Govt allays fears over savings promotion Act
The proposed Government Savings Promotion Act will provide a mechanism for grievance redressal without diluting existing tax incentives, says the government
New Delhi: The finance ministry on Tuesday said that the proposed Government Savings Promotion Act, by merging existing small savings Acts, will provide a mechanism for grievance redressal without diluting existing tax incentives.
In the Finance Bill 2018-19, finance minister Arun Jaitley had proposed merging the Government Savings Certificates Act, 1959, and Public Provident Fund Act, 1968, with the Government Savings Banks Act, 1873.
“The amended Act allows the government to put in place mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to small savings,” a statement issued by the finance ministry said.
The ministry clarified that the intention of the proposed Act is to remove existing ambiguities due to multiple Acts and rules for small savings schemes, make implementation easier for depositors, and also introduce certain flexibilities for investors.
“Concerns have been raised from different corners and also by print and social media that the government aims to bring down the protection against the attachment of Public Provident Fund account under any decree or order of any court in respect of any debt or liability incurred by the depositors. It is made clear that there is no proposal to withdraw the said provision and the existing and future depositors will continue to enjoy protection from attachment under the amended umbrella Act as well,” the statement clarified.
While the current PPF Act does not allow PPF accounts to be closed prematurely before completion of five financial years, the proposed Act is likely to allow premature closure of small savings schemes to deal with medical emergencies, higher education, etc.
To promote a culture of savings among children, the proposed Act is likely to allow guardians to start investing in small savings schemes on behalf of minors.
While there were no clear provisions in all three Acts for the operation of accounts in the name of physically infirm and differently abled persons, provisions in this regard have now been made in the proposed Act. Under existing provisions of the Acts, if a depositor dies and a nomination exists, the outstanding balances will be paid to nominees. But the Supreme Court in a judgment ruled that the nominee is merely empowered to collect the amounts as trustee for the benefit of legal heirs.
“It was creating disputes between the provisions of the Acts and verdict of the Supreme Court. Hence, rights of nominees have now been more clearly defined,” the statement said.