Ministry of Finance

About Ministry

• The Ministry of Finance is an important ministry within the Government of India concerned with the economy of India, serving as the Indian Treasury Department. In particular, Ministry of Finance concerns itself with taxation, financial legislation, financial institutions, capital markets, centre and state finances, and the Union Budget.
• The Ministry of Finance is the apex controlling authority of the Indian Revenue Service, Indian Economic Service, Indian Cost Accounts Service and Indian Civil Accounts Service.
• The Ministry of Finance comprises of the five Departments namely:—
  1. Department of Economic Affairs – nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management. A principal responsibility of this Department of Ministry of Finance is the preparation and presentation of the Union Budget (including Railway Budget) to the parliament and budget for the state Governments under President’s Rule and union territory administrations. 
  2. Department of Expenditure – nodal Department for overseeing the public financial management system (PFMS) in the Central Government and matters connected with the finances. The principal activities of the Department include pre-sanction appraisal of major schemes/projects (both Plan and non-Plan expenditure), handling the bulk of the Central budgetary resources transferred to States, implementation of the recommendations of the Finance and Central Pay Commissions, overseeing the expenditure management in the Central Ministries/Departments, preparation of Central Government Accounts, assisting Central Ministries/Departments in controlling the costs and prices of public services etc.
  3. Department of Revenue – It exercises control in respect of matters relating to all the Direct and Indirect Union Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC).
  4. Department of Investment and Public Asset Management – The Department of Disinvestment has been renamed as Department of Investment and Public Asset Management or ‘DIPAM’, a decision aimed at proper management of Centre’s investments in equity including its disinvestment in central public sector undertakings. responsible for systematic policy approach to disinvestment and privatisation of Public Sector Units (PSUs).
  5. Department of Financial Services – The Department of Financial Services of Ministry of Finance, covers Banks, Insurance and Financial Services provided by various government agencies and private corporations. It also covers pension reforms and Industrial Finance and Micro, Small and Medium Enterprise. It started the Pradhan Mantri Jan Dhan Yojana.

 

PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY)

• The Union Government has decided to make the Pradhan Mantri Jan Dhan Yojana (PMJDY) an open ­ended scheme and added more incentives to encourage people to open bank accounts.

Objectives

• • To ensure comprehensive financial inclusion of all the households in the country by providing universal access to banking facilities with at least one basic bank account to every household, financial literacy, access to credit, insurance, remittance and pension facility.

Salient Features

• • The Department of Financial Services under Ministry of Finance launched the Scheme.
  • Account can be opened in any bank branch or Business Correspondent (Bank Mitra) outlet.
  • It focuses on coverage of households as against the earlier plan which focused on coverage of villages. It focuses on coverage of rural as well as urban areas. Any individual above the age of 10 years can open Basic Savings Bank Deposit Account (BSBDA) Account.
  • Special Benefits under PMJDY Scheme include:
    1. 1. No minimum balance
       2. The scheme provides life cover of Rs. 30,000/- payable on death of the beneficiary, subject to fulfilment of the eligibility condition.
       3. Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.
       4. Overdraft facility upto Rs.5000/- is available in only one account per household, preferably lady of the household after satisfactory operation of the account for 6 months.
       5. The National Mission for Financial Inclusion (PMJDY) to continue beyond 14.8.2018
       6. Existing over Draft (OD) limit of Rs 5,000 to be raised to Rs 10,000.
       7. There will not be any conditions attached for OD upto Rs 2,000.
       8. Age limit for availing OD facility to be revised from 18-60 years to 18-65 years.
       9. Under the expanded coverage from “every household to every adult”, accidental insurance cover for new RuPay card holders to be raised from Rs 1 lakh to Rs 2 lakh to new PMJDY accounts opened after 28.8.18.

Intended Impact

• • Universal Coverage – It will bring many downtrodden into the mainstream of financial services with the expanded coverage from “every household to every adult”
  • Efficient subsidy regime – It will help to facilitate the transfer of benefits of various subsidy schemes of the Government more efficiently.

