other benefits, based on the last pay drawn was available to be employees. In the NPS, 10% of the basic pay plus DA will be recovered from the salary of employees towards employees’ contribution. Equal amount will be contributed by Government as employer’s contribution. Both the contributions will be invested each month by the funds managers appointed by Pension Fund Regulatory Authority (PFRDA) against the distinctive PRAN (Permanent Retirement Account) in the name of the subscriber. Presently, the fund is managed by M/s National Security Depository Ltd. (NSDL), Mumbai. The funds are being invested with M/s LIC, SBI Life Insurance and UTI Mutual Fund. The PFRDA or the fund managers do not offer any fixed income on investment or any assured minimum pensionary benefits on exit from NPS.

Immediately on joining service, the subscribers are required to apply for allotment of PRAN. Recovery towards NPS will begin with the next month followed by the date of appointment. If PRAN is not allotted by then, their contributions will not be uploaded to the fund managers and kept as “un-posted” with the PAO concerned. Any income on the contributions will be available only on investment with the fund managers. Therefore, it is important to submit the application for allotment of PRAN along with the requisite documents to be submitted at the time of joining service.


              Common application form (CSRF 1) is to be used for both departmental NPS subscribers and GDS (SDBS) subscribers. Those who are promoted to departmental service from GDS are required to submit afresh for allotment of PRAN under NPS, since the PRAN allotted to them under SDBS is distinctive and different from the NPS for departmental staff. However, those who were earlier in service in other departments/organizations where NPS was applicable and PRAN earlier allotted need not apply for PRAN again. The PRAN allotted to them earlier can be shifted to the new department where they are working now, together with the balance amount resting with the PRAN. For this purpose, they may apply to the PAO through the DDO concerned immediately on joining the new establishment.

               The DDOs concerned (HPOs/HROs etc for NPS and Divl. Heads (NLCC) for SDBS) should forward the applications to the PAO (Postal Accounts Office) together with covering letter in Annexure S-5 form. The PAO will process and forward the applications to the agency concerned for onward transmission to M/s NSDL.
             The following points may be kept in mind while processing the CSRF.1 applications:

             Applications incomplete in any respect and/or not accompanied by the required documents are liable to be rejected. The application is also liable to be rejected if the mandatory fields are left blank or the application form is printed back to back.

a) Black ink only should be used for filling up and authorizing the application.
b) Recent colour photograph of 3.5 X 2.5 cm size (Passport size) is to be affixed at the column provided. Signature or any other marks should not be made on the photograph.
c) Appropriate column should be ticked to earmark the sector to which the subscriber belongs.
d) Full name of the subscriber is to be given as first name. Initials may be given as middle name / last name, as the case may be.
e) Date of birth should be matching with the entry in the service book. Proof of date of birth is to be provided.
f) Address provided in the application form should match with the address provided in the address proof.
g) Providing Mobile no./e-mail ID is desirable, since monthly credit updation details and periodical informative alerts are provided vide SMS/e-mail etc.
h) Subscriber’s bank details to be provided against item no.7. Bank account with IFSC/MICR details is desirable, since all the future transactions are to be made only electronically.
i) If there is only one nominee, item no.8 may be filled up. If there are more than one nominee, Annexure III to CSRF 1 may be used. If the nominee is minor, his/her date of birth and details of guardian (other than the subscriber himself) to be provided. Percentage share applicable to each nominee in round figure (fraction not allowed) to be mentioned against each nominee. Total percentage of all the nominees altogether should be 100.
j) Filling up of item no.10 is not mandatory. If the same is not filled up, default scheme for allocation of funds will be adopted by M/s NSDL.
k) Signature or thump impression of the subscriber should be affixed well within the column provided at the bottom of page 2. This will be digitalized and referred while processing all future applications submitted by the subscriber.
l) The DDO/NLCC concerned should fill up the service particulars at page 3 of the form (in black ink only) and affix his signature, name and rubber stamp at the appropriate columns provided at the left side of the top column (For Govt. sector). In the case of NPS Lite/Swavalamban subscribers, NLCC need not provide the certification on this page. This will be done by the PAO (NLAO). However, If Annexure III to CSRF 1 is submitted (For multiple nomination), the DDO/NLCC should provide the necessary certification at page 2 of Annexure III.
m) Annexure 1 to CSRF 1 is to be provided only if the subscriber wishes to opt for Tier II. (If he wishes to open a Tier II account, contributing additional subscription other than the mandatory subscription).
n) Annexure II to CSRF 1 is to be filled up only if the subscriber wishes to provide the additional details mentioned therein.

