The Government today said that PPF accounts of Hindu Undivided Families (HUFs) which were closed down between May 2005 and December 7 last year would get 8 per cent interest on the deposits. The Finance Ministry has issued the clarification in view of the doubts raised with regard to payment of interest on Public Provident Fund (PPF) accounts held by the HUFs beyond the maturity period.
“…it has been decided that interest at PPF rate would be paid on those PPF (HUF) accounts which had attained the maturity after May 13, 2005, but closed by the subscribers before December 07, 2010,” the clarification said.
The Government had in May 2005 had disallowed HUFs from opening the PPF accounts, which is a 15-year small saving scheme, and laid down the norms for closure of their accounts.
Under the scheme, the government also allowed subscribers to extend the operation of the PPF account for 5 years after the expiry of the 15-year period.
In a gazette notification on December 7 last year, the government had said that all the accounts which had already completed 15 years be closed by March 31, 2011, while the other accounts be wound up at the end of 15-year period.
The problem arose as some of the HUF account holders, who had closed their accounts between May 2005 and December 07, 2010, were not paid 8 per cent interest after completion of the 15-year period.
“Some of the subscribers of the PPF (HUF) accounts had closed the accounts on maturity or thereafter between May 13, 2005 (when the original order had come) to December 7, 2010 (before the issue of the amendments),” it said.
It said that some of the account holders were not paid interest at PPF rates on the deposits retained beyond the maturity period and that the government had received representations from them to redress the matter.
Such subscribers sought the interest at PPF rate on the deposits that were retained in accounts beyond their maturity period.
Now the Government has acceded to their request. However, subscribers would be eligible for the interest at official rate only on the condition that the accounts had not been extended beyond the cut-off period and the deposits were retained in the accounts without further subscription.
Under the rules for HUF accounts, the head of the family is the ‘karta’ or the main operator of the account and the others are family members. While daughters can be members of an HUF, once married they cease to be members of the HUF PPF account promoted by their fathers.