New PPF Rules: Key Changes Explained

New PPF Rules Effective October 1, 2024: Key Changes Investors Should Know

The Ministry of Finance’s Department of Economic Affairs has introduced new guidelines for Public Provident Fund (PPF) accounts, which will come into effect on October 1, 2024. These new rules aim to streamline PPF account management, particularly for minors, individuals with multiple accounts, and Non-Resident Indians (NRIs).

Interest Rate for Minors’ PPF Accounts
One of the most significant updates is for PPF accounts held in the name of minors. According to the new regulations, these accounts will earn interest at the rate applicable to Post Office Savings Accounts (POSA) until the minor turns 18. Once they become adults, the standard PPF interest rates will apply. This change allows minors to benefit from better interest rates during their formative years.

Additionally, the maturity period for these accounts will be calculated from the date the minor reaches adulthood, making it easier for them to manage their finances as they grow older.

Managing Multiple PPF Accounts
For individuals who hold multiple PPF accounts, the new rules specify how interest will be calculated. The primary account will continue to earn interest at the scheme rate, provided it remains within the yearly investment limit of Rs 1.5 lakh. If the total balance across all accounts is below this limit, any excess balance in secondary accounts will be consolidated into the primary account. However, any remaining balance that exceeds this limit will be returned without earning any interest. This change discourages holding excessive accounts while ensuring primary investments are protected.

Extension of PPF Accounts for NRIs
The new guidelines also address NRIs who hold existing PPF accounts. NRIs can maintain their accounts until maturity; however, they will only receive POSA interest until September 30, 2024. After this date, these accounts will stop earning interest if they do not meet the specific residency criteria outlined in Form H. This change primarily affects Indian citizens who became NRIs while their PPF accounts were still active.

Aakhir Tak Editor-in-Chief

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