                      Following are the KYC documents to be submitted:

A) Date of Birth proof:  Birth Certificate, School certificate, Aadhar, Election ID, Driving License, Passport, PAN card etc. wherein the DOB is provided.
B) ID Proof: Aadhar, Election ID, Driving license, PAN card, Bank pass book, Ration card etc. with photograph of the subscriber. (Copy of ration card will not be accepted if it is in vernacular only).
C) Address Proof: Any of the documents mentioned at B above which provides the address of the subscriber matching with the address provided in the application.
D) Bank account Proof: A cancelled cheque or attested copy of the pass book or banker’s certificate in original containing name of the subscriber, bank account number, bank’s name, branch name, address, PIN code, IFSC and MICR codes.

                      Copies of KYC documents submitted by the subscribers (to prove date of birth, ID, address and bank account particulars) should be self-attested by the subscriber and counter attested by the DDO/NLCC with the remarks “verified with the original”  


            After allotment of PRAN, there may be certain mistakes in the subscriber details such as name, father’s name, date of birth, bank account details, nomination, photo, signature etc. Immediately on receipt of PRAN, the subscribers has to verify and confirm the correctness of date printed on the card. They may also login to the web-site www. using their user ID (PRAN No.) and I-Pin received with the PRAN kit to verify the subscriber details. In case any correction or future modification is required, an application in Annexure S-2 is to be submitted through the DDO/NLCC concerned. While filling up this form the columns wherein corrections/modifications are required only need to be filled up. PRAN number should invariably be provided in the specified column on first page. If date of birth is to be modified, proof of date of birth, duly certified by the DDO/NLCC that the revised DOB is in accordance with the entries in the service book, is to be provided. For change in name, address, bank account details, etc., proof for then same is required to be provided. The DDO/NLCC has to certify the application on the left side of top-most portion on the first page. If re-issue/re-print of PRAN is required, this has to be specifically mentioned in the specified column on the last page of the application.

            If correction/modification in signature or photograph of the subscriber is required, a separate form (Annexure S-7) is to be submitted. This has to be forwarded by the DDO/NLCC to the PAO together with a covering letter in Annexure S-8.


            When a subscriber is transferred from one department to another, central government to state government and vice versa, government sector to public sector and vice versa, from one circle to another circle within the department etc., his/her PRAN can be shifted to the new unit together with the accumulated balance amount, if the employment under the new unit is covered under NPS. For this purpose, the subscriber has to submit a written application to his new DDO. The maker of the new DDO can capture the subscriber shifting request on-line and upon authorization by the checker, the PRAN will be shifted to the new unit on the very next day. It is not necessary to apply for new PRAN in such cases. However, GDS employees who are covered under SDBS have to apply afresh for allotment of PRAN under NPS, since the SDBS scheme is distinctively different from the NPS for departmental employees. They may submit an application in Form SDBS-1 for transfer of their accumulated wealth in SDBS to the newly allotted NPS PRAN.


Subscribers may exit from NPS due to the following reasons:

01. Superannuation.
02. Pre-mature exit (due to resignation, voluntary/compulsory retirement etc.)
03. Death while in service.
04. Subscribers who were later brought under the purview of CCS (Pen) Rules.
05. Partial withdrawal.

On superannuation, withdrawal application is to be submitted in Form 101-GS. For pre-mature exit (resignation, voluntary/compulsory retirement etc.), Form 102-GP is to be used. Death claims (Death while in service) are to be submitted in Form 103-GD.

            In case of superannuation, subscriptions towards NPS should be stopped 3 months prior to the date of superannuation.
The following documents are to be submitted with the application.

