RBI 8% Savings (Taxable) Bonds, 2013

 

Instructions and Guidelines for 8% Savings (Taxable) Bond, 2003

 

Following are the instructions and guidelines for 8% taxable savings bond, 2003

  1. There is no maximum limit for Investment in the Bonds.
  2. Cheque/ draft towards subscription should be drawn in favour of the bank/Receiving Office, receiving the application and payable at the place where the application is tendered.
  3. If the application is made on behalf of a minor by the legal guardian, a guardianship certificate granted by a competent court under the provisions of Guardians and Wards Act (Act of 1890) should be produced.
  4. In case of minor applicant, a birth certificate issued by the Municipal or other competent authority, church, Registrar of Birth/s or a Magistrate, Head of a Gram
  5. Panchayat or Head Master of a School – disclosing the name and the date of birth of the minor should be produced in original (along with one xerox copy) for verification.
  6. The application shall bear the signature/thumb impression of the applicant/s. The thumb mark should be witnessed by 2 respectable persons.
  7. If the application is signed by a person other than the investor, a Power of Attorney authorising the signatory should be submitted along with the application. The P.O.A. should contain express provision to receive interest and the principal amount due under the Bonds and/or to negotiate or transfer the Bonds. The P.O.A. should also be unconditional. In case the P.O.A. is executed abroad, it should be attested by a Notary Public of the place where it is executed and notarised afresh in India (duly stamped).
  8. The Kartha of HUF making an application for Taxable Bonds should submit a declaration in the form annexed hereto.
  9. If the application is made on behalf of a (a) ‘Charitable Institution’ to mean a Company registered under Section 25 of the Indian Companies Act 1956 or (b) an institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or (c) any institution which has obtained a certificate from an Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961, such application shall be signed by an authority authorized to sign the documents on behalf of such Charitable Institution. Certified copies of the relevant documents shall be submitted along with the application.
  10. If the application is made on behalf of a “University”, means any university established under any statute, such application shall be signed by an authority authorized to sign the documents on behalf of such University. Certified copies of the relevant documents shall be submitted along with the application.
  11. The nomination may be made by a sole holder (other than a minor) in case of bonds in the form of Bond Ledger Account in Form ‘B’ or as near thereto as may be. A nomination made may be varied or cancelled by notifying branch of authorised Receiving Office in Form ‘B’ or ‘C’ as the case may be. Every nomination made or variation thereof shall be registered at branch of authorised Receiving Office and shall be effective from the date of registration.
  12. In case of applications made in the joint names of more than 2 persons, the bond/s interest warrants and Payment Order/s will be issued in the name of the first applicant.
  13. The bond in the form of Bond Ledger Account, will be opened from date of receipt of subscription in cash or the date of realisation of draft or cheque.
  14. Tax treatment available under 8% Savings (Taxable) Bond, 2003 are as under : i) Wealth Tax – The bonds will be exempt from Wealth Tax under the Wealth Tax Act 1957. ii) Income Tax – Tax will be deducted at source while making payment of interest on the non-cumulative bonds and credited to Government Account. Tax on the interest portion of maturity value will be deducted at source at the time of payment of the maturity proceeds on the cumulative bonds and credited to Government Account.
  15. The bond is repayable after a period of six years from the date of issue. Applications for Bonds in the form of Bond Ledger Account will be received at branches of State Bank of India, Associate Banks and Nationalised Banks, four private sector banks and SHCIL specified in the Annexure 3 of the Government Notification.
  16. Brokerage at the rate of Re. 1.00 (Rupee one only) per Rs.100/- will be paid to the brokers listed in Para 10 (a)&(b) and to PPF and UTI Agents enrolled with them as also to authorised banks on the applications tendered by them on behalf of their clients and bearing their stamp.
  17. The Bonds shall not be tradable in secondary market and not eligible as collateral for loan from banks, financial institutions and NBFC, etc.

 

 

 

RBI allows Premature Encashment of 8% Savings (Taxable) Bonds, 2003

 

RBI/2013-14/206
DGBA.CDD. No. 1448/13.01.299/2013-14

August 30, 2013

The Chairman / Managing Director
Head Office (Government Accounts Department)
State Bank of India and Associates
All Nationalized Banks
(Excluding Punjab and Sind Bank & Andhra Bank)
Axis Bank Ltd./ICICI Bank Ltd./HDFC Bank Ltd./
Stock Holding Corporation of India Ltd. (SHCIL)

Dear Sir/Madam,

 

8% Savings (Taxable) Bonds, 2003 – Premature Encashment

 

The captioned bonds, issued with effect from April 21, 2003, vide Government of India Notification No. F 4(10)-W&M/2003 dated March 21, 2003 and subsequent Notification F. No. 4(10)-W&M/2003 dated April 2, 2003, are repayable on the expiry of six years from the date of issue. Premature encashment was not permissible under this scheme.

