Frequently Asked Questions
The following are frequently asked questions by the investors, agents and others involved in mobilization of savings and answers to these FAQ’s are as under :-
1. National Savings Products
2. Post Office Savings Bank
3. Post Office Recurring Deposit
4. Post Office Monthly Income Scheme
5. Kisan Vikas Patra (Discontinued w.e.f. 30-11-2011)
6. Post Office Time Deposit Account
7. National Savings Certificate VIII Issue
8. Public Provident Fund Account
9. Senior Citizen's Savings Scheme
10. National Savings Certificate IX Issue
11. Sukanya Samridhi Yojana
12. Agency System
National Savings Products
Que.1: Why a person should invest in National Savings Products ?
Ans: The investment in National Savings Products which are the products of Ministry of Finance, Government of India, has a sovereign guarantee and therefore National Savings products are fully secured and safe. The rate of interest offered on National Savings products are quite attractive as compared to other schemes in the financial market.
Que.2: What products are under the fold of National Savings ?
Ans : The Ministry of Finance, Govt. of India has structured 9 products to cater the needs of different segments of the investors as given below. All the products are need based and the investors can opt for the product as per their requirement.
1. Senior Citizen’s Savings Scheme
2. Post Office Monthly Income Account
3. 15 Year Public Provident Fund Account
4. National Savings Certificate
5. 5-year Post Office Recurring Deposit Account
6. Post Office Time Deposit Account
7. Post Office Savings Account
8. Kisan Vikas Patra
9. Sukanya Samridhi Yojana
Que.3: Who formulates and introduces the schemes of National Savings?
Ans: Ministry of Finance designs the product in consultation with experts committees /National Savings Institute.
Que.4: From where the investor can buy the National Savings products?
Ans: All products are available at Post offices. 15 Year Public Provident Fund Account and Senior Citizen Savings Scheme are also available with designated Bank’s Branches of State Bank/Nationalized Banks.
Que.5: Is post Office a member of clearing house to expedite Cheque clearance as banks ?
Ans: Yes. All the HPO/GPOs are the members of clearing house for the purpose of Cheque clearance.
Que.6: Is nomination facility available in National Savings Products?
Ans: Yes. The depositor can nominate one or more persons as the nominee and also mention the share of nominee in case of more than one nominee.
Que.7: Whether NRI(s) can invest in the National Savings Products?
Ans: NRI(s) are not authorised to make investment in National Savings Products.
Que.8: What is the mode of payment on maturity / premature closure of National Savings Products?
Ans: On Premature Closure or maturity, the deposits accepting authorities make payment in cash upto Rs. 20,000/- and by cheque in excess thereof by depositing the amount into Saving Bank Accounts of individual concerned.
Que.9: Whether NS products enjoy the benefit of tax concession under Income Tax Act ?
Ans : The deposit in PPF, N.S.C. VIII Issue enjoy the benefit of tax concession under I.T.Act. The deposits in PPF qualify for deduction upto maximum of Rs.1,50,000/- and deposits in NSC VIII Issue upto Rs.1,00,000/- under Section 80 L of Income Tax Act. The interest accrued in NSC VIII Issue for 5 years also enjoy the benefit of Sec. 80 C of I.T.Act.
The interest on PPF and POSA is tax free as per the tax provisions.
Post Office Savings Bank
Que.1: Whether Cheque facility is available in P.O.S.A.?
Ans: Yes. Cheque facility is available in Post Office Savings Account like any other Bank.
Que.2: Is there any maximum limit of deposit in the Post Office Savings Account?
Ans: No limit.
Que.3: Can a minor open a P.O.S.A. ?
Ans: Yes. A minor who has attained the age of 10 years can open POSA Account, More over a guardian can also open a account in the name of minor.
Que.4: Can a person open a single as well as joint account separately?
Ans: Yes. A person can open a single and/or joint account separately even in the same post office.
Post Office Recurring Deposit
Que.1: Can a Post Office Recurring Deposit Account (PORD) be continued / extended beyond maturity period?
Ans: Yes, for a further period of 5 years by depositor at his option with or without deposits.
Que.2: Whether premature closure of the P.O.R.D. account is permissible?
Ans: Yes. The holder of the account may prematurely close the account after three years from the date of opening and in such a case interest @ of Post Office Savings Account shall be payable.
