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Massive changes in Mutual Fund Schemes post categorization and rationalization.
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New PPF Rules For Easier Account Operation

Public Provident Fund (PPF) is a well-established and one of the most-preferred investment options.

Multiple benefits under the scheme — tax-free interest income, tax deduction on deposit, risk-free sovereign guarantee, no attachment by any Court or Govt. Agency, etc. — are, of course, all well known.

With its recent notification dated Feb 13, 2018, the Ministry of Finance has expanded this scope of benefits.

The salient aspects of the aforesaid notification titled 'Government of India makes Amendments in Small Savings Act' are detailed below.

Presently, there are various Acts and Rules for Small Savings Schemes. This often creates ambiguities. To remove the same and given the objective of 'Minimum Government Maximum Governance', the Govt. plans to merge the Government Savings Certificate Act, 1959 and Public Provident Fund Act, 1968 with the Government Savings Bank Act, 1873.

Accordingly, relevant provisions of NSC and PPF Schemes would stand subsumed in the new amended Act... named as Government Savings Promotion Act... without compromising on any of the functional provisions of the existing Act.

In this regards, there were certain apprehensions that post the merger of these Acts into the Government Savings Promotion Act, the protection presently enjoyed by an investor against attaching the amount in his/her PPF Account, against any debt or liability, may get diluted.

The Ministry of Finance has stated clearly that none of the benefits available to the investors under the present PPF Act would be withdrawn or amended, including non-attachment of the amount in the PPF Account. The primary objective of this move is to simplify the rules for the depositors, besides adding more flexbility in the operating the Account.

Hence, in addition to the ALL the existing benefits available to a PPF account holder, following additional advantages would be available to the investors.

But before that: I hope you haven't violated any of the existing provisions of the PPF Act. Read Zero Interest PPF Accounts to check whether you will get NIL interest on your PPF account(s).

changes-in-ppf-account
Changes in the PPF Accounts to bring in some more conveniences.

Here's the list of simplifications proposed for your PPF Accounts:

1. The current PPF Act does not allow the accounts to be closed prematurely, prior to the completion of five years. This restriction is proposed to be relaxed. Hence, premature closure of accounts would become permissible in case of certain exigencies such as medical emergencies, higher education etc.

2. For accounts opened by a guardian in the name of the minor, the guardian too would enjoy associated rights and responsibilities under the amended Act.

3. The new Act defines the rights of the nominees more clearly. This is to resolve certain problems arising, because as per the present Acts the amount under Small Savings Schemes is paid to the nominees; whereas Supreme Court ruling states that the nominees are mere Trustees, who must pass on the proceeds to the legal heirs.

4. The present Acts do not have clear provisions regarding operation of the accounts either in the name of minors or the physically challenged and differently-abled persons. The new Act incorporates relevant rules in this regards.

5. Presently, accounts opened in the name of the minor, do not have any facility for nomination. In the event of the death of such minor account holders, the guardian has to furnish succession certificate, as the amount can be paid only to the legal heirs. To make things easier for the investors, in the new Act even accounts in the name of minors will have the provision for nomination. Plus, in the event of death, the amount would be paid to the guardian if there were no nomination(s).

6. A grievance redressal mechanism, presently absent, would be put in place. This would ensure that the disputes, if any, are quickly and amicably settled.

The Ministry of Finance has reiterated that this step to merge various Small Savings Schemes Acts
- does NOT make any change whatsoever to the interest rates,
- does NOT affect any of the tax benefits currently available, and
- does NOT mean the closure of Small Savings Schemes.

Lastly, I guess you might be interested in knowing the 7 Lesser known Facts about PPF.

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