Monday, February 28, 2011


DTC to be implemented from 1st April, 2012: Pranab

Finance Minister Pranab Mukherjee on Monday said the Direct Taxes Code (DTC), which will replace the Income Tax Act, is proposed to be implemented from 1st April, 2012.

"... The code is proposed to be effective from April 1, 2012," Mukherjee said in his Budget speech 2011-12.

In the DTC Bill, which was introduced in Parliament last year, the annual I-T exemption limit is proposed at Rs 2 lakh, compared to Rs 1.6 lakh at present.

Under the Bill, the government seeks to widen tax slabs to levy 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-10 lakh and 30 per cent above Rs 10 lakh.

Currently, income up to Rs 1.6 lakh per annum is exempt from tax for individuals. For women and senior citizens, the limit is 1.9 lakh and 2.4 lakh, respectively.

The tax is levied at a 10 per cent rate on income between Rs 1.6 lakh and Rs 5 lakh, 20 per cent on Rs 5-8 lakh and 30 per cent above Rs 8 lakh.

Source: DDI News

Saturday, February 26, 2011


Thousands of GDS employees came from nook and corner of the country to capital roared as lions with strong determination exhibiting placards, banners and the red flags of AIPEDEU for departmentalization and all other justified demands in the streets of Delhi under the mighty leadership of Com. S.S. Mahadevaiah, General Secretary, AIPEDEU, on 23-02-2011 Wednesday in connection with "MARCH TO PARLIAMENT" by all central trade unions.
More than Ten Thousand GDS employees gathered at Hindu Maha Sabha Bhavan in the morning of the day where the procession began. The procession led by Com. S.S. Mahadevaiah started exactly at 9:00 A.M. and passed through Mandir Marg, Ashok road, Palika Kendra Bus stop, talostoy road and at last reached to Parliament Street. The beating of drums, the demonstration of GDS employees and the red flags of AIPEDEU made the procession rich and colourful. A good number of GDS from Punjab Circle joined in the main procession at Talostoy Marg. Com. D.N. Giri, President (CHQ) and Com. Rajendra Diwakar, Treasurer (CHQ) guided the G.D.S. employees. Out of 22 circles representation of 21 circles participated in the Parliament March. All CHQ bearers, Circle Secretaries veteran leaders and well wishers of GDS also participated. Main demand regularisation and all facilities at par with regular employees. The processions started form different area corresponding to federations and central trade union come and joined in the parliament street.
Com. Sanjeeva Reddy (INTUC), Com. Umrao Purohit (HMS), Com. Gurudas Das Gupta (AITUC), Com. Tapan Sen(CITU), Com. Swapan Mukhrajee, Com. Tiwari, Com. S.S. Mahadevaiah (GDS) and other prominent leaders addressed the meeting.
A detailed and brief Memorandum on GDS demands was submitted to the Prime Minister and the Speaker of Lok Sabha thorough the representatives of the Central Trade Unions.
Com. S.S. Mahadevaiah expressed his heartful thanks to all the GDS who came to Delhi on the call of GDS Union even in the cold climate to make the programme thundering success.

Com. P. Rajeev, Member Parliament and also Standing Committee Member of Communication & I.T. has raised the issue of mass scale closure of posts offices with Sh. Sachin Pilot, State Minister for Communication and I.T. on 25.02.2011. Minister has agreed to intervene.
Postal JCA is also proposing to conduct immediate agitational programmes culminating to indefinite strike in the event of non drop of unilateral mass closure move of post office

Subject:             Rationalisation and consolidation of urban network.

D.G. Posts No. 40-06/2010Plg dated 25.01.2011.

                Kindly refer to this office letter of even number dated 17.5.2010 on the subject mentioned above calling for views/suggestions from circles regarding need for rationalization and consolidation for urban network, road  map to  be followed and time frame within which the exercise should be completed,. Almost all the Circles have unanimously favoured the need for rationalization.

