After the hullabaloo about the repealing of Public Provident Fund Act, 1968, as proposed in the Budget 2018, now the government has come out with a detailed clarification saying the protection to PPF will continue by promulgating a new act.
It also said rules regarding premature withdrawal of funds from PPF will also be relaxed. Currently, no withdrawal is possible within five years of opening the account.
The government said in the statement issued on Tuesday that it would merge its multiple acts and the rules governing small savings schemes into one single act. The Government Savings Certificates (NSC) Act, 1959 and Public Provident Fund Act, 1968 will be merged with the Government Savings Banks Act, 1873, the government said.
It further said the relevant provisions of the NSC Act and the PPF Act “would stand subsumed in the new amended Act without compromising on any of the functional provision of the existing Act”. The new amended act will be called Government Savings Promotion Act.
The government further clarified: “…the existing and future depositors will continue to enjoy protection from the attachment under the amended umbrella Act as well.” This would include the tax benefits enjoyed by these instruments. Economic Affairs secretary SC Garg had earlier tweeted about this issue too saying PPF would be immune from attachment.
In Budget 2018, it was proposed that the following schemes were temporarily moved to the Government Savings Banks Act, 1873: PPF, Post Office Savings Accounts, National Savings Time Deposits, National Savings Recurring Deposits, National Savings Monthly Income Scheme, Sukanya Samriddhi Scheme, National Savings Certificates (VIII Issue) and Kisan Vikas Patra.
Now, these schemes will be governed by the proposed Government Savings Promotion Act when it is passed by Parliament. However, it’s not clear if the protection from attachment available to PPF will be expanded to other savings instruments as well.
Some of the proposed changes in the Bill are:
- Premature/Early exit from the Public Provident Fund (PPF). Currently, no withdrawal is possible within five years of opening the account.
- Premature withdrawal from other small savings scheme for medical reasons or higher education
- Guardians will be able to contribute on behalf of minors and will have their rights and responsibilities more clearly defined.
- Minors will be able to specify nominees for their accounts. If no nominee is specified and the minor passes away, the guardian will be able to receive the balance in the account.
- The rights of nominees will be more clearly defined.
- Provision for the operation of small savings schemes accounts by physically infirm and differently abled persons will be made.
- The mechanism for grievance redressal to be set up.