The new rules of Public Provident Fund i.e. PPF are going to be implemented from October 1. Last month, the Department of Economic Affairs of the Finance Ministry had issued new guidelines to streamline the existing Public Provident Accounts opened through post offices.
The new changes in PPF rules relate to PPF accounts opened in the name of minors, multiple PPF accounts and extension of PPF accounts of Non Resident Indians (NRIs) under National Savings Schemes through post offices.
Rules changed for PPF accounts
PPF accounts opened in the name of minors
- As per the revised rules for PPF accounts opened in the name of minors, these accounts will continue to earn interest at the same rate as Post Office Savings Account (POSA) till the minor attains the age of 18 years.
- The maturity period of such accounts will be calculated from the date the minor attains majority. That is, the date from which the person becomes eligible to open an account.
More than one PPF accounts
- The investor's primary account in any post office or agency bank will receive interest as per the scheme rate. However, the condition is that the deposit amount should not exceed the yearly ceiling limit.
- If there is balance in the second account, it will be clubbed with the primary account, subject to the condition that the total amount remains within the annual investment limit.
- After linking the two accounts, the interest rate of the existing scheme will continue to be applicable on the primary account. Any surplus funds in the second account will be reimbursed at 0% interest rate.
0% interest rate on additional account
- Any additional account apart from the primary and second account will attract 0% interest rate from the date of opening the account.
PPF accounts for NRIs
- For NRIs with active PPF accounts opened under the Public Provident Fund Scheme of 1968, the residency status of the account holder was not enquired about in Form H.
- Therefore, the interest rate applicable on these accounts will remain as per the POSA guidelines till 30 September 2024. After this, the accounts will start earning interest at 0% rate.
PPF is a popular financial instrument Public Provident Fund (PPF), a popular financial instrument backed by the Central Government, is designed to encourage savings and investment while providing attractive long-term benefits to investors.
It operates under the EEE (Exempt-Exempt-Exempt) category, which ensures that the invested principal, interest earned and the final maturity amount are all exempt from taxation as per the provisions of the Income Tax Act 1961.
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