2.            Due to historical reasons, a major portion of urban postal network lies in the inner city areas consisting of single/double handed non delivery Sub Offices which are not in conformity with the distance criteria of location of post offices. The outer and recently developed areas, however, suffer from lack of even the basic postal facilities in most of the towns/cities. There are also requests for providing postal services in various urban agglomerations, SEZ areas, professional colleges etc. which may also be a profitable activity of the Department .However, due to non-availability of resources, the Department is not able to meet such request.

3.            While the entire rural network is subsidized, Post Offices in urban areas are expected to be initially self supporting, and should earn profit of at least 5% at the time of the First annual review , to be eligible for further retention. Despite this, as on 31.3.2010,as many as 5531 SOs in urban areas are reported to be incurring losses.

4.            Further, as per the prescribed criteria, the minimum distance between two post offices should be 1.5 Km in cities with a population of 2 lakhs and above, and 2 Km in other urban Areas. No two delivery offices should however be closer than 5 Km from each other. Moreover, a delivery post office in urban area should have a minimum of 7 Postman beats. These norms have not been followed in many cases.

5.            Our existing urban network consists of 15797 Post Offices comprising mainly of HOs and SOs.Urban expansion of the country is currently estimated to be 77370sq.kms. As per the prevalent distance norms, this area justifies only about 6000 Post Offices in urban area. This analysis suggests that we have 9797 Pos Offices in urban areas that do not conform to the prescribed norms. This situation warrants need for corrective measures.

6.            Need for rationalization of urban network  was appreciated by the Department as early as in the year 2003 which led to issuing  elaborate instructions to Circles vide D.O. letter No. 40-4/2002-Plg dated 6.1.2003 for relocation/merger of single / double handed post offices. Resultantly, 1262 post offices have been merged/relocated throughout the country. It is however felt that the pace of relocation of post offices is not satisfactory and we are losing out on various business opportunities and the people in outer areas of urban settlements are deprived of the postal services. On the other hand, the Government is not allowing us to further expand our network by creation of new posts not only in urban areas but also in rural areas. Successive Plan Periods have witnessed opening of Post Office by redeployment of posts only without any new creation.

7.            For rationalization of postal network in urban areas by way of relocation of Post Offices in new areas and creation of bigger Post Offices by merger of single /double handed Post Offices as per stipulated distance and other norms, the Circles should keep the following into consideration:

(i)                   There are some Post Offices which are loss making due to high rentals e.g. Post Offices at Railway Stations, important bus terminals, airports etc. We may however not relocate them due to their strategic importance, convenience they offer to the people and high number of footfalls they attract.
(ii)                 While assessing the need for postal facilities we should have close liaison with local bodies like Municipal Corporation/Municipal Committees, Town Area Committees etc. so that we can be aware of their future plans of expansion of cities and we can accordingly formulate our strategies and have a long-term plan for extending our network in such areas. Regular coordination meetings may be prescribed with such bodies at appropriate levels.
(iii)                Post Offices which have been covered under Project Arrow/Post Offices functioning in departmental buildings should not be earmarked for relocation. If there are other Post offices in their vicinity the same may be considered for relocation.
(iv)               Post Offices paying high rentals, having low volume of transactions and running in losses should be considered for relocation/temporary merger/permanent merger.
(v)                 Distance from the nearest post office and the business being transacted should be the main criteria for relocation. Merger of Post Offices.
(vi)               In addition to relocating post offices from one area to another, we can also create bigger Post Offices, not below the rank of LSG Offices, by merger of several smaller scattered Post Offices. The bigger Post Offices will be well equipped to cater to the latest postal facilities like IMO,eMO,Videsh MO, IMTS etc. These newly created Post Offices will be manned by redeployment of staff/posts from the nearby post offices.
(vii)              It may also be considered to reduce the number of delivery Post Offices, which may lead to obviating the need for the nodal delivery system for Speed Post articles as it is not providing to be cost effective. In any case there is a need to strictly follow the norms of the distance of at least 5 KMs between two delivery offices and also that of delivery Post Office in Urban area having a minimum of 7 Postman beats.
(viii)            If opening of a post office is justified in an area, but it is not possible to open post office by relocation or under the Plan targets, opening of franchise outlets may be considered for such area.
8.            In, view of the above, Circles are requested to take the following action:

