Author: Anuradha Singh

The investment product which I will be talking about in this article will meet all your requirement as a senior citizen.

It is called as “Senior Citizen Saving Scheme”. It is one of the safest investment products because it is sponsored by the Government of India.

What is SCSS?

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings instrument for individuals above the age of 60. It is one of the safest saving instrument for senior citizens, because it is a government-owned product and there is no risk of the capital loss. The purpose of this scheme is to provide a steady and secure source of income to senior citizens for their post-retirement phase.

The basic requirement a senior citizen will want from his/her investment is two basic things – safety and regular income. The Senior Citizen Savings Scheme (SCSS) meets these two requirements, and you get the tax benefit under section 80C on the amount invested.

Individuals can apply for this scheme from Post Offices, Public and Private Banks. The current rate of interest this scheme is offering is 7.4% (it changes from time to time). Both the spouses can open a single account and joint accounts with each other. Multiple withdrawals from an account will not be permitted.

Features of SCSS –

a) Interest Rates are revised Quarterly –

The interest rate under this scheme is revised every quarter (3 months) which goes to 4 times in a year. The interest rates are determined depending on the economic conditions such as inflation etc.

Past 2 yrs interest rate of this scheme (201 and 2019) –

[su_table responsive=”yes”]

2018 – 2019 (Q1)	8.3%
2018 – 2019 (Q2)	8.3%
2018 – 2019 (Q3)	8.7%
2018 – 2019 (Q4)	8.7%
2019 – 2020 (Q1)	8.7%
2019 – 2020 (Q2)	8.6%
2019 – 2020 (Q3)	8.6%
2019 – 2020 (Q4)	8.6%
2020 – 2021 (Q1)	7.4%

 

b) Minimum and Maximum Deposit Allowed under this Scheme –

The minimum contribution a senior citizen can make in this scheme is Rs. 1,000 and a maximum deposit of Rs. 15 Lakh can be made.

For example, if Mr Sharma receives Rs 13 Lakh as a retirement benefit, then he can invest up to that amount in the scheme. This clause applies irrespective of whether the account is held individually or jointly. However, one can only open a joint account with his/her spouse.

But, if an individual holds multiple accounts under this scheme, then the total amount deposited in all such accounts shall not exceed the maximum limit of Rs 15 Lacs.

c) Tenure of this Scheme –

The maturity period for the SCSS scheme is 5 years. However, it can be extended for another 3 years, effectively bringing up the total period to 8 years. In order to extend the tenure by 3 yrs, the individual will have to submit Form B after duly filling it. An extension in the tenure will be allowed only once. Once the extension is approved, the interest rates will be the applicable quarterly basis.

For instance, Ms Sita has deposited Rs. 7 Lakh under SCSS in April 2014, when the interest rate offered was 9.3%. However, when she extended this scheme in April 2020, the interest rate she was eligible to earn stood at 8.4%.

d) Premature Withdrawal and Closure –

An individual can withdraw prematurely from their account under this Scheme only after one year of opening the account. However, for any reason, if an individual closes their account before the completion of 2 years, 1.5% of the deposited amount will be deducted as penalty.

Premature closure of the account is allowed with some penalty. If the account is closed after the first year and before the end of the second year, an amount equal to 1.5 per cent of the deposit shall be deducted as penalty. If the account is closed on or after the second year, an amount equal to 1 per cent of the deposit shall be deducted.

For instance, if Mr Shah deposits Rs. 5 Lakh in Senior Citizen Savings Scheme on 1st March 2018 and closes it on 6th February 2020, he will have to bear a penalty of Rs. 7500. But, if the investor is deceased before the maturity of their account, no penalty will be charged.

e) Mode of Investment –

The mode of investment under this scheme will be either cash or cheque. If the investment amount is below Rs 1 Lac then the amount can be invested through cash. But if the investment amount exceeds Rs 1 lacs then the investment can be done only through cheque.

f) Capital is Secure –

As you all know that this scheme is purely governed by the Government of India that is why the capital invested is fully secured under any circumstances.

g) Interest Payout –

As we know that Interest is calculated on a quarterly basis, the interest will be credited to the account every quarter, on 1 April, 1 July, 1 October, and 1 January. If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.

h) Nomination Facility –

On the time of opening the account, the senior citizens can also attach nominee to this account so that if something happens to the senior citizen then his/her money will go to the nominee.

