PPF is one of the important investment options for the Indian citizens. The PPF enjoys EEE status, i.e. (Exempt -Exempt-Exempt) status. The investment made in PPF is exempted, the interest received from PPF is also exempted and the maturity proceeds from such funds are also tax exempted. The current PPF interest rate is 7.1% (Q3 of FY 2024-25) and the deposits can be made up to 1.50 lakh INR in a financial year.
The new updates have been introduced which are applicable from 1st October 2024. The updated rules are for minors, multiple PPF accounts, and NRIs’ PPF accounts.
1. Interest rate for minors PPF accounts
As per revised rules, the minor accounts will persist in receiving Post Office Savings Account (POSA) interest i.e. 4% until the minor reaches 18 years of age. Further, the maturity period for such accounts will be calculated from the date the minor becomes an adult.
In simple terms, for minors with irregular accounts, the POSA rate will apply until the account is regularized when the minor reaches adulthood. Such accounts will start the 15-year clock on the 18th birthday of the minor.
2. Irregularity due to more than one PPF Account
The people who hold more than one PPF account will be affected by this new rule. All the accounts other than the primary accounts will be considered irregular and will not accrue interests.
The primary account will continue to earn interest at the scheme rate as long as it remains within the yearly investment limit of 1.5 lakh INR. In case, the balance in all PPF accounts is less than 1.5 lakh INR the excess balance shall be added to the primary account.
Further, the remaining balance that is available in other accounts will be returned without earning any interest. In other words, only a primary account will accrue interest and accounts other than primary shall accrue no interest at all.
3. PPF accounts for NRIs
Post 30th September, 2024, NRIs will not earn interest on their PPF. In case, if any NRI already holds PPF account he can hold the account till maturity. However, NRI investors cannot extend their PPF accounts beyond the initial 15-year period.
For NRI 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. Post that, the account will not earn any interest.
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