                (i)            Identification of Post Offices which are at lesser distances than that prescribed                                                under   norms. In case, more than one Post Offices are not fulfilling the distance                           norms, Post Office                 (s) may be earmarked for relocation on the basis of :
(a)    Condition of building
(b)    Profitability of Post Office
(c)     Business of Post Office

                (ii)           PMsG/CPMsG will interact with all the stakeholders and convince them that                                    relocation and merger would help in providing postal facilities to public and it is in                               larger public interest.
                (iii)          Identity needy urban and rural areas where there is justification for new Post                                   Offices.
                (iv)          Post Offices once indentified as per (i) above, will be relocated /merged  This will                            outside the Plan targets.

9.            Circles are requested to complete the exercise in respect of sub para (i),(ii)and (iii) {of para 8) by 31.03.2011 and in respect of sub para(iv){para 8} by 30.06.2011. Circles are also requested to send monthly progress reports of action taken, to this Directorate(proforma enclosed).

10.          Since the need for opening of Post Offices in new locations seems to be ever increasing , Circles are also requested to open Post Offices by redeployment of posts/staff from the existing office(s), by curtailing  staff strength of the existing offices even to less than the justified workload of the office/offices. This exercise would, however, be subject to Plan targets set by the Directorate. The powers for redeployment of Group 'C' and 'D' posts have already been vested with the HoCs vide Directorate letter No. 2-2/93-PE-I dated 7th of Sep, 1993.Under no circumstances should the surplus posts be abolished.

                This issue wit h the approval of the competent authority.
(Anurag Priyadarshee)
Director (R.B)
Directorate letter on Service Discharge Benefit Scheme

File No.6-11/2009-PE-II Dated: 14-02-2011
Sub:Operationalisation of Service Discharge Benefit Scheme (SDBS) for Gramin Dak Sevaks.

In continuation of this office letter of even no. dated 09-02-2011, it is intimated that the applications submitted by the Collection Centers for registration with the Central Record Keeping Agency of PFRDA were processed and submitted to National Security Depository Limited (NSDL), Mumbai for registration and assigning the number.

2. The NSDL has communicated the Registration Nos. of the Collection Centers for the Department. The number assigned to Collection Centers of the divisions in your Circle is furnished in the enclosure. The Registration Nos. may be communicated to the respective Collection Centers for record and further action for submission of application of GDS to Facilitation centers.

3. The NSDL has brought to the notice of this office that only 43000 applications have been received by them and many of the Collection Centers have retained the applications of Gramin Dak Sevaks who have opted to join the Scheme with their offices only as the Facilitation Centers did not accept the applications for want of Registration Nos. assigned to Collection Centers and Account Offices.

4. Consequent on the registration of Collection Centers as well as Account Offices, the Divisional Heads may be requested for scrutinizing the applications once again as per the check-list prescribed and re-submit the applications to the respective Facilitation Centers indicating the Collection Center Registration No. and Account Office Registration No. at the end of each every application and also attesting the particulars furnished by the applicant will signature and rubber stamp of the Divisional Head.

5. For registration of the beneficiaries with Central Record Keeping Agency, the know your customer procedure is very essential, however, the Department has clarified that since the particulars furnished by the beneficiaries (GDS) are attested by the Controlling Officers, no further KYC procedure is requires. This view has been confirmed by the PFRDA under whose guidance the scheme is being operationalised. Therefore, it is very essential that the Divisional Head representing the Collection Centers should certify the particulars at the end of the application with his dated signature and also impression of the rubber stamp. Furnishing the AO registration no. and CC registration no. is mandatory. The applications of the beneficiaries should be bundled in each set of 50 applications and sent to Facilitation Center with a covering letter.

6. The points of check to be observed while forwarding the applications of the beneficiaries is furnished in the enclosure for strict observance.

