Public Provident Fund Update: BIG PPF Rule Changes From October 1 You Should Know

New PPF Rules: The new PPF rules focus on accounts opened in the names of minors, the permission for holding multiple PPF accounts, and the extension of PPF accounts for NRIs through post offices under the National Small Savings schemes.

The Department of Economic Affairs, Ministry of Finance, recently released new rules for Public Provident Fund accounts opened for minors, holding multiple PPF accounts, and extending PPF accounts for NRIs under the National Small Savings schemes through post offices. The ministry announced these changes in a circular on August 21, 2024.

New #PPF rules come into effect from October 1, 2024. They apply to PPF accounts opened in the name of minors, multiple PPF accounts held, and the extension of PPF accounts by NRIs.

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PPF Rules For Minors: POSA Interest Until Age 18

The circular dated August 21, 2024, states that the Ministry of Finance has the authority to regularize irregular small savings accounts. Therefore, all cases of irregular accounts should be sent to the ministry for regularization.

For PPF accounts opened in a minor's name, Post Office Savings Account (POSA) interest will be paid until the minor turns 18 and becomes eligible to open their own account. After that, the applicable interest rate will be applied.

The maturity period for PPF accounts opened for minors will be calculated from the time the minor turns 18 and becomes eligible to open their own account.

Rules For Multiple Accounts: Interest Only On Primary And Merged Accounts

For those with more than one PPF account, the primary account will earn interest at the scheme rate as long as deposits stay within the annual limit. The primary account is selected by the investor at a Post Office or bank and will remain after the accounts are regularized.

The balance in the second account will be merged with the primary one, provided the total stays within the yearly investment limit. After merging, the primary account will continue to earn interest at the current rate, while any excess balance from the second account will be refunded with zero interest.

All PPF accounts, except for the primary and second account, will not earn any interest from the day they were opened.

For NRIs, only active PPF accounts opened under the 1968 Public Provident Fund Scheme, where Form H didn’t request the holder’s residency status, will earn POSA interest until September 30, 2024.

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