Having a thought to make some changes in the Public Provident Fund while retaining the basic elements of the scheme like tax exemptions and the interest rate policy, the Union Government is introducing new facilities such as allowing investors to opt out of the scheme before the completion of five years.
The government has proposed several amendments to the laws governing small savings schemes such as PPF and National Savings Certificate, which have raised apprehensions about subscribers losing out on several benefits.
Investment in small savings schemes can be made by a guardian on behalf of a minor under the provisions proposed in the Bill and the guardian may also be given associated rights and responsibilities.
There was no clear provision earlier regarding deposit by minors in the existing laws and the new element has been incorporated to promote savings among children. Similarly, a specific provision has been inserted to allow operation of small savings accounts by differently-abled persons.
The new provisions have been built in to avoid any dispute in case of death of an investor in small savings scheme, given Supreme Court’s rulings. A grievance redressal mechanism has also been put in place for amicable and expeditious settlement of disputes. “The above provisions, which are proposed to be incorporated in the amended Act, will add to the flexibility in operation of the account under small savings schemes.”
The government said no existing benefit is proposed to be withdrawn, pointing specifically to the fact that PPF accounts cannot be attached through a court order. “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.”