7. As the scheme is to be operationalised before 01-04-2011, the Circle is requested to ensure for submission of all the applications of GDS who opted to join the scheme to the Collection Centers for registration and generation of Permanent Retirement Account Number (PRAN).

8. TOP PRIORITY may be accorded for this item of work.
Yours faithfully,
(A.K. Sharma)
Dy. Director General(Estt.)
Copy to:
1.Director of Accounts (P)
2.Shri Chandrasekhara Tilak, Ex.Vice President, NSDL, Trade World, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai-400013 for kind information, He is requested for issuing instructions to all their franchisee Facilitation Centers for accepting the applications of beneficiaries for scrutiny registration and generation of PRAN. A copy of the instructions may be endorsed to this office for record.

Friday, February 18, 2011

Our General Secretary writes to Secretary Post regarding reconsideration of revision of norms for assessment of workload of Branch Post Masters.

Ref. No. GDS/CHQ/49/1/2011                                       Dated. 15-02- 2011


The Secretary,
Department of Posts,
Dak Bhawan,
New Delhi-110001.

Sub:- Revision of norms for assessment of work-load of Branch Postmasters.

Ref:   Your office letter No.5-1/2007-WS-I(Pt) dated 16.12.2010

          While appreciating that time factors have been provided for assessing work-load relating several new businesses, we have some serious concern about the time factors revised in case of certain items of work. The process applied also indicates some departure from laid down conversions. Our point of view is furnished below which we are sure, would be taken into consideration and revised norms notified accordingly:-

1.       As has been the practices this union should have been given an opportunity to put forth its views on the time factors to be provided for different transactions. It has not done.

2.                   Secondly, every time we raise certain issues a reference is made to Sri Nataraja Murti Committee. We do not understand why this much of importance to this Committee where as the well reasoned recommendations of other committee including Justice Talwar Committee have been thrown away to gather dust. This particular Committee did have the best of wisdom to over ride others and was rather biased against the GDS employees. We feel, the department will shed the prejudice is favour of this particular committee and recognize the facts on merits.

3.                   Regarding time factor for the following transactions, will submit the following.
(i)           The time factor provided for handling registered article at serial(2), we feel should be and probably is 20 and not 22 registered articles for one point. This may be confirmed.
(ii)          For sale of postage stamps as given at serial (4) i.e. 1 point for Rs. 900/- worth of stamps sold is rather too harsh. Probably some parallel has been sought to be drawn with departmental employees. This is neither proper nor factual. Whereas S.O’s and H.O’s stamps of larger denominations i.e for Rs.5/- Rs.10/- or even larger amounts are sold, in Branch offices, generally postcards, inland letter cards and at the maximum envelops are sold sale of stamps of higher denomination a very negligible. On practical basis. The amount of Rs.900/- should be revised as Rs.100/-
(iii)         The time factor for cash handling i.e one point for Rs. 20,000/- is too harsh and impracticable. The following facts need to be carefully considered.
(a)         Some courts have stayed the application of this harsh time factors and the matter is sub-Judice. As a matter fact this revised norms should not have been issued till the final decision of the courts. On the account the notifications of the revised norm should be kept in abeyance.
(b)         We feel some pages have been taken from the book of norms for cash handling by departmental employees. This is impracticable. In S.Os and H.Os, big sums are deposited is SB or for purchase of postal certificates i.e KVPs and NSC’s etc or in respect of deposits in time deposits. In BOs, small amounts are deposited and coins, even bits and notes smaller denominations are to handled. In MNREGA or old age pensions now her notes of any higher denomination such as Rs.500/- or more are handled. Deposits and with drawals of small amount in SB transactions are made. R.D. accounts of smaller amounts are opened. So, is all fairness, the practicability and ground realities should be taken into considerations, thus the amount of Rs.20,000/- may be revised as Rs.5,000/-
(c)         It is not fair to exclude the amounts of remittance received or made by the B.O. you will agree that the remittances received and made are required to be Counted not only once but twice to make sure that the amount are correct or the BPM has got bear the brunt.
(d)         Similarly, the amount of salaries paid to the E.Ds staff is sought to be excluded for which there can be not Justification. Is it not a fact that the BPM has to count the amounts and make notes of the same in case of salary payment. Then where is the Justification for excluding this amount?
(e)         We sincere feel that in respect of Telephone bills and other bills, the norm should be the point for 10 transactions, be causes 0 in case of these transaction too more or less similar process is to be adopted as in case of SB transactions. The norm may be raised accordingly.
(f)          The preparation of accounts in view of several new transactions and business has become more cumbersome and norms should be provided according by. For this item 28 points should be provided is stead of 14 points.