Taxation of SCSS –

Investments made under SCSS are eligible for tax deduction under section 80C of the Income Tax Act, 1961. According to the current rules, if your interest earnings from SCSS are more than Rs 50,000 in one fiscal year, you are liable to pay TDS (Tax Deducted at Source) for the interest earned.

Eligibility Criteria of SCSS –

a) An individual who is a citizen of India can open this account in an individual capacity or jointly with a spouse.

b) Non-residential Indians (NRIs) or a Person of Indian Origin (PIOs) cannot invest in this scheme. Also, Hindu Undivided Family (HUFs) do not qualify for this scheme.

c) As this is a senior citizen savings scheme, so any resident of India aged 60 years or above is eligible to open an account under this scheme. However, there are few exceptions to the age bar:

• Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation are eligible to avail the scheme if they apply for the same within one month of gaining their retirement perks.
• Retired defence personnel can avail this scheme irrespective of their age, provided they fulfil all other conditions.

d) Nomination under this scheme can be done only in favour of resident Indians.

Documents required for opening the SCSS Account –

a) Proof of ID and address (any one of the following) –

• Aadhaar card
• Passport
• Driving licence issued by Regional Transport Authority
• Voter ID card
• Job card issued by MNREGA signed by State Government officer

Note – The above document has to be self-attested.

b) Additional documentation if the investor is less than 60 years –

• Certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer
• Proof of date of disbursal of retirement benefits (the date of opening of an account under this Scheme should be within one month of the date of receipt of the retirement benefits)

c) In addition to the above documents, PAN card is mandatory.

How to Open an Account under the Senior Citizen Savings Scheme?

An SCSS account can be opened with a post office or any of the private or public banks in India. The procedure for both is similar, and is mentioned below  –

Step #1 – Visit your nearest bank branch or Post office branch

Step #2 – Submit the Duly filled up Form A

Step #3 – Submit the original and photocopies of all the necessary documents mentioned above, broadly address and identity proof.

Step #4 – Submit the age proof with all the above documents.

List of few public sector banks which offers to open SCSS Account to their senior citizen customers –

You can click on the below banks to see the form of SCSS.

[su_table responsive=”yes”]

State Bank of India	Bank of Baroda
ICICI Bank	Bank of Maharashtra
Bank of India	Canara Bank
Syndicate Bank	Punjab National Bank
Allahabad Bank	United Bank of India

 

[/su_table]

Conclusion –

So this was all that I wanted to share about Senior Citizen Saving Scheme. If I have missed out on any point then you can highlight in the comment section.

When you sell any capital asset like a house, gold, bonds or debt mutual funds over a long period, you generally make a PROFIT, which is called as Capital gains. This is treated differently from “interest income” which you get from fixed deposits and these capital gains are taxed at 20%.

In case of selling house, these amounts can be quite big and if you reinvest these capital gains, you will not have to pay any taxes.

However at times, an investor may not want to invest in another house and also not willing to pay taxes.

54 EC bonds can help you in saving the capital gains tax.

What are 54 EC Bonds?

54EC bonds (capital gains bonds) are the best investment option through which an investor can save long-term capital gain taxes.

54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. The tax deduction is available under section 54EC of the Income Tax Act. However, 54EC bonds can only save long term capital gains taxes, and not short term capital gains taxes. Check out our Capital Gains Tax Calculator

The maximum limit for investing in 54EC bonds is Rs. 50 Lacs.

As we said above, an individual can invest in these bonds after receiving capital gains from selling a property, sale of land, or building (residential or commercial).

If you want to save your capital gains, you will have to make your investments in 54 EC bonds within 6 months from the date of sale of the property or before filing your income tax returns.

