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Amendments in Small Savings Scheme You Need to Know About

Sep 03, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

Small savings schemes are one of the most preferred investment options for a lot of low risk appetite investors due to their assured returns, tax benefits, and government’s guarantee. However, the government has proposed several schemes over the years, along with different rules and Acts, making small savings schemes difficult to monitor.

However, to overcome discrepancies, the Indian Government is looking to consolidate a few schemes into one. Apart from this, there are few other amendments that accompany this bold move, here’s a lowdown:

1. Merger of different acts governing small saving schemes

Many different small saving schemes have come up over the years, under various rules and Acts.

In the recent budget, the Government proposed to merge the Public Provident Fund (PPF) Act, 1968 and the Government Savings Certificates Act, 1959 with the Government Savings Banks (GSB) Act, 1873.

Small savings schemes such as Sukanya Samridhhi Yojana, PPF, Kisan Vikas Patra, National Savings Certificate, and other time deposits are to be brought under one umbrella. Before this, the small savings schemes fall under different acts. Withdrawals from them come at a high cost for the customers with a lot of difficulty.

2. Acts and their scope

Government Savings Certificates Act, 1959 covers National Savings Certificates and Kisan Vikas Patra. The Post Office Savings Bank, other banking companies or any other institution the government includes are included in the GSB Act.

3. Consolidation of acts and schemes

The main objective in proposing a common Act is to make implementation easier for the depositors. They would not need to go through various acts and rules to understand the scheme’s provisions.

Other amendments

  • The PPF account cannot be closed before completing 5 financial years, according to the current PPF Act
  • Under the proposed Bill, benefits of premature closure of Small Savings Schemes may now be introduced to deal with medical emergencies, higher education needs and so on
  • Investment in Small Savings Schemes can be made by a guardian on behalf of minor(s) under provisions made in the proposed Bill
  • Provisions have been made clearer for operating accounts in the name of physically infirmed and differently abled persons

Here is what happened with Mr Raju. He saved a good deal of money in a PPF account. According to the government rules, he knew he could not get that money before maturity. One day, there was a medical emergency and he needed his savings. But, he had to go through a lot of trouble to get them. Now, with the new revision, all small savings schemes have been brought under one umbrella and hence, there will be only one rule book to adhere to. His son can look forward to higher education for which Mr Raju can use the money in his PPF account before it matures.

What’s in it for you?

The consolidation will allow the government to keep a close eye on all schemes and prevent scams. Most amendments made in this bill have had the best interest of both — the masses and the government at its centre. Everybody benefits in some way, in the end.

However, to help your financial goals in the long run like Mr Raju’s, you should consider investments that help wealth creation. This means, apart from small savings scheme, you can go for medium and high-risk investment options to amplify your returns.

By investing in a ULIP, such as iInvest, you can insure your life as well as earn by investing part of premium in debt, balanced or equity funds. II/Aug 2018/4339


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