 

NATIONAL PENSION SYSTEM

• It is a pension cum investment scheme, launched by Gol in 2004, with the objective of providing retirement income/Old age security to all the citizens of India.

Objectives

• • To provide retirement income to all the citizens.
  • To institute pension reforms and to inculcate the habit of saving for retirement amongst the citizens.

Eligible Beneficiaries

• • NPS is applicable to:
    • All citizens of India between the age of 18 and 65 years.
    • All new employees of Central Government service (except Armed Forces) and Central Autonomous Bodies joining Government service on or after 1^st January 2004.
    • All the employees of State Governments, State Autonomous Bodies joining services after the date of notification by the respective State
    • Any other government employee who is not mandatorily covered under NPS can also subscribe to NPS
    • All citizens i.e., private employees and unorganized sector workers.
    • Non Resident Indians (NRIs) with bank accounts in India

Regulated by

Pension Fund Regulatory and Development Authority

Salient Features

• • NPS is a market-linked annuity product. Individual savings are pooled in to a pension fund, invested by PFRDA regulated professional fund managers into diversified portfolios comprising Govt. Bonds, Bills, Corporate Debentures and Shares.
  • Under the NPS, the individual contributes to his retirement account and his employer can also co-contribute.
  • It is designed on defined contribution basis wherein the subscriber contributes to his account, there is no defined benefit that would be available at the time of exit from the system and the accumulated wealth depends on the contributions made and the income generated from investment of such wealth.
  • The record-keeping, administration and customer service functions for all subscribers of the NPS are being handled by the National Securities Depository Limited (NSDL), which is acting as the Central Record-keeper for the NPS.
  • The subscriber will be allotted a unique Permanent Retirement Account Number (PRAN) which is portable and can be used from any location in India.
  • PRAN will provide access to two personal accounts:
    1. 1. Tier I Account: This is a non-withdrawable permanent retirement account meant for savings for retirement. Minimum contribution in a financial year is INR 6000.
       2. Tier II Account: This is simply a voluntary savings facility. The subscriber is free to withdraw savings from this account whenever subscriber wishes. No tax benefit is available on this account. Minimum contribution is INR 2000 in a financial year.
  • NPS returns are market linked. It offers 3 funds to subscribers: Equities, Corporate Bonds, and Government
  • Subscriber can exit from NPS after 10 years of account opening or attaining 65 years of age whichever is early. Only up to 40% of Corpus withdrawn in lump sum is exempt from tax.
  • Premature withdrawal – Recently Government has allowed premature withdrawal from New Pension Scheme Fund. A subscriber is eligible for 3 partial withdrawals during subscription period, each withdrawal not exceeding 25% of the contributions made by subscriber.
  • Recently cabinet has approved the coveted EEE tax status (tax exempt at entry, investment, and maturity) for the NPS (earlier it was EET).
  • Other recent changes include:
    1. 1. Increased contribution by the Central Government from the existing 10 % to 14 % for employees covered under NPS Tier-I.
       2. Central Government employees are provided freedom of choice for selection of Pension Funds and decide pattern of investment.
       3. Tax exemption limit for lump sum withdrawal on exit has been enhanced to 60%. With this, the entire withdrawal will now be exempt from income tax.
       4. Contribution by the Government employees under Tier-II of NPS will now be covered under Section 80 C for deduction up to Rs. 1.50 lakh for the purpose of income tax benefits provided that there is a lock-in period of 3 years.
       5. Payment of compensation for non-deposit or delayed deposit of NPS contributions during 2004- 2012.
       6. Apart from partially withdrawing money for exigencies like health, marriage, house and education, subscriber can also withdraw 25 percent of the contributions after three years of joining for skill development activity like startups, new ventures.

