Government has proposed to allow premature closure of Public Provident Fund (PPF) accounts and permit opening of small savings accounts in the name of minor. It will make amendments in Small Savings Act in this regard. In a statement, Finance Ministry said that the legislative changes proposed in the Finance Bill 2018 are aimed at adding flexibility in operation of the account under Small Savings Schemes (SSS).
Dismissing concerns expressed in the certain section of media, the Ministry said that all existing protections have been retained while consolidating PPF Act under the proposed Government Savings Promotion Act. It further said that apart from ensuring existing benefits, certain new benefits to the depositors have been proposed under the bill. The government has also proposed merger of Government Savings Certificates Act, 1959 and Public Provident Fund Act, 1968 with the Government Savings Banks Act, 1873.
The main objective in proposing a common Act is to make implementation easier for the depositors as they need not go through different rules and Acts for understanding the provision of various SSS, and also to introduce certain flexibilities for the investors.
The amendment would also allow the government to put in place mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to Small Savings. It said, apart from offering higher interest rates compared to bank deposits, some of the small savings schemes also enjoy income tax benefits.
It also clarified that no change in interest rate or tax policy on small savings scheme is being made through this amendment. It also said, the apprehension that certain Small Savings Schemes would be closed, is also without basis.