The new changes to the Public Provident Fund (PPF) scheme, effective from October 1, 2024, address irregularities in PPF accounts:
As a result of these changes, it's important to remember that, going forward, only adults can invest up to Rs 1.5 lakh in a PPF account
The new changes to the Public Provident Fund (PPF) scheme, effective from October 1, 2024, address irregularities in PPF accounts:
Minor Accounts: PPF accounts opened in minors' names will be regularized, correcting any compliance issues with small savings rules.
Multiple Accounts: If someone has more than one PPF account, then he/she must choose one primary account to earn interest. Excess funds in other accounts will be refunded without any interest.
NRI PPF Accounts: Non-resident Indians (NRIs) holding PPF accounts will stop earning interest after October 1, 2024.
Despite the changes in the PPF account rules, it's important to note that the returns and investment limits remain stable. These changes are primarily aimed at addressing certain irregularities.
One significant change is that individuals can no longer create multiple PPF accounts using different bank accounts or sources. Now, if you invest more than the allowed limit of Rs 1.5 lakh across multiple accounts, the excess amount will be refunded without earning any interest.
“Another significant change pertains to the use of a minor's account for investment. It's important to note that if both the minor and the guardian are investing, the total combined investment cannot exceed one and a half lakh rupees. Additionally, NRIs are no longer permitted to open new PPF accounts. Those who already have a PPF account and become NRIs must close the account at maturity or in five-year intervals,” says Anand K Rathi, co-founder, MIRA Money, an investment management platform.
What This Means For You: “If someone's PPF account has irregularities, then he/she should regularize it soon to avoid losing interest. NRIs and those with multiple accounts need to pay particular attention to these changes,” says Thomas Stephen, associate director, Anand Rathi Shares and Stock Brokers, a stock market broker.
According to experts, these changes address irregularities and will not affect compliant account holders. However, the regulation regarding minors' accounts may significantly impact those who use their children's accounts for PPF investments. “As a result of these changes, it's important to remember that, going forward, only adults can invest up to Rs 1.5 lakh in a PPF account,” adds Rathi.
Impact On Savings: The changes will mainly affect those with irregular accounts or excess contributions. Regular PPF holders who follow the rules will not be impacted.