 

PRADHAN MANTRI MUDRA YOJANA

• It is a scheme launched for providing micro finance loans upto 10 lakh to the non-corporate, non-farm small/micro enterprises.

Objectives

• • Increasing access of finance to the unbanked but also bring down the cost of finance from the last Mile Financers to the micro/small enterprises, most of which are in the informal sector.

Intended beneficiary

• • Any Indian Citizen who has a business plan for a non-farm sector income generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than Rs 10 lakh.

Implemented by

• • For implementing the Scheme, government has set up a new institution named, Micro Units Development & Refinance Agency Ltd (MUDRA), a wholly owned subsidiary of Small Industries Development bank of India (SIDBI).

Salient Features

• • MUDRA loans are extended by banks, NBFCs, MFIs and other eligible financial intermediaries as notified by MUDRA Ltd.
  • MUDRA Bank would be responsible for refinancing all Last Mile Financiers such as Non-Banking Finance Companies, Societies, Trusts, Section 8 Companies, Co-operative Societies, Small Banks, Scheduled Commercial Banks and Regional Rural Banks which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities.
  • The present authorised capital of MUDRA is at Rs. 5000 crore with a paid up capital of Rs.1675.93 crore. RBI has allocated an amount of Rs 20,000 crore from Priority Sector shortfall of Commercial Banks for creating a Refinance Corpus Fund.
  • 3 types of loans to be allotted by micro units’ development and refinance agency bank are:
    • 1. Shishu: covering loans upto Rs. 50,000
      2. Kishor: covering loans above Rs. 50,000 and upto 5 lakhs
      3. Tarun: covering loans above Rs. 5 lakh and upto 10 lakhs
  • There is no subsidy for the loan given under PMMY. However, at present, MUDRA extends a reduction of 25bps in its interest rates to MFIs / NBFCs, who are providing loans to women entrepreneurs.
  • Banks have been mandated by RBI not to insist for collateral security in the case of loans upto 10 lakh extended to the units in the Micro Small Enterprises sector.

 

ATAL PENSION YOJANA

• Launched in June 2015 under Ministry of Finance.

Objectives

• • The subscribers would receive the fixed minimum pension at the age of 60 years, depending on their contributions.
  • To address the longevity risks among the workers in the unorganized sector and to encourage the workers in the unorganized sector to voluntarily save for their retirement.

Intended beneficiary

• • Open to all Indians between the age of 18 and 40.
  • It is mainly focused on citizens in unorganized sector.

Administered by

• Pension Fund Regulatory and Development Authority under the National Pension System (NPS)

Salient Features

• • The Central Government co-contribute 50% of the total contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, who join the NPS between the period 1st June, 2015 and 31^st December, 2015 and who are not members of any statutory social security scheme and who are not income tax payers.
  • Under the APY, subscribers would receive a fixed minimum pension of 1000 to Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY.
  • It replaced the Swavalamban scheme.
  • The beneficiaries will not be able to exit the scheme before the age of 60
  • The minimum period of contribution by the subscriber under this would be 20 years or more.
  • In case of death of subscriber, the spouse of the subscriber shall be entitled for the same amount of pension till his or her death.
  • After the death of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age of 60 years of the subscribe.
  • It is administered by the Pension Fund Regulatory and Development Authority. The Institutional Architecture of NPS would be utilised to enrol subscribers under APY.

 

PRADHAN MANTRI VAYA VANDANA YOJANA (PMVVY)

• A pension scheme  launched by Ministry of Finance exclusively for senior citizens aged 60 years and above against a future fall in their interest income due to uncertain market conditions.

Objectives

• • To provide social security during old age and protect elderly persons against a future fall in their interest income due to uncertain market conditions.

