The Ministry of Finance’s Department of Economic Affairs has recently presented modern rules concerning Public Provident Support (PPF) accounts. These changes focus on accounts opened in the names of minors, regulations regarding multiple PPF accounts, and the extension of PPF accounts for Non-Resident Indians (NRIs) under the National Small Savings schemes through post offices. The updated rules were detailed in a circular issued on August 21, 2024.
PPF Accounts for Minors: Interest Accrual Until Age 18
As per the new guidelines, PPF accounts opened in a minor's name will earn interest at the Post Office Savings Account (POSA) rate until the minor reaches the age of 18. Upon turning 18, the individual becomes eligible to open their own PPF account, and the applicable PPF interest rate will then apply. Additionally, the maturity period for these accounts will be calculated from the time the minor turns 18 and is eligible to manage the account independently.
Regulations for Holding Multiple PPF Accounts
The new rules also address the issue of holding multiple PPF accounts. Interest will only be credited to the primary PPF account, which the account holder selects at a Post Office or bank, provided the deposits remain within the annual limit. Any balance in a second account will be merged with the primary account, as long as the total amount does not exceed the yearly investment limit. While the primary account will continue to accrue interest, any excess funds in the secondary account will be refunded without earning any interest. Other PPF accounts, apart from the primary and merged secondary account, will not earn any interest from the date of their opening.
PPF Rules for NRIs: Interest Eligibility for Active Accounts
For Non-Resident Indians (NRIs), the rules have specified that only active PPF accounts opened under the 1968 Public Provident Fund Scheme, where the holder did not specify their residency status using Form H, will earn POSA interest until September 30, 2024. After this date, the Ministry of Finance may require further steps to regularize these accounts.
These changes aim to streamline PPF account management and ensure proper interest allocation across all account types, especially for minors and NRIs.
With inputs from agencies
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