The Department of Economic Affairs of the Ministry of Finance issued new guidelines for Public Provident Fund (PPF) accounts which will be effective from October 1. The new guidelines target the simplification of the process with special attention to minors, Non-Resident Indians (NRIs) and individuals with multiple accounts.
New guidelines
Guidelines for accounts of minors: The new guidelines pay special focus on minors' PPF accounts. Under new regulations, until the minor turns 18, they will earn interest as applicable to Post Office Savings Accounts (POSA). The standard PPF account interest will only apply after the holder attains the age of 18. Moreover, the maturity of such accounts will be calculated from the date when the minor attains adulthood.
Extension of PPF Accounts for NRIs: The new guidelines also made provisions for the Non-Resident Indians (NRIs) who have PPF accounts. The NRI account holders can maintain their accounts until maturity. However, they will earn only POSA interest until September 30, 2024. Following this, the interest-earning will stop for these accounts as they do not meet specific residency criteria outlined in Form H. The changes will primarily affect those Indian citizens who became NRI after their PPF accounts were opened and were active.
Managing Multiple PPF Accounts: According to new regulations, those with multiple PPF accounts will continue to earn interest at the scheme rate in the primary account, until it stays within the annual investment limit of Rs 1.5 lakh. In case of cumulative balance across all accounts remains below this limit, excess money in a secondary account will be consolidated into the primary account, if available. However, in case of remaining balance in a secondary account exceeds the limit of annual Rs 1.5 lakh will return without earning interest.
Furthermore, any additional accounts beyond the primary and secondary will not receive any interest. The new regulation aims to discourage multiple account holdings while ensuring that account holders can benefit from their primary investments.
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