The Government's proposal to abolish the existing Public Provident Fund is troubling. Though the period of the PPF scheme is a little longer (15 years initially and optional extension of another five years) than other savings schemes which also offer income-tax rebate benefit under Section 88, this account is widely welcomed by all for several reasons.

The minimum deposit amount to be paid per annum to keep the account live is only Rs 500. Further instalments/deposit amounts can be paid in multiples of Rs 500.

Even if there is a default in a given year or years, the account can be revived any time on payment of a small penalty.

Annual one-time withdrawal facility is available. One can also take a loan against an account as per rules of the account, to meet emergency requirements.

For people in the unorganised sector — traders, small vendors, etc. — this account is a useful instrument that encourages their thrift habit.

The amount on maturity definitely helps them meet the expenses of higher education of children, marriage expenses of daughters, and so on.

One can invest irregular or occassional income, such as overtime, bonus etc. Thus, while they save such income for their future, they also enjoy the income-tax return.

While one could enjoy tax rebate on his investment on March 31 of the 15th year of the account, he could very well withdraw the entire amount on the next day, April 1, of the beginning of the 16th year!

As highlighted in your column, the interest earned also totally tax-free and in line with regular PF Act; it is also free from any court attachements.

If the Government could reconsider its proposal to dispense with this account, it could be a welcome measure for several savers.

M. Kandappan

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