Intended beneficiary

• • Elderly persons aged 60 years and above

Salient Features

• • It will provide an assured pension based on a guaranteed rate of return of 8 % for 10 years, with an option to opt for pension on a monthly / quarterly / half yearly and annual basis.
  • Recently, union cabinet gave approval for extending the investment limit from Rs 7.5 lakhs to Rs 15 lakhs as well as extension of time limits for subscription from 4^th May 2018 to 31^st March, 2020.
  • It will be implemented through Life Insurance Corporation of India (LIC).
  • The difference between the return generated by LIC and the guaranteed 8 percent interest would be compensated through the subsidy given to LIC.
  • The scheme also allows for premature exit for the treatment of any critical/ terminal illness of self or spouse.
  • On death of the Pensioner during the policy term of 10 years, the Purchase Price shall be refunded to beneficiary.
  • Loan facility is available after completion of 3 policy years. The maximum loan that can be granted shall be 75% of the Purchase Price.

 

PRADHAN MANTRI SURAKSHA BIMA YOJANA

• Launched in May, 2015 by Department of Financial Services under Ministry of Finance, Government of India. .

Objectives

• • It is a one year cover Personal Accident Insurance Scheme, renewable from year to year, offering protection against death or disability due to accident.

Intended beneficiary

• • Available to citizens (including NRIs) in the age group 18 to 70 years having a bank account.

Salient Features

• • Premium payable is Rs.12/- per annum per member.
  • Risk coverage available will be Rs. 2 lakhs for accidental death and permanent total disability
  • 1 lakhs for permanent partial disability
  • Individuals who exit the scheme at any point may re-join the scheme in future years by paying the annual premium
  • The scheme is offered/administered through Public Sector General Insurance Companies (PSGICs) and other general insurance companies.
  • Government has recently converged the social security schemes of Aam Aadmi Bima Yojana (AABY) with Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) to provide life and disability coverage to the unorganised workers depending upon their eligibility.

 

PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA

• Launched in May, 2015 by Department of Financial Services under Ministry of Finance, Government of India. 

Objectives

• • A one year life insurance scheme renewable from year to
  • Offering coverage for death due to any reason.

Intended beneficiary

• • Available to citizens (including NRIs) in the age group of 18 to 50 years.
  • Subject to annual renewal, benefits are available till the age of 55(entry, however, will not be possible beyond the age of 50 years).

Salient Features

• • It provides coverage of Rs. 2 lakh in case of death due to any reason. It charges an annual premium of Rs. 330.
  • It is offered / administered through LIC and other Indian private Life Insurance companies.

 

AAM AADMI BIMA YOJANA (AABY)

• Launched in 2007 and provides Death and Disability cover. Under the supervision of the Government of India, the Ministry of Finance made a proposal to merge both the Social Security Schemes, ‘Aam Aadmi Bima Yojana (AABY) and Janashree Bima Yojana (JBY).

Eligible Beneficiaries

• • Persons between the age group of 18 to 59 years, for identified vocational/ occupational groups/ rural landless household

Objectives

• • To provide economical support to families

Implemented by

• • Life Insurance Corporation

Salient Features

• • The AABY provides insurance cover for a sum of Rs 30,000/- on natural death
  • 75,000/- on death due to accident
  • 37,500/- for partial permanent disability due to accident
  • 75,000/- for total permanent disability due to accident.
  • Add-on-benefit – Scholarship of Rs 100 per month per child is paid to a maximum of 2 children per member, studying in 9th to 12th Standard.
  • Annual premium – Rs. 200/- per beneficiary of which 50% is contributed from Social Security Fund created by Central Government & maintained by LIC. The balance 50% contributed by State Government/ Nodal Agency/ Individual, as the case may be.

 

STAND UP INDIA

• The scheme is anchored by Department of Financial Services (DFS), Ministry of Finance, Government of India.

Objectives

• • It aims at promoting entrepreneurship among women and scheduled castes and tribes.

Intended beneficiary

• • SC/ST and/or woman entrepreneur, above 18 years of age.