            01. Original PRAN card. (If the same is lost or not traceable, a declaration by the subscriber mentioning the circumstances of loss and with an assurance to submit the same if and when traced out subsequently, duly countersigned by the DDO to be submitted).
            02. ID/Address proof: Photocopy of any of the following documents with name, photograph and  address matching with the address provided in the application,  duly attested by the DDO – Aadhar, Election ID, Driving licence, Passport, ID card issued by State/Central Govt., Bank pass book etc.
03. Bank account proof: Cancelled cheque with name of the subscriber printed on it or copy of the bank pass book or certificate in original issued by the bank manager. The following information should be available in the bank account proof – Name of the Subscriber, Name of Bank, Branch, Branch address, PIN Code, Account number and IFSC Code.
04. In case of pre-mature exit, copy of the orders of competent authority allowing such exit.
            05. In death claim cases, (if withdrawal from NPS is opted), separate application to be submitted by each nominee. Original or attested copy of death certificate is to be submitted. If nomination does not exist, Legal Heirship Certificate/ Succession Certificate / Letter of Administration as the case may be to be produced, depending upon the amount involved.

            In cases of death of subscriber while in service, the nominees/family members have option to avail family pension and death gratuity from Govt., surrendering 100% of the NPS wealth to the Govt. For this purpose, they have to submit the applications for family pension, gratuity etc. in the prescribed forms (under CCS (Pen) Rules) to the Divisional Head concerned. Request-cum-undertaking for surrendering the NPS wealth in Annexure A and Annexure II has to be submitted by the nominees/family members (As per the nominations registered with M/s NSDL) and Annexure I by the DDO also to be submitted with such application.

            Application is to be filled up in black ink in capital letters. Application form is not to be printed back to back. Passport size colour photograph of the applicant is to be affixed at the specified column on the first page of application and self-attested by him/her. Name of the subscriber is to be entered in the application exactly as provided in the PRAN card. Signature of the subscriber affixed in the application should match with the signature in the PRAN card.  It is desirable to provide Mobile number, e-mail ID etc. for updating the status of application at various stages.

            Percentage of lump-sum amount of withdrawal and percentage of amount to be invested for purchase of annuity are to be mentioned under Section B on page-2

As per the existing rules relating to withdrawal of NPS wealth on superannuation/resignation/death of subscribers, the lump-sum amount which can be withdrawn is as follows:

a) Superannuation: Up to 60% of the total NPS wealth. If the total NPS wealth as on the date of retirement is less than or equal to Rs.2 lakhs, the subscriber has an option to withdraw 100% of the NPS wealth.
b) Resignation: Up to 20% of the total NPS wealth. If the total NPS wealth as on the date of resignation is less than or equal to Rs.1 lakh, the subscriber has an option to withdraw 100% of the NPS wealth.
c) Death: Up to 20% of the total NPS wealth. The nominees/family members have an option to withdraw 100% of the NPS wealth, if the same is less than or equal to Rs.2 lakh as on the date of death. 
If 100% withdrawal is opted, a request-cum-undertaking for this purpose in the prescribed form (separate forms for Superannuation/Premature exit/death cases) is to be submitted. Annuity or any other benefit under NPS will not be admissible in such cases.

After withdrawal of the NPS wealth up to 20% or 60% as above, the remaining NPS wealth not less than 80% or 40% as the case may be has to be invested with the Annuity Service Providers (ASPs) empanelled by PFRDA/NSDL for the purpose of providing annuity to the subscribers/nominees/family members. After transfer of the withdrawal amount (up to 20% or 60% as the case may be) the subscribers have to approach the ASPs or M/s NSDL Mumbai directly for submitting the required application form for investment of the amount with the ASP concerned. However, at the time of submitting the application form for withdrawal of NPS wealth (Form.101-GS/102-GP/103GD) on retirement/resignation/death, the subscribers/nominees/family members have to choose the name of ASP and the name of scheme offered by the ASPs in the relevant column of the application form itself.
            At present, the empanelled ASPs are the following:
            1. SBI Life Insurance Co. Ltd. (ASP Code-ASP001)
            2. Life Insurance Corporation of India. (ASP Code-ASP004)
            3. ICICI Life Insurance Co. Ltd. (ASP Code- ASP003)
4. HDFC Life Insurance Co. Ltd. (ASP Code-ASP002)


