The Government has proposed to allow the closure of Public Provident Fund (PPF) account prematurely and to allow small savings account to be opened in the name of minor.
The Finance Ministry said on Tuesday that the proposed changes in the Finance Bill 2018 aims to bring flexibility in the accounts of small savings schemes. The government has clarified that there is no proposal to get back the profits which are available in PPF. The bill proposes to allow depositors to close the PPF account before five years in an emergency.
Currently, the PPF account can not be closed before the completion of five financial years. In the new change, the option of closing down small savings schemes will be given time to cure critical illness and other needs including higher education. It is noteworthy that interest rates are higher compared to bank deposits on small savings schemes and in some small savings schemes, income tax is also available on investment. Small savings schemes include Post Office Savings Account, National Savings Monthly Income Account, National Savings Recurring Deposit, PPF and Sukanya Samrudhi Yojana.
