Good news for PPF (Public Provident Fund) investors. The Modi government has, in the Finance Bill 2018-19, made a provision to repeal the Public Provident Fund Act, 1968, along with the Government Savings Certificate Act, 1959, and the Government Savings Bank Act, 1873, and consolidate these Acts under the proposed Government Savings Promotion Act. The move is aimed at removing the existing ambiguities due to multiple Acts and making small savings schemes more attractive to investors.
Talking about this proposal, Brijesh Parnami, Executive Director & CEO, Essel Wealth Zone, says, “PPF, Post Office Savings Account, Post office National Savings Monthly Income Account, Post office Recurring Deposit Account and Sukanya Samriddhi Account, etc, are the schemes at present governed by separate Acts and the government wants to put all these schemes in a single Act so that they could introduce uniform procedures under the Act (for example, interest rates on these schemes are subject to change every quarter and by this amendment they may be able to implement it uniformly).”
What is good news for investors is that besides keeping the existing benefits of these schemes intact, some new benefits have been proposed under the Finance Bill. For instance, “in the new PPF (Public Provident Fund) scheme, the government proposes for withdrawal facility before 5 years in case of some emergencies like medical and educational needs. And all the existing benefits will continue, including tax benefits and the major benefit of protection of PPF from attachments,” says Parnami.
Thus, deposits in your PPF account are not only safe, as assured by the government, but you will also enjoy additional benefits now. Here we are taking a look at 5 such benefits PPF will provide to investors like you once this proposal is implemented:
1. Premature Closure: Under the current regime, you can’t close your PPF account before the completion of five financial years from the date of opening the account. However, now the government may allow the benefit of premature closure of a PPF and other small savings schemes in case of medical emergencies and higher education needs, among others.
2. PPF account for minors: Currently, only parents are allowed to open a PPF account on behalf of a minor. Even grandparents were not allowed to do so till the parents remained alive. However, now any guardian can open a PPF account on behalf of a minor under the provisions of the proposed finance bill.
3. Provision for nomination in case of a minor’s account: Currently, in case of death of a minor, the amount accumulated in the PPF account is alloweed to be paid only to the legal heirs. However, now the amount will be paid to the guardian in case there is no nomination. Also, there will be a provision for nomination, which is currently not there.
4. Provision for grievance redressal: There is no provision for grievance redressal under the existing Acts. However, now a mechanism will be put in place for redressal of grievances and settlement of disputes related to small savings.
5. Account for differently-abled persons: It is also not clear in all the three existing Acts as to how the accounts, which are in the name of physically infirm and differently-abled persons, will be operated. However, provisions have now been made in this regard in the finance bill.