New PPF Rules from Oct 1: These Public Provident accounts will not earn any interest. Know why

Last month, the Department of Economic Affairs, under the aegis of Ministry of Finance, had issued fresh guidelines to streamline existing Public Provident accounts opened through post offices. These changes in PPF rules, to be effective from October 1, 2024, pertain to PPF accounts opened in the name of minors, multiple PPF accounts held, and the extension of PPF accounts by Non-Resident Indians (NRIs) under the National Saving Schemes held through the post office.

“It 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,” DEA said in a circular.

Changed rules for PPF accounts

1. PPF account for minors

> For the Public Provident Fund (PPF) accounts opened in a minor's name, as per the revised rules these accounts will persist in receiving Post Office Savings Account (POSA) interest until the minor reaches 18 years of age. 

> Maturity period for such accounts will be calculated from the date the minor becomes an adult, that is, the date from which the individual becomes eligible to open the account.

2. More than one PPF Account

> The primary account selected by the investor at any Post Office or agency bank will earn interest at the scheme rate, provided that the deposited amount does not exceed the yearly ceiling limit. 

> In the event that the second account holds a balance, it will be consolidated with the primary account as long as the total remains within the annual investment limit. 

> Following the consolidation, the primary account will retain the current scheme interest rate. Any surplus funds in the second account will be reimbursed with a zero percent interest rate.

3. Any additional accounts beyond the primary and second account, shall earn zero percent rate of interest from the date of opening of that account.

PPF accounts for NRIs

> For Non-Resident Indians (NRIs) with active PPF accounts opened under the Public Provident Fund Scheme (PPF) of 1968, when Form H did not inquire about the residency status of the account holder, the rate of interest applicable will be as per the POSA guidelines until September 30, 2024. 

> Subsequently, the account will begin earning a zero percent rate of interest.

The Public Provident Fund (PPF) is a popular financial instrument supported by the Centre, designed to encourage savings and investments while offering attractive long-term advantages to investors. It operates under the EEE (exempt-exempt-exempt) category, ensuring that the invested principal, accrued interest, and final maturity amount are all exempt from taxation as per the provisions outlined in the Income Tax Act of 1961.