The Department of Economic Affairs under the Ministry of Finance has issued new guidelines for Public Provident Fund accounts formed in the name of minors, multiple PPF accounts, and the extension of PPF accounts by NRIs under National Small Savings (NSS) schemes through post offices. In this regard, the ministry has released a circular notifying the revisions on August 21, 2024.
In the notification, the ministry said these new rules for PPF, Sukanya Samriddhi Yojana, other small savings schemes will be effective from October 1, 2024
The Finance Ministry in the circular said, “lt needs to be noted that the power to regularise irregular small savings accounts are vested with the Ministry of Finance. Therefore, all cases pertaining to irregular accounts should be forwarded to this division for regularisation by the Ministry of Finance.”
It should be noted that the Public Provident Fund (PPF) is a long-term savings and investment scheme that offers tax benefits, competitive interest rates and guaranteed returns.
Check key changes to the PPF Rule:
If one PPF account has been opened in the name of a minor, the Post Office Savings Accounts (POSAs) interest rate will be paid until the minor becomes eligible to open a regular account at the age of 18.
After the account holder turns 18, the appropriate interest rate will be paid. Moreover, the maturity term for such accounts will be computed from the date the minor becomes an adult.
Case of multiple PPF accounts
If there are multiple PPF accounts, then the rate of interest will be paid to the primary account as long as the deposit falls within the applicable annual ceiling. The primary account is one of the two accounts selected by the investor in any Post Office or agency bank and the investor desires to keep it following regularisation.
In case, the primary account remains below the applicable investment ceiling each year, the balance in the second account will be combined with the first.
However, the main account will continue to earn the current scheme interest rate following the merger. Interest-free repayment of any remaining amount in the second account will apply.
PPF account extension by NRI
In case, a Non-Resident Indian (NRI) has an active Public Provident Fund (PPF) account and didn’t request for the change in residency status using Form H, he or she will continue to earn a POSA rate of interest on their account until September 30, 2024. and after this date, the account will stop receiving interest payments.