Que.3: Is there any provision of interest on discontinued account after maturity?
Ans: Yes. If maturity value of a discontinued account is retained by a depositor after the date of maturity, post maturity interest is allowed at P.O.S.A. rate as applicable from time to time.
Que.4: Is there any social security benefit in PORD account?
Ans: Yes. All accounts upto maximum deposit Rs. 50/- P.M. are eligible for social security benefit subject to certain terms and conditions and maturity amount is paid to the nominee/legal heir of the depositor.
Post Office Monthly Income Scheme
Que.1: Can a depositor open more than one P.O.M.I.S. account?
Ans: Yes. A depositor may open more than one account subject to the condition that deposits in all accounts taken together shall not exceed the prescribed limit.
Que.2: Can joint MIS account be opened by 3 persons?
Ans : A joint MIS account can be opened by 2 and 3 persons and in such case, the share of the individual account holder will be ½ or 1/3 of the total deposits as the case may be. The maximum amount that can be deposited in a joint account opened with 2 or 3 persons will however be Rs.9,00,000/- only.
Que.3: Whether a depositor is entitled for bonus on MIS?
Ans : No bonus shall be paid on the deposits made in the accounts opened on or after the Ist day of December, 2011.
Kisan Vikas Patra
Que.1: Whether replacement of lost or destroyed K.V.P. is permissible?
Ans: Yes. The holder should apply for the issue of duplicate certificate and comply with the prescribed procedure.
Que.2: Whether the K.V.P. can be encashed through messenger?
Ans: Yes. If endorsement on the back of the certificate have been signed already by the holder and accompanied by a letter of authority containing specimen signature duly attested.
Post Office Time Deposit Account
Que.1: Whether post maturity interest is paid on Time Deposit Accounts or not?
Ans: Yes. In case payment of a deposit becomes due and the same has not been made, interest shall be allowed on the amount at the post office savings account rate for a maximum period of two years only.
Que.2: Whether Time Deposit Account can be pledged?
Ans: Yes. An application should be made in the prescribed form by the transferors and transferee as per rules.
Que.3: Can the interest of Time Deposit Account be credited to the Post Office Savings Bank account standing in same post office?
Ans: Yes, on request in writing from the investor.
Que.4: Can a POTD account be prematurely closed ?
Ans : A POTD account can be closed prematurely after six months but before one year without interest. A POTD account for 2, 3, 5 years can be closed after one year and depositor will get 2% less than the rate of interest specified for a deposit of one year, two years, or three years as the case may be.
National Savings Certificate VIII Issue
Que.1: Can Post Office issue certificate of annual interest in respect of N.S.C.s (VIII issue) for purpose of filing of income tax returns?
Ans: Yes. Post office issues the certificate on demand by the investors.
Que.2: Can premature encashment be made in NSC VIII th issue?
Ans: No premature investment is allowed. However, the premature encashment can be made only in three conditions i.e. on death of the holder, on forfeiture by a pledgee & when ordered by Court of Law.
Public Provident Fund Account
Que.1: Can PPF account be extended after 15 years and is there any time limit?
Ans: Yes. The account can be extended for one or more blocks of five years by giving option in form ‘H’ within one year from the date of maturity of the account.
Que.2: Whether the PPF Account can be continued without further deposits after maturity?
Ans: Yes. The depositor can continue the account without deposits after completion of maturity /extended block period.
Que.3: Can a PPF account be opened by HUF ?
Ans : A PPF account is not allowed to be opened by HUF w.e.f. 13.5.2005. However, all the accounts which were opened earlier will continue to earn interest till their maturity.
Que.4: A PPF account where no subscription has been made in a year is treated as discontinued?
Ans : A subscriber can deposit the minimum subscription of Rs.500/- + default fee of Rs.50/- for each year of default subject to the condition that the total deposit during the year in which defaulted subscription is deposited should not exceed the maximum deposit ceiling of Rs.1,50,000/- and it is not treated as discontinued.
Que.5: Whether a person is entitled for interest on the deposits made in excess of the prescribed limit i.e. Rs.1,50,000/- in a PPF account ?
Ans : Account holder is not entitled for interest on any amount deposited in excess of Rs.1,50,000/- in a financial year in the PPF account.
