The Department of Economic Affairs, the Ministry of Finance, has released three updates for Public Provident Fund (PPF) account holders, which shall be applicable from October 1, 2024.
The circular announcing these changes was issued on August 21,2024, and here is everything you need to know about these changes:
PPF Account for Minor
If a parent or guardian has opened a PPF account in the name of a minor, the interest rate equivalent to Post Office Savings Account (POSA) will be applicable to such account until the minor reaches the age of 18. At the age of 18, the minor will become an adult, and so, will open his / her own account, and the standard PPF interest rate will be applicable. This is a reduction in interest rate on the account of minor, since the interest rate on POSA is 4% p.a. and the interest rate on PPF is 7.10%.
Multiple PPF accounts
If an individual has two PPF accounts, the interest will be earned on the primary account, if the deposit has been made within a year. Any of the accounts can be chosen as the primary account. If the primary account has less investment than the maximum amount, the balance of the secondary account shall also be merged. After the merger, the primary account will earn the regular interest applicable, and excess balance in the secondary account shall be refunded without any interest. Also, any account other than the primary and secondary account will not earn any interest.
Extension of PPF account by NRI
If an NRI has a PPF account, the account holder would earn POSA interest rate until September 30, 2024. After this date, the account holder will not earn any interest on PPF account. This change will affect those NRIs who left the country after opening their PPF account.
The current PPF offers 7.10% interest p.a. and the interest rate is revised every quarter.
NRIs can download the SBNRI app and get all their PPF and tax-related queries resolved under one roof by connecting with our NRI Tax Expert!
Stay tuned for more updates!
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
Frequently Asked Questions
What is the new PPF rule for NRIs?
NRIs will not earn interest on their PPF accounts since October 1, 2024. They can, however, still maintain the account till maturity.
Can I break my PPF anytime?
You can break your PPF any time after completing the 15-year term when the account has matured. But if you wish to withdraw the money before 15 years, you will be liable for a fine as well as loss of interest income.
Can I miss my PPF payment?
If you miss the minimum annual deposit requirement of INR 500, it will lead to the deactivation of your account. In such cases, you can reactivate the account by paying a penalty of Rs. 50 and your due payment of Rs. 500 every year.