These ASPs offer 4 different types of annuity schemes to the annuitants to choose from:

a. Annuity payable for life to the annuitant.
(Scheme Code: SBI-AS001001/LIC-AS004001/ICICI-AS003001/HDFC-AS002001)
b. Annuity payable for life with return of purchase price on death of annuitant.
(Scheme Code: SBI-AS001002/LIC-AS004002/ICICI-AS003002/HDFC-AS002002)
c. Annuity payable for life with a provision of 100% of the annuity payable to the nominee during his/her life time on the death of the annuitant.
(Scheme Code: SBI-AS001003/LIC-AS004003/ICICI-AS003003/HDFC-AS002003)
d. Annuity payable for life with a provision of 100% of the annuity payable to the nominee during his/her life time on the death of annuitant. The purchase price will be returned on the death of last survivor nominee.
(Scheme Code: SBI-AS001004/LIC-AS004004/ICICI-AS003004/HDFC-AS002004)

            The rates of monthly annuity payable for each Rs.10,000/- invested with different ASPs are available in the Table of Annuity Schemes. 

As per the guidelines issued by M/s NSDL regarding purchase of annuity, M/s SBI Life Insurance Co. Ltd does not accept applications for purchase of annuity if the amount for purchase of annuity is less than Rs. 2 Lakh and M/s LIC of India does not accept the same if the amount for purchase of annuity is less than Rs. 1 Lakh. (after lump-sum withdrawal of maximum 60% / 20% of the total NPS wealth).                    

            Bank account details matching with the proof submitted, to be provided under Section C. Particulars of nominees to be furnished on page-4, which should be signed by the subscriber/applicant as well as by 2 witnesses. If there are more than one nominee (maximum 3), Form 401-AN to be submitted, instead of providing the nomination on page-4. If Form 401-AN is submitted, the same also is to be certified by the DDO in the specified columns.

If the nominee is the spouse of subscriber (wife/husband) his/her date of birth also is to be provided.

Aadhar number and/or income tax PAN number of the claimant/s are also required to be provided.                                                                                           
The DDO has to furnish a certificate on page-5 providing name of subscriber, date of retirement as per Govt. records, DDO code, designation and office name of the DDO etc. Signature and office seal of the DDO to be affixed at the appropriate columns specified for the purpose.

            The subscriber has to submit an advanced stamped receipt on page-5. The amount need not be mentioned in the receipt, since the value of NPS wealth may vary as on the date of withdrawal.

            The page numbers mentioned above are applicable to Form 101-GS. For the other forms the page numbers may vary.


            Certain subscribers covered under NPS were subsequently brought under CCS (Pen) Rules on account of implementation of court orders, counting of training period and temporary status casual labour service etc. In such cases, the NPS contributions made by those subscribers (Employees’ contributions) and accumulated returns thereon has to be refunded to them. For this purpose, the subscriber has to submit an application in Form NPS-EWC through the DDO concerned. Original PRAN card and copy of the orders of competent authority bringing the subscriber under the purview of CCS (Pen) Rules are to be submitted along with the application. In cases of those who are still in service, such amount will be credited to their GPF account. Those who are not in service (on account of superannuation, resignation, death etc.), sanction for payment of the amount through the DDO concerned will be issued by DA(P).


Partial withdrawal from NPS has been introduced vide Regulation 8 of the PFRDA (Exit and withdrawal from NPS) Regulations 2015, subject to the following terms and conditions:

(A) Purpose: A subscriber on the date of submission of the withdrawal form, shall be permitted to withdraw not exceeding 25% of the contributions made by him to his individual pension account, for any of the following purposes only:-

a) For higher education of his or her children including legally adopted child.
b) For marriage of his or her children, including legally adopted child.
c) For the purchase or construction of a residential house or flat in his or her own name or in a joint name with his or her legally wedded spouse. In case the subscriber already owns either individually or in the joint name a residential house or flat, other than ancestral property, no withdrawal under these regulations shall be permitted.
d) For treatment of specified illnesses: If the subscriber, his legally wedded spouse, children including a legally adopted child or dependent parents suffer from any of specified illnesses, which shall comprise of hospitalization and treatment in respect of the following diseases:

i. Cancer ii. Kidney failure (End Stage Renal Failure) iii. Primary Pulmonary Arterial Hypertension iv. Multiple sclerosis v. Major Organ Transplant vi. Coronary Artery Bypass Graft vii. Aorta Graft Surgery viii. Heart Valve Surgery ix. Stroke x. Myocardial Infraction xi. Coma xii. Paralysis xiii. Paralysis xiv. Accident of serious/life threatening nature xv. Any other critical illness of a life threatening nature as stipulated in the circulars, guidelines or notifications issued by the Authority from time to time.