Que.6: If a person opens PPF account in the name of individual and also in the name of a minor(s), how the limit of deposit is determined?
Ans : The maximum amount of Rs.1,50,000/- can be deposited by a person in a financial year in a PPF account opened in his name and in the name(s) of a minor(s) taken together.
Que.7: Whether the investment in N.S.C., KVP, POMIS, POTD earns post maturity interest?
Ans : The post maturity interest on all the above schemes will be paid up to maximum period of two years from the date of maturity at the POSA rate applicable from time to time.
Que.8: If the investment is made in NS products by cheque, what is the date of deposit ?
Ans : In case of deposit by cheque in the NS products, except PPF and R.D., the date of deposit will be the date of realization of cheque. However, in the case of PPF and R.D., the date of deposit will be treated as date of presentation of cheque.
Senior Citizen's Savings Scheme
Que.1: Can a joint account be opened with any person under the Senior Citizen’s Savings Scheme?
Ans : The account can be opened jointly with the spouse only.
Que.2: What should be the age of the spouse in the case of Joint. Account?
Ans : In the case of Joint account, the age of first applicant /depositor is the only factor to decide the eligibility to invest under this scheme. There is no age bar/limit for the 2nd applicant/joint holder (i.e. spouse).
Que.3: What is the share of the joint account holder in the deposit in SCSS ?
Ans : The share of the joint account holder under the scheme is attributed to the first applicant/depositor only. Question of any share of the 2nd applicant/ account holder (spouse) therefore does not arise.
Que.4: In case, the depositor does not close the account on maturity and also not extend the account for a period of three years within a period of one year, how the interest is to be calculated/paid after the maturity period ?
Ans :The account shall be treated as matured and post maturity interest at the rate applicable to the deposits under POSA from time to time shall only be admissible for the period beyond maturity in accordance with the rules. The amount of excess interest paid (at higher rate applicable to deposits under SCSS) after the maturity shall be deducted.
Que.5: Whether TDS will be deducted on the interest paid on SCSS ?
Ans : The tax will be deducted at source in respect of interest payable under SCSS. However, senior citizen can avail the facility of furnishing the form no. 15-H under income tax rules who is a resident in India and of the age of 65 years or more.
Que.6: Can SCSS account be transferred from one deposit office to other?
Ans : A depositor may apply enclosing the pass book thereto for transfer of his account from one deposit office to another provided that where deposit is Rs.1 lakh or above transfer fee of Rs.5/- per lakh on deposit for the first transfer and Rs.10/- per lakh of the deposit for the 2nd and subsequent transfers shall be payable by the depositor.
Que.7: What is the period up to which post maturity interest can be given?
Ans : In case, the account is not closed on completion of the five years, maturity period and also not extended under rule 4(3), post maturity interest at the POSA rate from time to time shall be paid till the end of the month preceding the month of closure. No time limit has been prescribed.
Agency System
Que.1: Whether the services of National Savings Agents are available to the investors?
Ans. Yes. Except in case of Post office savings Bank account. However investors in their own interest should either tender Cheque drawn in favour of the deposit accepting agency i.e. post office or bank to the agents or obtain proper Agents Receipt as a token of receipt from the agent.
Que.2: How an individual can become agent of NSI ?
Ans: There are two types of agents operative in the National Savings Agency system namely ,
1. Standardised Agency System (SAS)
2. Mahila Pradhan Agency System (MPKBY)
The work relating to appointment, renewal and servicing of the agents has been transferred by Govt. of India to the respective State Governments and in most of the cases District Collector/Dy. Commissioner is the appointing authority in their respective area of operation. The procedure regarding appointment also varies from State to State depending on their requirements of agents and any person interested to work as agent in National Savings can approach the concerned Deputy Commissioner, Additional Deputy Commisioner, Additional/Sub-Divisional Magistrate, Block Development Officer/ Tehsildhar of the concerned area.
Que.3: What is the procedure for payments of commission?
Ans: Agents under National Savings are paid commissions at the rate of ½ % in SAS & 4% in MPKBY Agency System which is applicable in case of ladies only and they are authorized to canvass only Recurring Deposit Scheme. The payment of commission is made by the deposit accepting authorities at source.