The Public Provident Fund (PPF) is a long-term savings and investment plan that provides tax benefits, competitive interest rates and guaranteed returns. The Department of Economic Affairs at the Ministry of Finance recently issued updated guidelines for Public Provident Fund accounts opened in the names of minors, individuals with multiple PPF accounts and NRIs extending their PPF accounts through post offices under the National Small Savings (NSS) schemes. On August 21, the finance ministry issued a circular notifying the adjustments.
“It needs to be noted that the power to regularise irregular small savings accounts are vested with the Ministry of Finance. Therefore, all cases pertaining to irregular accounts should be forwarded to this division for regularisation by the Ministry of Finance,” the circular reads.
The new rules will take effect on October 1, 2024.
Here are the key changes to the PPF Rule:
For a PPF account opened in the name of a minor: Post Office Savings Accounts (POSAs) interest rate will be paid until the minor becomes eligible to open a regular account at the age of 18.
Once the account holder turns 18, the appropriate interest rate will be paid.
The maturity term for such accounts will be computed from the date the minor becomes an adult.
People With Multiple PPF Accounts
The scheme rate of interest will be paid to the primary account as long as the deposit falls within the applicable annual ceiling. The primary account is one of the two accounts selected by the investor in any Post Office or agency bank and the investor desires to keep it following regularisation.
If the primary account stays below the applicable investment ceiling each year, the balance in the second account will be combined with the first.
The main account will continue to earn the current scheme interest rate following the merger. Interest-free repayment of any remaining amount in the second account will apply.
Please note that all other accounts—apart from the primary and secondary accounts—will not earn interest beginning on the day they are opened.
PPF account extension by NRI
An Indian citizen, who became a Non-Resident Indian (NRI) has an active Public Provident Fund (PPF) account and didn’t request a change in residency status using Form H, will continue to earn a POSA rate of interest on their account until September 30, 2024. After this date, the account will stop receiving interest payments.
Comments
0 comment