                   We are sure that the suggestions would considered and accepteed.
 Yours faithfully,

                General Secretary
All India Postal Extra Departmental Employees Union


DoP - SBI tie-up for banking services - news

SBI to set up postmen as BCs for rural penetration

The largest lender of the country, State Bank of India and Indian Postal Department have joined hands in carrying forward the idea of taking banking to rural areas. As a result of the tie up, postmen will act as business correspondents (BCs) for SBI acting across 12000 villages.
Villagers in these areas have no experience in banking so far. BCs will act to offer small credit as well as remittance facilities to the villagers.
"To meet this intiative a tie-up with India Post will be a great advantage," a senior SBI official said. SBI aims to reach out to 12,492 villages by 2012.
Indian postal department has a network of more than 1.5 lakh branches. The extensive reach of the postal department was compelling the government since long to enter into tie ups of similar kind, said an official of the finance ministry.
"We have encouraged banks to explore similar tie-ups to speed up the financial inclusion agenda," he said.
A senior postal department official said, "India Post, or its employees, are undoubtedly the most reliable partners for any bank."

No. 20/57/2010-CSII(A)
Government of India
Ministry of Personal & Public Grievances & Pensions
Department of Personal & Training
CSII (B) Section
Lok Nayak Bhawan,
New Delhi, dated 31 January 2011.
              Shri Pinaki Acharya,
              UDC NSSO, SDRD,
              Mahalonobis Bhawan,
             164,GLT Road, Kolkata-700108

Sub: Information sought under Right to Information Act, 2005.
            Please refer to your RTI application dated 3/1/2011 (received in this Division on 21/1/2011 through Ministry of Statistics & Programme Implementation vide their letter No. 34019/1/2010-RTI dated 11.1.2011). Point wise information is furnished as under:
2.         With regard to point (A), it is informed that this Department has not received any memorandum/request from any Central Government Employees Associations/ Department for merger of the post of LDC & UDC. However this Department has received representations from Associations for up gradation of the grade pay of LDCs & UDCs of CSCS cadre. The issue regarding up gradation of the grade pay of LDCs & UDCs is being examined by the Anomaly Committee of the DOP&T. Further, a proposal to allow grade pay of Rs. 4200/ in Pay Band 2 to UDCs of CSCS and Stempgraphers Grade 'D' of CSSS who have completed 4/5 years of approved service in the grade, w.e.f. 1/1/2006 is under examination of this Department in consultation with the Ministry of Finance.
3.         With regard to point B, a copy of your RTI application is being forwarded to concerned CPIO i.e. Under Secretary, Estt. (D), DOP&T, North Block, New Delhi as the subject matter related to implementation of MACP Scheme pertain to them. 4. Appeal, if any, may be made to Sh. Rajiv Manjhi, DS (CSII), 1st appellate Authority, CS-II Division, DOP&T, 3rd Floor, Lok Nayak Bhawan, Khan Market, New Delhi within 30 days from the receipt of this letter.
                                                                          Yours faithfully
Under secreyary                                                                                                   

Monday, February 14, 2011

Sub: Entitlement of various types of accommodation based on the revised Pay Scales recommended by the 6th Central Pay Commission.

