PPF New Rules from 1st October, Check Here

The Ministry of Finance’s Department of Economic Affairs has announced new guidelines for Public Provident Fund (PPF) accounts, effective from October 1, 2024. These updates are designed to streamline the management of PPF accounts, particularly for minors, individuals with multiple accounts, and Non-Resident Indians (NRIs).

Below is a detailed overview of the key changes:

PPF Accounts for Minors

• Interest Rate Update: Under the revised rules, PPF accounts opened in the name of minors will now earn interest at the rate applicable to Post Office Savings Accounts (POSA) until the minor reaches the age of 18.
• Transition to Standard PPF Rate: Once the minor turns 18, the account will transition to the standard PPF interest rates. This ensures minors benefit from a favorable rate during their early years.
• Maturity Period: The maturity period for PPF accounts will now be calculated from the date the account holder becomes an adult, providing greater ease in managing finances as they grow older.

PPF Accounts for Individuals with Multiple Accounts

• Primary and Secondary Accounts: The primary PPF account will continue to earn interest at the standard scheme rate as long as it remains within the yearly investment limit of ₹1.5 lakh.
• Excess Funds Consolidation: If the total balance across all accounts remains under the investment cap, any excess balance in a secondary account will be consolidated into the primary account.
• Excess Funds Beyond Limits: If the balance in a secondary account exceeds the limit, the extra amount will be returned without earning any interest.
• No Interest on Additional Accounts: Any further accounts beyond the primary and secondary accounts will not accrue any interest. This discourages the holding of excessive PPF accounts while ensuring investors maximize returns from their primary account.

Extension of PPF Accounts for NRIs

• NRI PPF Accounts: Non-Resident Indians (NRIs) holding PPF accounts can continue to maintain their accounts until maturity.
• Interest Rate until September 30, 2024: These accounts will only earn POSA interest rates until September 30, 2024.
• Post-2024 Changes: After this date, PPF accounts held by NRIs will stop earning interest if the account holder does not meet the residency criteria outlined in Form H.
• Impacted Account Holders: This change primarily affects Indian citizens who became NRIs while their PPF accounts were active.

These new rules aim to improve the efficiency and clarity of PPF account management for various categories of account holders. Investors are advised to review the changes and assess how they may impact their PPF investments.

PPF General Guidelines

Key Features of PPF Account

Deposit Limits:

• Minimum deposit: ₹500 per financial year.
• Maximum deposit: ₹1,50,000 per financial year.

Loan Facility:

• Loans can be availed from the 3rd financial year up to the 6th financial year.

Withdrawal:

• Partial withdrawals are allowed every year starting from the 7th financial year.

Account Maturity:

• The account matures after completing 15 full financial years from the end of the year it was opened.

Extension After Maturity:

• After maturity, the account can be extended in blocks of 5 years with further deposits.

Indefinite Retention:

• The account can be retained indefinitely without making additional deposits, and it will continue to earn interest at the prevailing rate.

Protection from Legal Attachments:

• The balance in the PPF account is protected and cannot be attached under any order or decree of a court of law.

Tax Benefits:

• Deposits qualify for a deduction under Section 80C of the Income Tax Act.
• Interest earned is exempt from income tax under Section 10 of the Income Tax Act.