Aadhaar, PAN Now Mandatory For Small Saving Schemes, Accounts To Be Frozen For Non-Compliance 

Aadhaar and PAN have become mandatory for operating any small savings accounts, such as Public Provident Fund, Sukanya Samriddhi Yojana as well as post office savings scheme. Existing subscribers will have to submit Aadhaar by September 30, 2023 failing which their accounts will be frozen 
Aadhaar, PAN Now Mandatory For Small Saving Schemes, Accounts To Be Frozen For Non-Compliance 

From April 1, 2023 onwards, permanent account number (PAN) and Aadhaar will be mandatory for investing in small savings schemes. For existing subscribers, Aadhaar number will have to be submitted by September 30, 2023, failing which their accounts will be frozen. 

The changes are part of the know-your-customer (KYC) processes for small savings schemes, such as Public Provident Fund (PPF), Sukanya Samriddhi Yojan (SSY), Post Office Saving Schemes, and Senior Citizens Saving Schemes (SCSS). 

Previously, small savings schemes did not require Aadhaar. Now, Aadhaar has been made mandatory for investment in small savings schemes, and a PAN card has been made mandatory for investments above a certain threshold. 

Also, an Aadhaar enrolment number would work if a subscriber has yet to receive his/her Aadhaar number from UIDAI. However, they must provide Aadhaar within six months of opening the account, failing which, the small savings account will be frozen immediately. 

The PAN-Aadhaar linkage is also required for investment in many other financial instruments. 

PAN-Aadhaar Linkage Becomes Indispensable 

The permanent account number (PAN) or Aadhaar must be quoted if you deposit or withdraw more than Rs 20 lakh from banks, or open a current account in a bank, or a post office savings account.  

Employees’ Provident Fund (EPF) accountholders must also link their Aadhaar number to withdraw, and/or transfer their funds. 

A PAN is necessary for opening a dematerialised account or for investing in mutual funds, stocks, and other financial instruments. Transactions that require the PAN will be prohibited if it is not linked to Aadhaar by June 30, 2023. 

The stock exchanges will also suspend the dematerialised accounts of investors whose PAN is not linked to Aadhaar. Mutual Fund systematic investment plans (SIPs) that have already been started and are ongoing will also be stopped. Fund transfers from one investment scheme to another will also be prohibited without PAN-Aadhaar linkage. 

Incidentally, the government has also increased the rate of interest across small savings schemes except Post Office savings account and PPF. 

The rate of interest for the National Savings Certificates (NSCs) have been increased by 70 basis points (bps) to 7.7 per cent for the first quarter of financial year 2024, i.e., April-June 2023. The rate of interest on SCSS has been increased by 20 basis points to 8.2 per cent and on SSY by 40 basis points to 8 per cent. The government has also increased the rate of interest on the Kisan Vikas Patra (KVP) by 30 bps to 7.5 per cent, and also reduced its maturity period by 5 months to 115 months.  

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