Salient Features

• • It facilitates bank loans between Rs 10 lakh and Rs 1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise. This enterprise may be in manufacturing, services or the trading sector.
  • In case of non-individual enterprises at least 51% of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur.
  • Borrower should not be in default to any bank/financial institution.
  • It covers all Scheduled Commercial banks.
  • Borrower shall be required to bring in minimum of 10% of the project cost as own contribution.
  • The rate of interest would be lowest applicable rate of the bank for that category (rating category) not to exceed (base rate (MCLR) + 3%+ tenor premium).
  • Besides primary security, the loan may be secured by collateral security or guarantee of Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL) as decided by the banks.
  • The loan is repayable in 7 years with a maximum moratorium period of 18 months.
  • Rupay debit card to be issued for convenience of the borrower.

 

SOVEREIGN GOLD BONDS (SGB)

Objectives

• • Reducing the demand for physical gold by shifting a part of the estimated 300 tons of physical bars and coins purchased every year for Investment into gold bonds.

Issued by

• • RBI on behalf of Govt
  • Distributed through Scheduled Commercial banks and Post office.

Eligibility

• • People resident in India Individual, HUF, Trust, Universities, and Charitable Institutes.
  • Minor through a guardian can invest

Salient Features

• • Sovereign Gold Bonds will be issued on payment of rupees and denominated in grams of gold.
  • Bonds will be issued on behalf of the Government of India by the RBI. Thus, the Bonds will have a sovereign guarantee.
  • The Bonds shall be denominated in units of one gram of gold and multiples thereof.
  • The bond would be restricted for sale to resident Indian entities.
  • The investment limit per fiscal year has been increased to 4 kg for individuals, 4 Kg for Hindu Undivided Family (HUF) and 20 Kg for Trusts and similar entities notified by the Government from time to time.
  • The Government will issue bonds with a rate of interest which will be calculated on the value of the gold at the time of investment.
  • Bonds will be available both in demat and paper form.
  • The tenor of the bond could be for a minimum of 5 to 7 years.
  • Bonds can be used as collateral for loans.
  • Bonds to be easily sold and traded on exchanges to allow early exits for investors who may so desire.
  • On maturity, the redemption will be in rupee amount only which would not be a fixed sum, but linked to the price of gold.
  • The deposit will not be hedged and all risks associated with gold price and currency will be borne by Gol through the Gold Reserve Fund.

 

GOLD MONETIZATION SCHEME

• It is a gold savings account launched in 2015.

Objectives

• • To mobilise gold held by households and institutions of the country and facilitate its use for productive purposes, and
  • In the long run, to reduce country’s reliance on the import of gold.
  • To provide a fillip to the gems and jewellery sector in the country by making gold available as raw material on loan from the banks.

Eligible depositors

• • Individuals, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations, Companies.
  • Recently the ambit was expanded to include charitable institutions, Central/State Government, and entities owned by them.

Implementation

• • Banks excluding RRBs will be eligible to implement the Scheme.

Salient Features

• • The scheme allows banks’ customers to deposit their idle gold holdings for a fixed period in return for interest in the range of 2.25-2.50%.
  • Recently RBI made changes, the scheme could now be availed by charitable institutions, the central government, the state government or any other entity owned by the central government or the state government, apart from individual and joint depositors.
  • Scheme provides different options to the people to monetize the gold, by modifying the already existing two schemes, namely ‘Revamped Gold Deposit Scheme’ and the ‘Revamped Gold Metal Loan’ scheme.
  • All scheduled commercial banks (excluding RRBs) have been allowed to implement the scheme.
  • The minimum deposit at any one time shall be 30 grams of raw gold (bars, coins, jewellery excluding stones and other metals). There is no maximum limit for deposit under the scheme.
  • The deposits can be made for a short-term period of 1-3 years; a medium-term period of 5-7 years and a long-term period of 12-15 years. (Minimum tenure is one year)
    1. 1. The principal and interest on short term deposits shall be denominated in gold. In the case of medium and long term deposits, the principal will be denominated in gold. However, the interest shall be calculated in Indian Rupees with reference to the value of gold at the time of the deposit.
       2. The difference between the current borrowing cost for the Government and the interest rate paid by the Government under the medium/long term deposit will be credited to the Gold Reserve Fund.
       3. Tax exemptions under the GMS include exemption of interest earned on the gold deposited and exemption from capital gains made through trading or at redemption.

