Govt proposes allowing premature closing of PPF accounts
In what could benefit lakhs, the government has proposed allowing premature closure of small savings schemes, including the public provident fund (PPF). Currently, they cannot be closed before five years. Another suggested change in the Finance Bill 2018 is merging the provisions of PPF accounts and savings schemes under a single act. Know more about the proposed amendments and how they can impact you.
Small savings schemes, PPF to be brought under single act
A major amendment proposed is merging the Government Savings Certificates Act, 1959 and the PPF Act, 1968, with the Government Savings Banks Act, 1873. This Act will now include Post Office Savings Accounts, National Savings Monthly Income (Account), National Savings Recurring/Time Deposit, Sukanya Samridhhi Account, Senior Citizens' Savings Scheme, KVP, NSC and PPF. The government has denied that this will impact depositors' benefits.
DEA Secretary issues clarification on proposal
But why the merger?
"The main objective in proposing a common act is to make implementation easier for depositors...and to introduce flexibilities for investors," the finance ministry said. The proposed merger will "remove existing ambiguities due to multiple acts and rules and further strengthen the objective of "minimum government, maximum governance," it added. This doesn't include any change in interest rate or tax policy on such savings schemes.
Certain "new benefits" to ease process for depositors
Besides the merger, the government has recommended allowing premature closing of small savings schemes for medical emergencies, higher education needs or other exigencies. Guardians will also be able to invest in such schemes on behalf of minors. Certain "new benefits" like these would help depositors, officials said. They would also allow the government to ensure grievance redressal and expeditious settlement of disputes, officials said.
