New PPF guidelines will come into effect from October 1, 2024. The primary objective of the new rules is to target the accounts which have been opened in violation of the scheme guidelines. These are classified as irregular accounts which could be if an investor has:
- Opened multiple PPF accounts in his name.
- Opened more than one account in the name of minor – one with self as guardian and another with spouse as guardian.
- Invested Rs.1.5 lakh p.a. each in individual account and minor account with himself as guardian. Cumulative deposits exceeding Rs.1.5 lakh in both accounts will be declared irregular.
- Extended PPF account beyond 15 years after turning NRI and did not disclose their change in residency status.
How will the new rules affect the irregular accounts:
- Irregular PPF accounts opened under the name of a minor: More than 1 PPF account opened in the name of minor will be declared irregular. Such irregular accounts will earn nominal post office savings rate, until the individual (minor) becomes eligible for opening of account, i.e., attains 18 years of age. Thereafter, the applicable interest rate will be paid.
Further, any excess deposit exceeding Rs.1.5 lakh in the primary account opened individually and along with the minor shall be refunded without any interest to the investor.
- Multiple PPF accounts: An investor is not allowed to open more than one PPF in his/her name. In case of more than one PPF account, the primary account shall remain in force and earn the scheme rale of interest subject to the applicable investment limit of Rs.1.5 lakh p.a. (Primary Account is one of the two accounts chosen by the investor in any Post Office/ agency bank where the investor prefers to continue with the account upon regularization). The balance amount in the second account shall be merged with the first account subject to the primary account remaining within the applicable investment ceiling in each year. Excess balance in the second account, if any, shall be refunded with zero percent rate of interest. Any additional accounts beyond the primary and second account, shall also earn zero percent rate of interest from the date of opening of that account.
- Extension of PPF account by NRI: While NRIs are allowed to continue investing in their existing PPF accounts, they are not permitted to extend the account beyond 15 years. Any NRI account extended beyond 15 years and where the change in residency status is not disclosed, will be declared as irregular account. Such account will earn nominal post office savings rate till 30 September 2024 and thereafter zero per cent rate of interest.
These rules are only applicable to irregular PPF accounts. The regular accounts, adhering to the PPF rules, will continue to earn the scheme interest rate.
Also read: https://goalbridge.in/are-you-investing-more-than-rs-1-5-lakh-in-your-ppf-account/