Government proposes early closure of PPF accounts

Announcing that the basic elements of the popular public provident fund scheme are being retained including the interest rate policy and tax exemptions, the Union Government on Tuesday said that new facilities are coming up which will allow the investors to opt out of the scheme before the completion of five years.

Small savings schemes such as PPF and National Savings Certificate have been proposed with several amendments raising apprehensions regarding the subscribers losing out on several benefits.

The Finance Ministry in a statement stated that PPF accounts will now be allowed to close prematurely in case of urgent situations such as medical emergencies or higher education needs.

For a minor, a guardian can make an investment in small savings schemes on the minor’s behalf under the provisions proposed in the Bill with the guardian also granted the associated rights and responsibilities.

The statement said that the new aspect is being incorporated to promote savings among children. Similarly, a specific provision has been implemented to allow small savings accounts by differently-abled persons.

In case of the demise of an investor in the scheme, new provisions have been built in to avoid any dispute.

Income tax benefits, no change in interest rate or tax policy on small savings scheme is being made through the amendment.

The statement further stated, “The main objective of proposing a common Act (for small savings) is to make implementation easier for the depositors as they need not go through different rules for understanding the provision of various small saving schemes, and also to introduce certain flexibilities for the investors.”