2. The Government of India has now vide Notifications dated July 29, 2013 and August 16, 2013 (copies enclosed), decided to provide the facility of premature encashment of these bonds to individual investors in the age group of sixty years and above, after a minimum lock-in period of three years from the date of issue as indicated below:-

 

1.              Lock-in period for investors in the age bracket of 60 to 70 years shall be 5 years from the date of issue.

2.              Lock-in period for investors in the age bracket of 70 to 80 years shall be 4 years from the date of issue.

3.              Lock-in period for investors of the age of 80 years and above shall be 3 years from the date of issue.

3. An investor, desiring to avail of the facility of premature encashment, will have to submit documentary evidence in support of his/her date of birth to satisfaction of the agency bank. In case of joint holders or more than two holders of a bond, any one of the holders should fulfil the above conditions of eligibility.

 

4. After aforesaid minimum lock-in period from the date of issue, an eligible investor can surrender the bonds at any time after the 10th or 8th or 6th half-year as applicable, corresponding to the respective lock-in period, however, encashment payment will be made on the following interest payment due date. Thus, the effective date of premature encashment for the eligible investors, in case of Non-Cumulative bonds will be 1st August and 1st February every year after completion of the lock-in period as per the eligibility criteria and for Cumulative bonds, it will be notionally the 7th or 9th or 11th half-yearly interest payment due date (the date can be any date and not necessarily 1st August and 1st February). However, 50% of the interest due and payable for the last six months of the holding period will be recovered as penalty from the investor for premature encashment in such cases, both in respect of cumulative and non-cumulative bonds.

The amount payable on completion of respective half year for per `1000 invested is given hereunder:

Payable on

Amount payable per `1000 invested (in `)

Non-Cumulative

Cumulative

7th half year

1020.00

1290.63

8th half year

1020.00

1342.25

9th half year

1020.00

1395.94

10th half year

1020.00

1451.78

11th half year

1020.00

1509.85

 

5. We further clarify the provisions for premature encashment as under:

1.              Premature encashment means encashment of entire amount invested through any single application for 8% Savings (Taxable) Bonds, 2003, which has completed minimum lock-in period, as per the eligibility criteria from the date of issue. As such, investors can be allowed to withdraw entire amount of investment made on any single application. However, if a holder is having multiple investments in the same BLA, he/she can make one or more request(s) for premature encashment of entire amount(s) of one or more investment(s), which has/have completed minimum lock-in period as per the eligibility criteria from the date of issue.

2.              Partial encashment of amount invested on a single application is not permitted.

3.              Where post-dated interest warrants have been issued to eligible investor at the time of investment, they are required to surrender the same along with request for pre-mature encashment.

4.              There is no specific form/declaration, which the investor has to fill-up while submitting his/her request for premature encashment.

5.              The investor needs to submit a request letter along with discharge certificate in usual Form1A, as is being obtained now, for the full amount to be prematurely encashed.

 

6. The premature encashment of investment may be allowed even after despatch of interest warrant, but such requests, received after despatch of interest warrants, must be accompanied by the interest warrant of latest half-year issued to the investor. However, in cases where interest warrants have already been despatched, but not yet received by the holders or not tendered by the holder, request for premature encashment may be accepted on the condition that 50% of the interest due and payable for the last six months of the holding period will be recovered from the principal amount and credited to the Interest Account maintained with CAS, Nagpur. In case of receipt of requests for premature encashments well in advance, Payment Orders for encashment amount/credit to account through NEFT/NECS will be made on the next half yearly due date, i.e. 1st August/1st February, as the case may. In case where such request is not received well in advance, the issuing offices may take five clear working days to make the payment.

7. Suitable instructions to designated branches operating the scheme may be issued to make the changes in the system to absorb the premature encashment process. The premature encashment option may also be suitably displayed in the dealing branches.

8. Please acknowledge receipt.

Yours faithfully,

(Sangeeta Lalwani)
General Manager

Encl:As abo

 

 

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