(B) Limits: The permitted withdrawal shall be allowed only if the following eligibility criteria and limit for availing the benefit are complied with by the subscriber:

(a) The subscriber shall have been in the NPS at least for a period of last ten years from the date of his or her joining. In case the subscriber is mandatorily covered under NPS the period of 10 years for partial withdrawal will be considered from the date of applicability of NPS for such subscribers. However, in case of inter-sector/intra-sector shifting of subscriber previous tenure in NPS will also be considered.

(b) Frequency: The subscriber shall be allowed to withdraw only a maximum of 3 times during the entire tenure of subscription under the NPS and not less than a period of 5 years shall have elapsed from the last date of each of such withdrawal. The mandatory requirement of 5 years shall not apply in case of treatment for specified illness or in case of withdrawal arising out of exit from NPS or death of subscriber. For subsequent withdrawal only the incremental contributions made by the subscriber after the first/next subsequent withdrawal as the case may be will be considered.

            M/s NSDL, Mumbai has incorporated necessary modules in their web-site for on-line processing the partial withdrawal applications. The subscribers are required to apply in Form 601-PW together with necessary documentary proof to establish the purpose of withdrawal and bank account proof, ID/address proof etc., duly attested by the DDO. The DDO concerned may forward the application to the PAO with due certification in the specified columns. The PAOs will upload the withdrawal request on-line and on approval, the withdrawal amount will be transferred to the designated bank account of the subscriber electronically by M/s NSDL.

Published by

(Complied by: M. P. Vijayan, Circle Secretary, Postal Accounts Employees Association, Kerala)

Sources Confirmed Allowance Committee Report Submitted

One of the NJCA leader, On Condition of Anonymity, told that the committee constituted to examine the allowance has finalized its reports and submitted it to the Government on 22nd February 2017.

On asking whether the NJCA knew the details of the committee report, he said that they were not provided with the committee report. But the committee has informed them that their demand on allowance would be considered favorably.

Hence it is expected the HRA will be retained in old rates (Sixth CPC rates) from the beginning itself and will be paid in 7th CPC Pay Scale when revised allowances come into effect. However, the news of revised allowances would be implemented with effect from 1.4.2017 is not reliable. NJCA will not accept this and clearly said that it should be implemented with effect from 1.1.2016 retrospectively.
X cities- 30%
Y cities- 20%
Z cities- 10%
Transport Allowance may be split into two elements as CCA and TA as it was paid in fifth CPC. The Rates will be delinked from DA and will Fixed in slab rates.

The Government will announce its decision over the committee report after the last phase of state elections ie after 8th March 2017.

India Post Bank is likely to tap World War-era tech to garner business

  • Three things India Post will do to change the banking landscape
  • Postman to deliver cash at homes
  • Phone cell-based remittances and bill payments

It is back to basics for India Post Payments Bank (IPPB). It is tapping into World War-era phone-based technology and its vast network of postman to target a customer base of around 850 million, which either have no access to telephony or still depend on feature phones. 

“Banks and payments banks are two different things.Over 90% households have access to bank accounts. So, we are targeting remittances and bill payments,“ said an officer at the bank, which launched operations a month ago, offering 5.5% interest on deposits. 

Unlike full-fledged banks, payments banks can accept deposits up to Rs 1lakh and have to mandatorily park 75% of funds in government bonds.They are not allowed to offer loans either. 

With its network of over 1.5 post offices, IPPB is seen to be a major competitor for banks, especially in rural areas and small towns. The bank, floated by India Post, is running behind schedule as it is yet to tie up with a technology vendor for its banking services. But it is still targeting 2 crore customers in the first year with business of around Rs 450 crore.By the fifth year, the bank hopes to have eight crore customers with a business of Rs 2,500 crore. 

