Amogh Deshpande, email
Q. I’ve been investing Rs 2,000 monthly in a pension plan that’s now maturing. I’m thinking of surrendering it instead of buying an annuity. What are the tax implications?
A. When you surrender a pension plan before purchasing an annuity, the entire amount you receive—comprising the principal (premiums paid) plus any accrued bonuses or interest—will be treated as “Income from other sources” in the year of surrender and taxed at your applicable slab rate. It is always advisable to take help of a tax consultant in case of confusion.
Pandurang R Desai, email
My in-laws, both senior citizens with US citizenship and Overseas Citizens of India (OCI) cards, have recently settled in India. My father-in-law has a Permanent Account Number (PAN) as well as an Aadhaar card, but my mother-in-law only has PAN. Can they buy health insurance here? Is Goods and Services Tax (GST) applicable, and what documents are needed?
1 August 2025
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Yes, your in-laws can purchase health insurance policies in India. OCI cardholders who have relocated to and reside in India are treated as Indian residents for health insurance purposes. They can buy new policies by submitting standard Know Your Customer (KYC) documents, including identity proof (OCI card, valid foreign passport, and PAN). For address proof, your father-in-law can use his Aadhaar, and your mother-in-law can submit an OCI-endorsed passport, a recent utility bill or a bank statement in her name. A cancelled cheque or Indian bank statement (savings or NRO account) and passport-size photographs are typically required.
All health insurance premiums in India attract 18 per cent GST, regardless of citizenship or age. Insurers may conduct medical underwriting through phone-based health questionnaires or physical check-ups such as blood tests, liver/kidney function tests, and ECG, especially for those above 60. Pre-existing conditions usually carry a two- to four-year waiting period. Supporting documents like discharge summaries and medical reports may be needed. Look for senior citizen-specific plans with higher entry ages, wide hospital networks, and clear co-payment terms.
Uma S. Chander, CFP® Handholding Financials
Christina Lyngdoh email
I want to invest Rs 20 lakh for my daughters, aged 25 and 23, to build a corpus for their 40s. Should I choose a lump sum investment or a systematic investment plan (SIP) in a large-cap fund? Is a small-cap fund also advisable?
With a 15-17-year investment horizon, you have a good opportunity to build long-term wealth for your daughters. Given the timeframe, a moderate to high-risk profile is suitable, to balance growth and market volatility. You can either invest the entire Rs 20 lakh as a lump sum or opt for a SIP. A lump sum has benefits, but comes with higher market-timing risk. On the other hand, SIPs help average out the cost of investment over time, reduce timing risk, and encourage disciplined investing, although they may delay full market participation during rallies.
A more balanced approach could be to invest 50 per cent as a lump sum, and the remaining 50 per cent via SIPs over the next 12 months to manage both opportunity and risk. Based on your daughters’ risk appetite, you can choose from large-, mid-, or small-cap funds, or a mix of these.
Regularly review the portfolio and rebalance asset allocation when needed. You may consult a certified financial planner as well.
Hina Shah, CFP® Luhem²Wealthaa
Prashant Sinha, email
I have a Public Provident Fund (PPF) account in my bank, which will mature in two years. I wish to continue investing in it until my retirement. Do I need to inform the bank in advance?
Yes, you need to inform the bank for extending your PPF account before the expiry of one year of maturity. You can extend the account for a block of five years at a time. You have the option of extending PPF Account indefinitely in blocks of five years.
Suhel Chander, CFP®, Handholding Financials
