The Public Provident Fund Account (PPF Account) rules have changed, all designed to enhance the benefits for our account holders. These changes, effective from October this year (01 October 2024), will apply to both existing and new accounts.
The rules regarding multiple PPF accounts, accounts opened in the name of children, and non-resident Indian (NRI) PPF accounts have been simplified for your convenience.
Interest on minor PPF account: The PPF account, a cornerstone of the National Savings Schemes run by the Post Office, continues to be a valuable investment. According to the Union Ministry of Finance notification, there have been new changes in the PPF account.
As per the new rules, the PPF account opened in the name of a minor will continue to accrue interest till he turns 18. The date on which he becomes a major is considered the maturity period of this account.
If parents, grandparents, or guardians have opened separate accounts in the minor’s name, the amount deposited in all the accounts should be the maximum annual limit (Rs. 1.50 lakhs). The same rule applies to a joint account.
What if there is more than one PPF account? If one has opened multiple PPF accounts, they are merged into one. Interest is credited to the primary account, and money in other accounts is also transferred to the primary account.
The amount deposited in all the accounts should also not exceed the prescribed annual limit. After merging accounts, a fixed interest rate is applicable.
If the combined amount in all the accounts exceeds the limit, it will be returned to the account holder. No interest will be paid if there is a third PPF account other than the primary and secondary accounts.
NRI PPF Account: As per the new guidelines, if an NRI opens a PPF account under the Post Office Savings Scheme, he will earn interest only till 30 September 2024. Interest will not be paid for the subsequent period.
This rule applies to those who do not have a residence certificate. An NRI can continue his PPF account until maturity, even if no interest is earned. This rule applies to Indian citizens who have become NRIs.
PPF Account Interest, Other Details: Currently, the government pays 7.1 percent interest per annum on PPF accounts. The government announces its interest rate once every three months. Investment in a PPF account is locked for 15 years.
However, money can be withdrawn in an emergency after five years of account opening. After 15 years, the entire account can be withdrawn as a lump sum.
An income tax deduction can be applied to money deposited into the PPF account. Moreover, there is no need to pay tax on the interest and maturity amount earned on the PPF account.