A key focus area for IPPB is one billion bills that are paid every month, with the average ticket size being Rs 300. This is where Giro -an electronic fund transfer tool used in Europe and Japan -will come in handy . Apart from helping customers settle bills, a worker in a city can add his wife or mother as a beneficiary and transfer funds into their accounts by issuing instructions to a call centre. The wife or the mother will then use Aadhaar based authentication to withdraw funds either at a post office or ask a postman to deliver cash at home, for which a small fee may be levied. 

IPPB is also in talks with the rural development ministry for accessing details of NREGA beneficiaries and pensioners getting funds under the National Social Assistance Programme.Again, idea is to make the payments Aadhaar-based to minimise leakages.

Source : The Economic Times

Saturday, February 25, 2017

10 things to know before investing money in Sovereign Gold Bonds

The scheme has many attractions. For instance, the capital gains tax arising on redemption of SGB to an individual has been exempted.

If you want to earn returns which are linked to the price of gold, then get ready to buy sovereign gold bonds. The Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds 2016-17–Series IV.
The scheme has many attractions. For instance, the capital gains tax arising on redemption of SGB to an individual has been exempted. However, in case of long-term capital gains (LTCGs), the indexation benefits will be provided to any person on transfer of bond. These bonds can also be used as security while taking loans against them.

The bonds will be open for subscription from February 27, 2017 to March 03 2017. These bonds will be available in both demat and paper form. If you are meeting the eligibility criteria, then by providing a valid identification document and also sending the application money on time, you will be able to receive the allotment.

Here are ten things which you must know before investing in Sovereign Gold Bonds:

1. What is Sovereign Gold Bond?
Sovereign Gold Bond (SGBs) are government securities which are denominated in grams of gold. They are, in fact, issued as a substitute for holding physical gold. Here investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The bond is issued by the RBI on behalf of the Government of India.
2. Why should you buy SGB rather than physical gold?
The quantity of gold for which the investor pays is protected, unlike physical gold which you need to protect by yourself. Therefore, the risks and costs of storage are eliminated in case of investing in SGB. You also receive the ongoing market price at the time of redemption/ premature redemption. Despite holding in the demat form, the SGB offers a superior alternative to holding gold in the physical form. Investors are assured of the market value of gold at the time of maturity and periodical interest. Since it is bond, SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in the demat form, eliminating the risk of loss of scrip etc.
If you want to earn returns which are linked to gold price, then get ready to buy sovereign gold bonds. The Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds 2016-17–Series IV.
There is no change as such. KYC norms are the same as that for the purchase of physical form of gold. You need to provide identification documents such as Aadhaar card/PAN /Passport / Voter ID card. KYC will be done by any of the following – issuing banks, SHCIL offices, Post Offices or agents. No separate KYC will be needed for receiving the bank’s own customers.
4. What is the minimum and maximum limit for investment?
The bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in the bond is one gram with a maximum buying limit of 500 grams per person per fiscal year (that is from April to March). In case of joint holding, the limit applies only to the first applicant.
5. What are the tax implications on the interest rates and the capital gain?
The interest earned on the bonds will be taxable as per the provisions of the I-T Act. The capital gains tax, which if arises on redemption of SGB to an individual, has been exempted. However, the indexation benefits will be provided to long-terms capital gains if arises to any person on the transfer of bond.
It is to be noted that TDS is not applicable on the bond. But, it is the utmost responsibility of the bond holder to comply with the tax rules and regulations.
6. What will you get on redemption?
At the time of redemption, that is on maturity, all the proceeds will be equivalent to the prevailing market value of the grams of gold originally invested in Indian denomination. The redemption price is based on the simple average of previous week’s (Monday-Friday) closing gold price for 999 purity published by the IBJA. 
7. What is the rate of interest?
The bonds bear the rate of interest at 2.75 per cent, which is a fixed rate per annum on the amount of initial investment. The given interest gets credited semi-annually to the bank account of the investor and the last interest is payable on maturity along with the principal.
8. What is the time period to encash the bond?
In normalcy, the tenor of the bond is 8 years. Early encashment or redemption of the bond is allowed only after the fifth year from the date of issue on coupon payment dates. The bonds are tradable on exchanges, if they are held in demat form. They can also be transferred to any other eligible investor.
9. How can you gift the bonds to a relative or friend on some occasion?
The bond can be gifted or transferred to a relative, friend, or anybody who fulfills the eligibility criteria. That is, a person resident in India as defined under the Foreign Exchange Management Act, 1999, where eligible investors can be an individuals, HUFs, trusts, universities, charitable institutions, etc.
The bonds are transferable adhering to the rules mentioned under the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer, which is available with the issuing agents. 
10. How to get exit from the investment?
In case of premature redemption, investors can approach either of the concerned bank, SHCIL offices, Post Office or agent thirty days before the coupon payment date. The request for premature redemption can only be accepted if the investor approaches the concerned bank or the post office at least one day before the coupon payment date. Whatever the maturity proceeds be, it will get credited to the customer’s bank account provided at the time of applying for the bond.
(With inputs from RBI website)