Consequent upon the revision of he pay scale recommended by the 6th Central Pay Commission and as approved by the Government of India, the revised entitlement for allotment of the staff quarters will be as given below. This is in super session of the Board’s circular No.98/LMB/10/62 dated 10.01.2000 as amended from time to time.





Staff with Grade Pay equal to or less than Rs. 1800



Staff with Grade Pay more than Rs. 1800 and upto 2400



Staff with Grade Pay more than Rs. 2400and upto Rs.4200



Staff With Grade Pay more than Rs. 4200



Gazetted Officers with Grade Pay less than Rs. 6600



Gazetted Officers with Grade Pay Rs. 6600

Type-IV special


Gazetted Officers with Grade Pay more than Rs.6600


Note-. No existing Type-IV or other types of quarters will be transferred from non-Gazetted pool to Gazetted pool merely because the number of staff eligible for such quarters in accordance with the above instructions happens to be less than the number of available quarters.

2. This order will come into force from the date of issue.

3. This issues in consultation with the Finance Directorate of the Ministry of Railways.

4. Please acknowledge receipt of this circular.

(M.K. Panda) Dy. Director(Land & Amenities) New Delhi date 27.01.2011

Source: AIRF

Saturday, February 12, 2011


                    Orissa Circle Branch
             Po: - Alba (Orissa) Dist: - Kendrapara – 7 5 4 2 1 7
            Phone (06729) 220058 (R) 221630 (O) Fax- 221210
                 E mail – 
    P.R. Dash                                                                                   N.C. Singh
 Circle President                                                                        Circle Secretary
   Mobile 9861194411                                                                  Mobile - 9437003058
NO: ED/SUBS/2011                                                                    Dated: 11.02.2011

    Mrs. Hilda Abraham, IPoS
    Chief Postmaster General, Orissa Circle
    Bhubaneswar- 751001

Sub: Information RTI Act’ 2005- Regarding collection of union subscription for the following periods & paid /not paid to the divisional secretaries by DDOs- Case of Cuttack City / Bhadrak / Balasore / Cuttack North & Puri Divisions – Request to advice the authorities to Act as per instruction of Circle / Directorate as well – there of.
Ref: Co Letter No. WL/RTI-1/2007-09 Dated 10.11.2010
Rev. Madam,
        In pursuance to Circle office letter No. Referred to above on the subject, I am surprised to intimate on the receipt of the replies from the divisional authorities as referred on the subject that the Union subscriptions have been collected by the DDOs and not collected for some months and after collecting not paid to the divisional secretaries of respective divisions, Causing financial loss to the unions and the divisional secretaries are therefore not in a position to pay the respective quotas to the circle & All India union as well. The following information submitted by the authorities to circle office may kindly be verified to know the truth.
`       30.00
`  30000.00
` 12580.00
`  53000.00
` 18555.00
`  26845.00
Cuttack GPO
`   3860.00
`    4830.00
Chandini Chowk
`     485.00
`  12045.00
` 12890.00
`  67170.00
`     400.00
`  51790.00

`  48800.00
`  2,27680.00

         I therefore, request your good self to kindly cause necessary action on the matter to avoid callousness of the DDOs & divisional authorities as well, and pay the amounts collected by them to the divisional secretaries immediately to make good the loss of the union amount.
With Regards.                                                                                   Yours Faithfully
                                                                                           (N.C. Singh)
                                                                                         Circle Secretary

Postal Bank and Postal ATM

Department of Posts is going to introduce Banking service through Post Offices. All post offices will also work as  Post Banks. ATMs will also be introduced along with Postal Banks.

Department of post is going to launch post bank and prepaid card scheme very shortly all the regional heads of all circles have been directed to personally identify and expedite the manner of installation of ATM,s in Head post offices. RBI approval and License is awaited. As part of core banking process all existing accounts are now updated in computers. The circle heads are frequently stressed to complete the signature scanning of all A/c holders as early as possible. A centralized server possibly at Ghaziabad is proposed to be constituted  which will automatically extract data from all HO & SO as when the counter clerk enters a transaction. The role Of SBCO will be minimized. The preservation of records at all Hos  will be considerably reduced.

