The government has made significant changes in the rules related to Public Provident Fund (PPF), which will come into effect from October 1, 2024.
These changes specifically relate to PPF accounts opened in the name of minors, management of more than one PPF account and extension of NRI PPF accounts. Let us tell you that the government-backed Public Provident Fund (PPF) is a popular investment option, where risk-free fixed returns are guaranteed.
The Department of Economic Affairs, Ministry of Finance has announced these new guidelines by issuing a circular on 21 August 2024. The aim of these revised rules is to make the operation of PPF accounts more transparent and streamlined, providing more clarity and convenience to investors.
Changes will come into effect from October 1:
Recently, the Department of Economic Affairs, Ministry of Finance has issued some new guidelines regarding PPF accounts. These new guidelines have been implemented through a circular issued on 21 August 2024, and will be effective from 1 October 2024. Let us understand these changes in detail.
Changes related to PPF accounts of minors:
Under the new changes, if a PPF account is opened in the name of a minor, then the Post Office Savings Account (POSA) interest rate will be applicable on this account until the minor turns 18 years old. When the minor completes the age of 18 and becomes eligible to open his own account, from then onwards the normal PPF interest rate will be applicable on this account.
The point to be noted here is that the maturity period of this account will be considered from the date the minor attains majority, i.e. from the day he becomes eligible to open the account himself.
Changes related to more than one PPF account:
If an investor has more than one PPF account in his name, the interest rate of the scheme prescribed on his primary account will be applicable as long as the deposit amount remains within the annual limit.
The investor has to choose two accounts from any post office or agency bank. After regularization, the account which the investor wishes to retain will be treated as the primary account.
Primary account is the better option:
If the balance in the primary account falls short of the investment limit each year, the balance of the secondary account will be merged with the primary account. After this merger, the primary account will continue to earn interest at the prescribed scheme’s interest rate. The excess balance of the secondary account will be refunded without interest. It is worth noting that apart from the primary and secondary accounts, all other accounts will not earn any interest from the date of their opening.
Changes related to NRI accounts:
For Indian citizens who became NRIs after opening a PPF account, and whose residential status was not sought while filling Form H, the Post Office Savings Account (POSA) interest rate will be applicable on such accounts till September 30, 2024. After this, no interest will be paid on such accounts.