 

PROJECT SAKSHAM

• Launched by Ministry of Finance. The project will help in integration of systems for the entire indirect tax system.

Objectives

• • To bolster the information technology network for the new GST regime

Salient Features

• • It is a New Indirect Tax Network (Systems Integration) of the Central Board of Excise and Customs (CBEC).
  • It will enable the implementation of Goods and Services tax (GST) and support all existing services in Customs, Central Excise and Service Tax.
  • It will also enable extension of the Indian Customs Single Window Interface for Facilitating Trade (SWIFT) and other taxpayer-friendly initiatives under Digital Indian and Ease of Doing Business of CBEC.
  • The Central Board of Excise and Customs (CBEC) IT systems need to integrate with the Goods and Services Tax Network (GSTN) for processing of registration, payment and returns data sent by GSTN systems to CBEC, as well as act as a front-end for other modules like audit, appeal and investigation.

 

SWACHH BHARAT KOSH (SBK)

Objectives

To attract Corporate Social Responsibility (CSR) funds from Corporate Sector and contributions from individuals and philanthropists to achieve the objective of Clean India (Swachh Bharat) by the year 2019.

Salient Features

• • It would be administered by a Governing Council chaired by Secretary, Department of Expenditure under Ministry of Finance.
  • Donations to the “Swachh Bharat Kosh”, other than the sums spent for “Corporate Social Responsibility” are eligible for 100% deduction under section 80G of the Income-tax Act, 1961. This is applicable to the assessment year 2015-16 and subsequent years.

 

SUKANYA SAMRIDDHI SCHEME

• It is a small saving scheme, governed under the Post Office Savings Account Rules.
• Subcomponent of Beti Bachao, Beti Padhao campaign.

Objectives

• • Welfare of girl child, aimed at the higher education and/or marriage needs

Salient Features

• Deposit
  • Minimum INR. 1000/-and Maximum INR. 1,50,000/- per year. Subsequent deposit in multiple of INR 100/-
  • Parent or a legal guardian, in name of a girl child who is up to 10 years of age can open an account. Only one account per girl child, Max 2 accounts for 2 girl children. After 10 years girl child can operate the account herself.

Duration/Maturity

• • Deposits can be made only up to 14 years from opening the account
  • Premature withdrawal, maximum up to 50% of balance, can be made only on completion of 18 years of age e.g. for higher education or marriage
  • Account can be closed after completion of 21 years from day of opening or 18 years age (if girl is married)
  • Tax Benefit (Exempt – Exempt – Exempt) – Tax deduction under 80 c – Tax free Interest – Maturity amount tax free.

 

SAVINGS (TAXABLE) BONDS, 2018

Objectives

• • To enable resident citizens/HUF to invest in a taxable bond, without any monetary ceiling.

Eligibility

• • Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families (NRI Not eligible).

Salient Features

• • Bonds will be issued for a minimum amount of Rs.1,000/- (face value) and in multiples thereof.
  • There will be no maximum limit for investment in the Bonds.
  • Interest on the Bonds will be taxable under the Income-tax Act, 1961
  • The Bonds will be exempt from Wealth-tax under the Wealth Tax Act, 1957.
  • Bonds will have a maturity of 7 years carrying interest at 7.75% per annum payable half-yearly.
  • Bonds are non-transferable, not tradeable in the Secondary market and are not eligible as collateral for loans.

To read and learn about Government Schemes and Programs related to other Ministries,  Click Here. (Notes on all Government Ministries Schemes and Programs)