The government has introduced significant changes to the Public Provident Fund (PPF) scheme, with new rules coming into effect from October 1, 2024. These changes are aimed at making it easier to manage PPF accounts, especially for minors, multiple account holders, and non-resident Indians (NRIs). Let’s break down the key updates and how they may impact you.
PPF Accounts for Minors: New Interest Rules
One of the most important updates relates to PPF accounts opened in the name of minors. Under the new rules, these accounts will earn Post Office Savings Account (POSA) interest rates until the minor turns 18. Once the account holder reaches adulthood, the regular PPF interest rates will apply.
This change is significant because minors can now benefit from the higher POSA rates until they are 18, providing a more profitable savings option in their early years. Additionally, the maturity period of the account will now start from the date the account holder turns 18, giving young adults more control over their financial future.
Changes for Multiple PPF Account Holders
For individuals holding multiple PPF accounts, the new rules offer clarity on how interest will be calculated. Interest will be credited only to the primary PPF account, provided the total investment across all accounts remains within the annual limit of Rs 1.5 lakh.
If any additional accounts have funds exceeding this limit, the extra amount will be transferred to the primary account, and the excess balance in the secondary account will not earn any interest. This update encourages people to consolidate their investments into one primary account, ensuring they maximize their returns without juggling multiple accounts.
Impact on NRI PPF Account Holders
The new rules also address PPF accounts held by NRIs. NRIs can continue to hold their PPF accounts until maturity, but they will only earn POSA interest rates until September 30, 2024. After this date, if an NRI fails to meet the residency requirements mentioned in Form H, they will not earn any interest on their PPF account.
This change primarily affects Indian citizens who became NRIs while maintaining an active PPF account. It’s essential for these account holders to stay updated on residency requirements to avoid losing interest earnings.
The new PPF rules, set to take effect on October 1, 2024, bring several important changes that will impact minors, multiple account holders, and NRIs. Whether you’re managing a PPF account for your child or considering consolidating your multiple accounts, understanding these updates can help you make better financial decisions.
