3 New PPF Rules Effective from October 1, 2024: Key Updates for Minors, Multiple Accounts, and NRIs
@AlliesFin
The Ministry of Finance's Department of Economic Affairs has introduced important updates to Public Provident Fund (PPF) rules, which will come into effect on October 1, 2024. These changes, announced via a circular on August 21, 2024, are aimed at addressing irregularities in small savings accounts, particularly concerning minors, individuals with multiple PPF accounts, and Non-Resident Indians (NRIs) with PPF accounts.
Here are the key details of the new PPF rules:
1. Interest Rate for Minor Accounts
What's new? For PPF accounts opened in the name of minors, the interest rate applicable for the account will now be the same as that of a Post Office Savings Account (POSA) until the minor turns 18 years old. Once the minor reaches adulthood and is eligible to open their own regular account, the standard PPF interest rate will apply.
Maturity Calculation:
The maturity period for such accounts will no longer be counted from the date of opening but from the date when the minor attains adulthood. This means that the PPF account’s 15-year tenure will start once the individual turns 18, not before.
2. Multiple PPF Accounts
What's new? Individuals with multiple PPF accounts will now have restrictions on interest earnings. The PPF interest rate will only be applied to the primary PPF account, provided the total yearly deposits remain within the prescribed limit of ₹1.5 lakh.
Combining Balances: If the primary account's balance remains below the annual deposit limit, the balance from a second PPF account may be combined with the primary account, and interest will be paid on this combined balance. However, if the total deposit exceeds the limit, the excess amount in the second account will be returned without any interest. Any additional PPF accounts beyond the second will not earn any interest, even if they hold balances.
3. Extension of PPF Account for NRIs
What's new? NRIs holding PPF accounts and continuing them after becoming non-resident Indian citizens will face significant changes. Specifically, from October 1, 2024, NRIs with PPF accounts who have not submitted Form H explicitly addressing their residency status will earn the Post Office Savings Account (POSA) interest rate until September 30, 2024, and no interest will accrue afterwards.
Implication for NRIs: This rule impacts Indian citizens who became NRIs during the currency of their PPF account. After September 30, NRIs will no longer receive any interest on their PPF accounts if they fail to declare their status using the prescribed form.
Why These Changes Matter
These updated rules streamline account management and ensure compliance with existing small savings regulations. For parents managing PPF accounts for minors, the interest rate change means they won’t benefit from the higher PPF rates until the child becomes an adult. The regulation on multiple accounts ensures that people don’t overextend the tax benefits or interest earnings. As for NRIs, the updates make it necessary for them to declare their residency status, or they will lose interest on their existing PPF accounts.
The new rules will bring clarity and standardization across PPF accounts, further enhancing transparency in the management of small savings schemes.
Conclusion
These changes, though minor in scope, could significantly impact account holders, especially those with multiple PPF accounts or those managing accounts for minors. NRI account holders will also need to stay aware of the rules to ensure their savings continue earning interest. These guidelines are a step towards regularizing the Public Provident Fund and making it more transparent and aligned with the broader National Small Savings Scheme.
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By: ۞ A X i T D S H A H ۞ via AlliesFinServe #StockMarket #Bharat Telegram.me/AlliesFin