Under Prepaid card scheme which is to be launched in collaboration with banks,. all expenses are to be borne by banks. Cards will be issued to customers who have Savings account only and later expanded to other customers. With help of card one can withdraw money in POs/ Any ATM/make purchase in any merchant outlets. A minimum charge will be levied for each operation. Minim um load is Rs 1000 maximum reload to card is Rs50000. Maximum withdrawal is 10000 per day and only four times can a card be used in a single given day.

All you wanted to know about EPF and PPF

1. What is the difference between EPF and PPF?
Where Employees Provident Fund (EPF) serves all salaried employees, the Public Provident Fund (PPF) serves everyone - the employed, the unemployed, even children and housewives.
The access to the fund is also quite easy as any post office and some State Bank of India branches can help you open the fund. The purpose of a provident fund is to provide individuals some form of savings for their retirement years. Naturally, the EPF and PPF are for long-term savings.
2. What kind of income can one expect from PPF?
The returns from the fund are in the form of interest paid. The interest rate currently is 8 per cent compounded annually.The interest, however, is not paid out but is compounded (like a bank recurring deposit) till the maturity or withdrawal.With the current levels of inflation, real and stated, the returns from the PPF fund could be low. This is a typical asset-class mismatch.
3. Is there any capital appreciation?
Being a typical debt investment, there is no capital appreciation for the investment.
4. What is the risk involved with this investment?
There is hardly any risk for the capital or the returns from the PPF deposit.The risk, however, is with inflation, which could possibly reduce the value of the returns in the long-term, and the other disadvantage is the long lock-in period of 15 years.
5. How about liquidity of the investment?
PPF gives very little liquidity, too. The fund, as mentioned earlier, is for a minimum of 15 years. This can be extended for a further period of 5 years each, indefinitely.
The liquidity is in the form of withdrawals, which can be made from the fund from 7-year onwards. The withdrawal value is, however, limited to a maximum of 50 per cent of the average of the last 3 years' fund values.
After 7 years, one withdrawal can be made every year, based on the same condition.
6. What happens in the case of the death of the account holder?
In case of death of the account holder before the maturity of the account, the fund will be paid to the nominee/ legal heir.
7. How is PPF treated for tax?
This is where the PPF scores very high. Currently, The PPF comes under the Exempt- Exempt- Exempt category. This means that the amount invested gets tax benefits, the interest is not taxed and this applies for the final maturity amount as well. The investment gets benefits under Section 80C of the IT Act. The investment, however, is limited to a maximum of Rs 70,000 per year per person. This limit of Rs 70,000 includes the deposits made in the name of any dependent children.
8. Are there any other specific benefits that I need to know?
Some other unique benefits from the fund are:
1. There is no wealth tax on the value of the fund.
2. In case of insolvency, the money in the fund will not be attached to the assets. So, only this investment is truly ours, come what may. (Except for education in a philosophical sense).
This feature can be very useful particularly for business people in high-risk industries / businesses. The fund cannot help anyone if there is tax evasion though.
9. How does it score on convenience?
The fund scores high on convenience. As a savings tool, it is incomparable in terms of the flexibility of payment and quantum. You can make up to 12 contributions per year.
Each contribution can be as low as Rs 100 subject to a minimum of only Rs 500 per year.
There has to be at least one contribution per year. In case no payment is done for a whole year, there is a charge of Rs 50 when the next investment is made.
The objective is to make savings as comfortable and convenient for the minimum possible investment.
A minor disadvantage is that the fund is yet to go online. So, we have to carry our passbook and also face a queue to make the payment every time.
In conclusion:
PPF is a typical savings tool but one has to invest for the long term. This means there is an asset-class mismatch.
But, on the convenience side, the fund scores pretty high for the flexibility that it offers.
There are additional unique advantages in the form of wealth tax and insolvency benefits from the Public Provident Fund.
On the flip side, the long-term (minimum 15 years) of the plan is a limitation.