The Public Provident Fund (PPF) is a very popular savings scheme that offers a low-risk investment option. As you prepare for the festivities of Diwali 2024, consider opening a Public Provident Fund (PPF) account to secure your financial future. However, before you proceed, it is important that you are aware of three important changes that could affect your investment:
Individuals can now open only one Public Provident Fund (PPF) account for each child. Any additional bills are considered irregular and only earn 4% interest, compared to the standard rate of 7.1%. Moreover, Non-Resident Indians (NRIs) who do not declare their residential status while opening a PPF account will no longer receive interest. All these changes came into effect on October 1, 2024. These changes are outlined in a Ministry of Economy circular issued on August 21, 2024 by the Ministry of Finance, which also includes new guidelines for regularizing irregular accounts in various small savings schemes. including certain PPF accounts.
“Going forward, you can open only one PPF account for a child. Each additional bill is considered irregular and earns interest of 4% against the regular interest of 7.1%. Also, non-resident Indians (NRIs) who did not declare residency status while maintaining a PPF account will no longer receive interest on their accounts from October 1,” said Abhishek Soni, CEO and co-founder of Tax2win.
Here are three new Public Provident Fund rules you need to know
PPF accounts for minors: POSA interest is earned on these accounts until the minor turns 18. Once he reaches adulthood, the appropriate interest rate applies.
Multiple PPF accounts: The schedule’s default interest rate applies to the primary account only. Any excess balance on secondary accounts will not accrue interest.
NRI PPF Accounts: If the account holder becomes an NRI during his lifetime, he will receive POSA interest till September 30, 2024; then the interest rate drops to zero.
PPF latest interest rate
Currently, the PPF interest rate is set at 7.10% per annum. Although PPF is entirely a debt instrument, many investors may not be fully aware of its features. A PPF account offers an attractive mix of safety, decent returns and tax-saving benefits.
Individuals can open a PPF account at any bank or local post office, with a minimum deposit requirement ₹500 per year. The maximum deposit allowed in a PPF account is limited to Rs. 1.5 lakhs. A PPF account matures after 15 years.
Read all our personal financial stories here
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We recommend that investors consult certified experts before making any investment decisions.