Professional Documents
Culture Documents
CFP – Module IV
• Eligible investors
– Individuals (whether or not salaried)
– NRIs who opened accounts before they became NRIs (can continue contribution till
maturity – no extension)
• Interest calculated on the lowest balance between close of the fifth day and last day of
the month
• Not subject to attachment under order or decree of a court. However, can be attached
by IT authorities to recover dues
• Tenure
– Base tenure – 15 years
– Can be continued for a block of 5 years on maturity with or without contribution
– If continued without contribution for a year, will continue as is for the rest of the term
– If continued with fresh subscription, upto 60% of the balance at the beginning of the
extended period can be withdrawn in one or more installments but not more than
one a year
• Withdrawals
– Can start from the 7th year
– For instance first withdrawal in end 2002 + 6 = 2007 – 08
– First withdrawal amount = 50% of lower of the two balances:
• 4 years preceding Mar 2008 = Mar 2004
• 1 year preceding Mar 2008 = Mar 2007
• Loans
– Can start from the 3rd year
– For instance first loan in end 2002 + 2 = 2004 (2003-04)
– For loan taken in 2003-04, amount = 25% of balance at the end of the Mar ’02
– For loan taken in 2004-05 amount = 25% of balance at the end of the Mar ’03
– No loan possible after 2006-07
– Repayable in 36 months
– Interest rate
• First 36 months –
• Thereafter –
• Duration – 6 years
• Principal contribution and interest reinvested eligible for deduction u/s 80C; interest
taxable
– Prior to introduction of Section 80C, interest income was deductible u/s 80L
• Tax saving / ELSS funds are proving more attractive from a returns and liquidity
perspective
• Entry criteria
– Retirees– 55 years or above; account to be opened within 3 months of retirement
– Non retirees– 60 years or above
• Premature termination
– After first year but before completion of 2 years – 1.5% of deposit to be deducted
– On or after 2 years – 1% of deposit to be deducted
– If account extended (after 5 years), account can be closed a year after the extension
for no additional cost