Features & Benefits of 54 EC Bonds

• As 54EC bonds are generally AAA rated and hence it is the safest and secure bond as it is backed by the Government of India.
• Interest earned on these 54EC bonds is taxable in nature. So while you don’t pay any tax on the lump sum you got after selling the house or another property, the interest earned from these bonds are taxable.
• No TDS is deducted on interest from 54EC bonds and wealth tax is exempted.
• 54EC bonds come with a lock-in period of 5 years and are non-transferable in nature.
• The minimum investment an investor can make in 54EC bonds is 1 bond amounting to Rs. 10,000 and the maximum investment in 54EC bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.
• The interest these bonds offer is at 5.75% which is payable annually. This is not very high interest, and if you pay taxes on these, the final post tax returns will be much lower.
• These bonds can be held in Demat Form and Physical Form as well.

Eligible Bonds under section 54 EC –

So when we say 54 EC bonds, it’s not exactly a product in itself. There are actually 4 types of bonds which come under the definition of 54 EC bonds. They are as follows –

• REC (Rural Electrification Corporation) – Download form
• NHAI (National Highways Authority of India) – Download form
• IRFC (Indian Railway Finance Corporation) – Download form
• PFC (Power Finance Corporation Ltd- Download form

Let us see the comparison between REC and NHAI as these are the most popular options to invest.

[su_table responsive=”yes”]

BOND	REC Bonds	NHAI Bonds
Interest Earned	5.75%	5.75%
Rating of the Bond	AAA/Stable (CRISIL)	AAA/Stable (CRISIL)
Minimum Investment Required	Rs. 10,000	Rs.10,000
Maximum Investment Required	Rs.50 Lakhs in Financial Year	Rs.50 Lakhs in Financial Year
Tenure of the Bonds	5 yrs	5 yrs
Mode of Interest Payment	Annually	Annually

[/su_table]

What if you don’t invest in 54 EC bonds?

If you don’t want to invest in these 54 EC bonds and rather want to invest in other financial products like a fixed deposit, debt mutual fund or equity mutual funds – then remember that first you will have to pay the tax, and then you can invest only remaining amount which may fetch higher return compared to 54 EC bonds returns.

However a quick calculation shows that you are better off investing in EC bonds, if you are not looking forward to invest in equity mutual funds and are ready to take risk. In general it’s usually a good idea to put money in 54 EC bonds and over 5 yrs, you will have decent amount of money.

Only if you are ready to take high risk, and are not looking for lock in, then you can put this money in equity mutual funds. Below is a comparison between all 4 options we talked about

[su_table responsive=”yes”]

What?	54 EC bonds	Fixed Deposit	Debt Mutual Funds	Equity Mutual Funds
Capital Gains Amount	50,00,000	50,00,000	50,00,000	50,00,000
Tax to be Paid before investing	NIL	1000000	1000000	1000000
Amount Remaining for Investment	5000000	4000000	4000000	4000000
Return	5.75%	7%	8.50%	11%
Taxes on Investment	30.00%	30%	Approx. 6% (assuming 4% inflation in CII index and 20% capital gains tax)	10% capital gains tax without indexation
Post Tax Returns	4.03%	4.90%	7.99%	9.90%
Final Maturity Amount (Post Tax)	6090579	5080862	5874591	6412811
Notes	This is Assured	This is Assured	This is not 100% assured, but the final returns you will get will be close to assumption most probably	This is surely dependent on the equity returns, which can be very volatile, so the final result can be much less, or much higher than the assumption

[/su_table]

Note that the only option which has some chances of beating the 54 EC bonds returns is equity, but you have to remember that this is not an option for everyone. Only one who can take right decisions about equity and is ready to take higher risk / high reward path should get into it.

Otherwise, overall investing in 54 EC bonds looks like the best option, but it will come with strict lock in.

So, this was all that I wanted to share in this article. Let me know your queries in the comment section.

The telecom and financial services have drastically changed over the last 15-20 yrs. and this means that you can do lots of things over your phone now. You don’t need to go to bank for everything. Now your mobile itself is a bank and it will let you transfer money to anyone and transact with just a click of the button.