Senior Citizen Savings Scheme saves tax, beats bank FDs: Here's all you need to know about it

Senior Citizen Savings Scheme saves tax, beats bank FDs: Here's all you need to know about it

The Senior Citizen Savings Scheme (SCSS) offers regular income, highest safety and tax saving, making it a popular product for those over 60 years of age. 

Post retirement, people are looking for investment avenues to park their retirement corpus in. They are hesitant to put their hard-earned money in equities, which carry capital loss risk, or products which come with a long lock-in period and don't offer any income till maturity. 
Retirees are looking for products that are less risky and can also minimise their tax outgo. SCSS offers capital protection, along with quarterly interest payment as a source of income. The scheme is backed by the government and, therefore, offers a sovereign guarantee. 

Interest income from SCSS can also help retirees bridge the gap between their 
pension and the last salary drawn. 

Who can invest in SCSS? 

As the name suggests, any individual aged 60 and above can invest in it. Early retirees between 55 and 60 years, who either opted for the voluntary retirement scheme (VRS) or superannuation, can also invest in the scheme, provided the investment is done within a month of receiving retirement benefits. 

Retired defence personnel, excluding civilian defence personnel, can invest in this scheme irrespective of their age, subject to other conditions. 

Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not allowed to invest SCSS. 

How to invest? 

A senior citizen can invest in this scheme by opening either an individual or a joint (along with the spouse) account with a post office or a scheduled commercial bank. 

How much can one invest? 

An individual, singly or jointly, can open an SCSS account by investing up to Rs 15 lakh (in multiples of Rs 1,000) only. The amount invested in the scheme also cannot exceed the money one receives on retirement. Therefore, one can invest either Rs 15 lakh or the amount received as a retirement benefit, whichever is lower. 

The account can be opened by cash for amounts below Rs 1 lakh and by cheque only for Rs 1 lakh and above, as per the senior citizen scheme rules on the Income Tax website. The investment date in the scheme is taken as the date on which the cheque is realised in the government's account. 

Number of accounts 

There is no limit on the number of accounts that can be opened, but the total amount in all the accounts must not breach the maximum investment limit. 

Documents required 

Following is the list of the documents required for investing in the scheme: 
(a) Duly filled application form, available at the post office or bank 
(b) Know Your Customer (KYC) form 
(c) Photographs of the applicant/s 
(d) Permanent Account Number (PAN) 
(e) Address proof 
(f) Age proof 
(g) In the case of retirees, a certificate from the employer, stating the retirement was on superannuation or otherwise, retirement benefits, employment held (designation) and the period of employment. 
(h) Proof of date of disbursal of the retirement benefits 

The account opening application form requires details such as PAN, address proof, age and number of accounts already opened under the scheme and the amount deposited in each account. 

Pan Number is mandatory for opening an SCSS account. If the investor doesn't have PAN at the time of investment, he must apply for the same and mention the application number on the application form. 
Click here for the account opening form. 

Proof of investment 

The depositor is given a passbook once the account is opened, which includes the date of opening, the account number, the depositor's name, photograph, address, the amount deposited, dates and amount of the quarterly interest payable, maturity date and amount, nomination details. 

