New PPF rules effective October 1: How they impact you
The Department of Economic Affairs, under the Ministry of Finance, has announced new guidelines for Public Provident Fund (PPF) accounts. These changes, set to take effect from October 1, 2024, primarily impact accounts held by minors and Non-Resident Indians (NRIs), as well as those with multiple PPF accounts. The ministry has issued a circular detailing these revisions.
New regulations for PPF accounts held by minors
The new guidelines specify that Post Office Savings Account (POSA) interest will be paid on irregular accounts until the minor account holder turns 18. From this point forward, the standard interest rate will apply. The maturity period for these accounts will commence from the date the minor becomes an adult, marking their eligibility to open an account independently.
Changes for investors with multiple PPF accounts
For investors who hold more than one PPF account, the new rules state that the primary account will earn interest at the scheme rate as long as deposits remain within the annual limit. The balance in any secondary account will be merged with this primary one, provided it stays under the yearly investment ceiling. Post-merger, the primary account will continue to accrue interest at the current scheme rate while any excess balance in secondary accounts will be refunded without interest.
Extension of PPF accounts by NRIs
The new guidelines also address the extension of PPF accounts by NRIs. Only active NRI PPF accounts opened under the Public Provident Fund Scheme (PPF), 1968, where Form H did not inquire about the account holder's residency status, will receive the Post Office Savings Account (POSA) rate of interest until September 30, 2024. This applies to Indian citizens who became NRIs while the account was active. So starting October 1, these accounts would receive no interest.