While this is wonderful news, it’s also a bad news because various kind of cyber frauds have started happening from last few years. Today I am going to share about one such fraud called as “SIM Swap Fraud”

I also requested one of person I know personally who actually lost money because of this fraud, and I requested him to jot down what exactly happened and steps they took after the fraud happened.

What is SIM Swap Fraud?

SIM swap fraud is a very sophisticated type of cyber fraud, where the attacker first blocks your sim card, and then gets a duplicate sim issued and gets access to all OTP/SMS which are required to make the transactions. This also means that they put a request to your mobile company with forged documents or online and if you have not secured your data/documents – it’s not very tough to get it done.

On top of it, if you do not act fast or take things lightly – the chances of fraud getting successful is very high.

People have lost amounts ranging from few Lacs to few crores. Just have a look at the below screenshot

The sim swap frauds are also known as SIM splitting, SIM jacking, SIM hijacking, or port-out scamming in different countries.

A real life case of an NRI who lost money from his bank account

So a few weeks back, one of the NRI readers of this blog mailed me asking for help on a fraud which happened in his bank account and he lost money.

Luckily the amount was just in thousands. I looked at his email and soon realized that this is a case of SIM SWAP fraud. While he has not got the money till now, I asked him to share the entire incident with all of us so that we can learn from this incident.

Please go through his experience which I got by email.

Hello Manish,

Greetings and appreciate your thoughtfulness to create awareness to this fraud,

So the story goes this way

My wife has a savings account in ICICI and me being NRI she travels to visit me for more than 5 months in a year as such I had linked my Sisters Phone number for net banking and all was going well. as local numbers don’t work in the country I live.

Recently my sister was having issues with idea sim card and she had registered a complaint with idea, and she was told a customer care will coordinate with her. then there was the lockdown and curfew and banks shops etc all closed.

One day a person called her and said he was from idea customer care and she needs to upgrade her sim from 3G to 4G and to do that she needs to text him a code and a sim card no a 20 digit number, due to lockdown since idea center is closed this is her option, which she did, she got a call back saying it will take about 4 hours for this upgrade and she may not get coverage until then.

my email was linked to that ICICI account and I got an email that there was a failed attempt to access my online account.

I replied to ICICI customer care and there was no reply. ( Got reply after two days, Standard written email do not share otp, password etc with any one and if suspicious report to ICIC customer care)

But I was able to log into net banking and did not find anything suspicious.

The next day I was off and was not online to check emails for full day in the evening I saw 8 emails from ICICI auto emails, password changed, new beneficiary added, OTP sent to Registered mobile, amount transferred to beneficiary account. balance in my account is now zero.

Now it’s a Saturday bank is closed, Lockdown cannot go out, customer care lines are busy and on hold for 25 min, and finally when she got on line with customer care they said she is not calling from registered mobile and they cannot help us.

The damage was done. The hacker took control of the sim and was getting OTP and had reseted the password using registered phone number.

The complaints we made

Sister went to idea and narrated the incident and idea said this normally does not happen this way and only authorized person in idea can do the sim swap and said they will investigate it

Wife went to police to complain, they are clueless on this matter and were more interested on knowing the fraud for their personal reason and challenging wife stating what she was telling can never happen and they never heard of such case and there must me something else which has happened and not sim swap. but when my wife raised her tone they took the complaint and said they will forward it to cyber branch.

Till date no positive lead.

Wife went to bank to complain, they saw the log and found the transaction is done through correct channel and there is no fraud, Password changed by registered mobile, otp sent to registered mobile and all things done legally without breach..

However as there was a police complain they traced the beneficiary account and put a freeze and lien on that account (In case he deposits money that money will be directly transferred to my account).

We changed the mobile number and now my wife gave her new local number, and they said not to use the account for some time till the investigation is over.

that night wife get a call from ICICI customer care saying we have registered your complain and your money will be transferred to your account tomorrow.

Wife goes to ICIC and meets manager she say no this case is not solved and normally it takes more than 15days for this and this call is not from us.