Interest rate offered 

The scheme currently offers an interest rate of 8.5 per cent per annum, reviewed every quarter by the Ministry of Finance. The scheme does not have the option of 'cumulative interest', unlike a bank fixed deposit (FD). 

The interest rate on the SCSS is reset every quarter by the government. However, the interest payable on an investment is locked on the date of the investment and does not change even if the rate on the scheme as a whole is revised later. 

Only new investment under SCSS is affected by the change in interest rate. However, if an SCSS account is extended post maturity the interest rate that the extended account will earn will be as per the rate prevailing for that scheme on the date of extension. 

The interest is calculated for each quarter up to the last day of every quarter i.e., on March 31, June 30, September 30 and December 31. The interest payable is credited to the account holder's account on April 1, July 1, October 1 and January 1. 

The account holder, while investing in SCSS, must remember that if the investment is done via a post office then he/she must have an operating post office savings account to receive the credit of the quarterly interest. The same goes for investment done through a bank. 

As of now, the credit of the interest on investment done through a post office is not possible in the account holder's bank savings account. 


The tenure of the scheme is five years, which can be further extended for three more years. Premature withdrawals are allowed, but only after one year and with premature withdrawal charges. 

If one prematurely withdraws after a year, but before two years from the start date, the charges are 1.5 per cent of the deposit, and after 2 years it is 1 per cent. 

No charges are levied in case of premature closure of account due to the depositor's death. 


If the depositor wishes to close the account after the completion of five years and receive the maturity amount then he needs to submit the duly filled 'Closure Form', along with the passbook. 

To apply for the extension of the scheme for another three years after it has completed its mandated five-year tenure, the investor must submit the duly filled form of the extension of the scheme. 
Click here for the closure/extension form. 

In case the depositor has not extended the scheme on maturity or closed the account after maturity then post maturity, the deposit will earn the post office savings account interest rate, applicable at that time. 


Investment in SCSS qualifies for deduction under Section 80C of the Income-tax (I-T) Act. However, this tax benefit is under the overall current ceiling of Rs. 1.5 lakh per annum fixed for all investments under Section 80C. 

Commenting on the tax benefits available under the scheme, Amarpal Chadha, Tax Partner and India Mobility leader, EY, says, "Section 80C benefit is available in the financial year in which the deposit is made in SCSS. As per SCSS Rules, only one deposit is allowed in one SCSS account. There will be no additional benefit under Section 80C for the extension of an existing account after five years." 

Further, as far as taxation goes in case of premature withdrawals, Sonu Iyer, Tax Partner & National leader - People Advisory Services, EY India, adds that the person loses the 80C benefit if he withdraws from the scheme prematurely, but the benefit is not withdrawn on retrospective basis for the year of the deposit. 

Instead, the principal amount withdrawn, along with the interest paid in the year of withdrawal is added to the individual's gross total income in the year of the premature withdrawal. 

It must be noted that the principal amount on premature withdrawal by the nominee or legal heirs is not taxable in their hands in the event of the death of the depositor. Any interest paid into the account of a depositor after the date of his demise, will be taxable in the hands of the nominee or legal heirs. 

The interest received under the scheme is taxable in the hands of the depositors. There is a tax deducted at source (TDS) on the interest payment if the amount is more than Rs 10,000 per annum as per current tax laws. 

Other facilities 

Nomination facility is also available for account holders. A depositor can also appoint a minor as his nominee. He just needs to provide the guardian's details, along with the minor's date of birth. 

If the nomination is not made at the time of the opening of the account, the depositor can do so during the scheme tenure by submitting the duly filled nomination form. In the case of joint holding, the nomination form should be signed by all the account holders. 

There is no limit on the number of times an investor can change his nominee. This facility is available free of charge. 
Click here to view the nomination form. 

The depositor can also transfer his account to another post office or to a bank. He can avail this facility by submitting the duly filled transfer form to his current deposit office, i.e., the post office or bank. A nominal fee is charged to avail this facility. 
Click here to view the transfer form. 


While opening an SCSS account, the depositor must furnish all the required information. If the information furnished by him is false then the account will be closed immediately and the deposited amount will be refunded after the deduction of interest already paid (if any) to him/her. 

Source:-The Economic Times