New Delhi: The Ministry of Finance’s Department of Economic Affairs has issued new guidelines for Public Provident Fund (PPF) accounts which will take effect from today, October 1. The new guidelines aim to streamline the process with a focus mainly on minors, individuals with multiple accounts, and Non-Resident Indians (NRIs).
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Key Points To Look At
Accounts Of Minor: One of the key updates involves the handling of PPF accounts held in the names of minors. Under the new regulations, these accounts will earn interest at the rate applicable to Post Office Savings Accounts (POSA) until the minor turns 18. Upon reaching adulthood, the standard PPF interest rates will apply, allowing minors to benefit from a more favourable interest rate during their formative years. Furthermore, the maturity period for these accounts will be calculated from the date the minor attains adulthood, facilitating better financial management as they grow older.
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Managing Multiple PPF Accounts: For individuals with multiple PPF accounts, the new rules clarify interest calculations. The primary account will continue to earn interest at the scheme rate, provided it stays within the annual investment limit of Rs 1.5 lakh. If the total balance across all accounts remains below this limit, any excess in a secondary account will be consolidated into the primary account. However, any remaining balance in a secondary account that exceeds this limit will be returned without earning interest. Notably, any additional accounts beyond the primary and secondary will not accrue interest at all. This change aims to discourage excessive account holdings while ensuring that investors can benefit from their primary investments.
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Extension of PPF Accounts for NRIs: The new guidelines also address Non-Resident Indians (NRIs) with existing PPF accounts. These account holders can maintain their accounts until maturity, but they will only receive POSA interest until September 30, 2024. After this date, accounts that do not meet specific residency criteria outlined in Form H will not earn any interest. This adjustment primarily affects Indian citizens who became NRIs while their PPF accounts were active.