Wonder how the hacker got this number which was just given to ICICI, also though ICICI said they deleted the old phone number and registered the new phone number my sister is still getting messages when we complain to ICICI they say it cannot be and when shown proof via screen shots said we will forward to our IT dept.

So till date this is the final summary

Idea mobile operator claims no responsibility of damage done to bank account but their responsibility is to give control of the sim card back to my sister in 24 hours and they did it

Bank does not take any responsibility as the transaction was done by the registered mobile number

Police claims it was out carelessness to give the 20 digit number to the hacker and they can do nothing

I Learnt a very good lesson and will be more careful in these matters.

Jerry

From the real life incident of the above, I can see that it’s a bit of everything. Some bad luck, some carelessness, some ignorance and a lot of smart work by fraudster. These sim swap frauds are not easy to achieve as there are lots of things which needs to happen.

Let us now look at exactly what are the steps which are involved into Sim swap fraud.

4 Steps of Sim Swap Fraud – How it can happen to you?

Let’s understand how exactly a sim swap fraud happens through 4 steps process

Step 1 – Fraudster steals your important data

In this first step, the fraudster gets your personal information like your PAN number, Bank account number, phone number, your net banking password, and any other details which are essential for an online transaction. These things can be acquired using various methods like Email/Phone/SMS frauds or by hacking into your personal devices .

Sometimes there can be data theft by getting access to your documents which might be lying with someone (imagine you give your laptop for repair and some file has all the data or imagine you leave your bank statement at a Xerox shop)

Step 2 – Placing a request for SIM Swap with your SIM company

The next step is quite important and the main step, where the fraudster places the request for sim swap with your sim company by posing a fake identity and giving all relevant documents or through online mode.

Here the person may also call you to inform you about you posing as the sim company representative and tells you a lie that your sim will be active in some time as there is an upgrade going on or something like that.

You will generally get a sms or email from sim company telling you that your sim swap request will be complete soon.

DONT IGNORE THIS SMS at any cost. This is exactly where a customer mind presence is required and you have to act fast. A lot of people who do not understand how thing work online fall prey to it. Imagine if your 70 yr old father gets this kind of sms, he might not understand exactly what it is!

Step 3 – Doing the transaction

Once the sim swap request is processed, the game is almost over because the fraudster now has all the login details and the main thing – THE NEW PHONE NUMBER which is linked to the net banking/card.

Now all they have to do is add a beneficiary and complete the transaction

Step 4 – The fraud happens

And finally, the OTP comes to the new phone number and the transaction is complete. This is the point, where you loose the money and getting it back it quite tough. I strongly suggest that you read these 21 tips you should follow to secure your banking transactions

Some Safety Tips which can prevent you from such Frauds –

• If your network is lost for a very long time like more than 20-30 min, be alert and enquire about it from your mobile operator
• If you ever get a sms/email alerting you that your sim swap request is received, make sure you contact your bank immediately and report this incident. If possible login to your net banking and change your passwords the same moment
• Never share your the 20 digits mentioned on the back of sim card to anyone ever on call. This 20 digits are required for a successful sim swap
• Don’t entertain anyone asking for any kind of OTP or your accounts details
• Register for Alerts (SMS and Email) so that whenever there is any activity on your bank account you will receive an alert.
• Always check your bank statements and online banking transaction history regularly to help identify any issues or irregularities.
• Have strong passwords in your phone and computers. Don’t keep simple passwords which can be guessed by others
• If there is any cyber fraud, immediately inform the cyber cell or the best thing is to file a FIR in local police station.
• Don’t root your phone, if you are not a tech expert.
• Don’t install unverified apps on your mobile or laptop. A lot of these programs can read your computer or phone data
• Don’t leave your important documents Xerox here and there. At times we feel, nothing will happen – but bad things happen!

Do watch this video on preventing sim swap fraud!

Don’t be over confident that it can’t happen to you

Whenever we come to hear about these types of frauds any kind of fraud, the first thought as an investor comes to our mind is that no matter what happens, I will not fall prey to any such frauds.

