PPF accounts: The Ministry of Finance made certain changes for Public Provident Fund (PPF) accounts established via post offices. The revised regulations concerning PPF accounts, which are effective from today, focus on accounts opened for minors, the ownership of multiple PPF accounts, and the eligibility of Non-Resident Indians (NRIs) to extend their PPF accounts within the framework of National Savings Schemes administered by post offices.
Here are the new rules:
1. PPF accounts for minors
For Public Provident Fund (PPF) accounts opened in the name of a minor, it is essential to note that, as per the revised regulations, these accounts will continue to earn interest at the Post Office Savings Account (POSA) rate until the minor reaches 18 years of age. The maturity period for such accounts will be computed from the date the minor attains adulthood, which is the point at which they become eligible to independently open and operate the account.
Key points for minor accounts
> If both parents have opened separate Public Provident Fund (PPF) accounts for the same child, it's important to ensure that the contributions made to each account do not exceed the annual limit set by the government.
> Similarly, if both parents and grandparents have opened a PPF account for the same child, coordination is essential to monitor contributions and avoid exceeding the prescribed limits.
> In the scenario where the child has one standalone PPF account and a joint PPF account with either of the parents, it's crucial to keep track of contributions to each account to adhere to the PPF regulations.
2. More than one PPF accounts
When an investor has more than one PPF (Public Provident Fund) account, the primary account chosen at a Post Office or an agency bank will accrue interest at the scheme rate, provided that the deposit amount does not exceed the annual ceiling limit.
If a second account holds funds, those funds will be merged with the primary account, ensuring that the combined total remains within the yearly investment cap. After the consolidation, the primary account will maintain the existing scheme interest rate. Any excess funds in the second account will be refunded without any interest.
For any additional accounts beyond the primary and secondary accounts, they will not earn any interest from the date of their opening.
3. PPF accounts for NRIs
The updated guidelines have introduced provisions concerning Non-Resident Indians (NRIs) with PPF accounts. NRIs holding PPF accounts are permitted to retain their accounts until maturity, but they will receive only POSA interest until September 30, 2024. Subsequently, interest accumulation will cease for these accounts due to non-compliance with the residency requirements specified in Form H. These modifications will predominantly impact Indian nationals who transitioned to NRI status subsequent to the activation of their PPF accounts.
PPF interest rates
PPF is a widely utilised financial tool, which the Central government backs. It was established to promote savings and investments by providing advantageous benefits to investors over the long term. PPF falls under the EEE (exempt-exempt-exempt) category, meaning that the initial investment, accumulated interest, and final maturity sum remain tax-exempt as per the regulations specified in the Income Tax Act of 1961.
The current interest rate of PPF is 7.1% per annum. The interest rate of the scheme is revised every quarter of the financial year. On September 30, 2024, the Finance Ministry decided to keep the interest rate of PPF at the same level like other small savings schemes.
PPF calculator
Investing in a Public Provident Fund (PPF) account allows individuals to start investing with a minimum contribution ranging from Rs 500 to a maximum of Rs 1,50,000 annually. This flexibility means you do not require a substantial lump sum to initiate a PPF account. Furthermore, only one deposit per year is mandated to keep the account operational.
Upon maintaining savings in a PPF account for three years, account holders become eligible to obtain a loan against their invested sum. Notably, a PPF account may be established either in the name of an individual or under the guardianship of an adult for a minor.
| Investment Period | Total PPF Investment | Total Interest Earned | Maturity Value |
| 15 years | Rs 1.5 lakh | Rs 18,18,209 | Rs 40,68,209 |
| 20 years | Rs 1.5 lakh | Rs 36,58,288 | Rs 66,58,288 |
| 30 years | Rs 1.5 lakh | Rs 1,09,50,911 | Rs 1,54,50,911 |