This is nothing but overconfidence. Be alert and always pay attention to small signals which might be pointing to this kind of frauds, especially when you keep too much money in your bank account.

Today, we will see what exactly happens when a stock is delisted from stock market? What happens to the shareholders and how they get the money back for their shares?

To understand de-listing, first let’s understand meaning of “Listing”

So when a private company wants to be become a public limited company and offer its share to open public for buying and selling, then it has to get it registered with stock market and make its shares open to public and that is called as “listing”. Once a stock lists on the stock market, it then has to follow up various processes and comply with many rules and regulations.

Meaning of Delisting

When a company wants to de-register its stocks from stock exchange and no longer wants to let public buy and sell its shares, then it’s called delisting process. In most of the cases, the stock holders will get back the value of their shares on the price which is determined at the time of delisting.

There are two kind of delisting

Voluntary delisting

Voluntary delisting, as the name suggests happens when the company takes the decision of delisting themselves. It happens mainly because company does not see any benefit in keeping its shares on stock exchange and wants more control. In this case, the buyback price offered to the shareholders is more price than the prevailing stock price. Common reasons behind voluntary delisting are

• Merger with another company
• Looking for more control and simplification within company

Involuntary delisting

• Involuntary delisting happens not out of choice, but when the situation forces for the delisting. When this happens, mostly the shareholders don’t get the good price, because anyways the stock prices must be at lowest levels. Some of the common reasons for involuntary delisting are
• Violations of Regulations
• Failure to meet the minimum financial expectations
• Company is bankrupt or ceases its 0perations
• No longer meets the listing requirement on stock exchange

How the investor gets their money back once the de-listing happens?

In case of Voluntary delisting

Understand that if its voluntary delisting, then it’s happening because the company wants it to happen. In this case, there is enough time for shareholders to get back their money and it’s mostly the transaction between the promoter and shareholders. In this case, you can expect to sell your shares back to promoters at premium price.

There is around 1 yr. of time for shareholders to get back their money and it happens through a process called as “Reverse book building” process

In case of Involuntary delisting

When involuntary delisting happens, it’s a case of violation of norms/regulations most of the times and it sends a negative shock among stock holders. Most of the times, the stock is already quoting at a lower price. In this case, whatever price is offered by company, it’s suggested to take it and close the matter.

In any kind of listing, it’s not suggested to wait for future listing of the company because you have no idea when it will happen again. It might never happen. Also it gets very tough to find a buyer off the market and get a good deal.

Recent delisting case of Vedanta Ltd

Let’s talk a bit about the recent case of Vedanta Ltd delisting news. Recently, Vedanta Ltd has decided to delist from stock exchanges because of “Corporate simplification”. They feel it will enhance operational and financial flexibility in a capital intensive business.

It was a case of Voluntary Delisting, and hence there is enough time for delisting process and shareholders don’t have to panic at all. The company has decided to buy out the minority and non-promoters shares back from public. They have proposed an “indicative offer price” of Rs 87.5 a share which is around 10% more than the closing market price last of 79.6.

Now the next set of process will follow, but you don’t need to get into details. The point is that the delisting will happen and shareholders will get a good exit.

Here is a small list of few companies which got delisted in the last 10 year from BSE

1. Maharaja Shree Umaid Mills Ltd on Feb 2, 2015
2. Shantivijay Jewels Ltd on Jan 20, 2015
3. Novopan Industries Ltd on Nov 10, 2014
4. Vishnu Sugar Mills Ltd on Jun 30, 2014
5. English Indian Clay Ltd on Jun 4, 2014
6. Rhodia Speciality Chemical India Ltd on May 28, 2014
7. Reliance Media Works Ltd on May 6, 2014
8. Reliance Broadcast Network Ltd on March 28, 2014
9. Gujarat Organics Ltd on Jan 9, 2014
10. Chettinad Cement Corporation Ltd on July 8, 2013

Hope you all have understood the various aspect of delisting of a company from the stock exchange. If you all have any questions, you can put across in the comment section and I will get back to you on your queries asap.