New PPF Rules 2024: 3 Major Changes Coming On October 1

The Ministry of Finance’s Department of Economic Affairs has issued updated guidelines for Public Provident Fund (PPF) accounts, bringing new rules that will affect accounts opened under the names of minors, individuals holding multiple PPF accounts, and Non-Resident Indians (NRIs) with active PPF accounts. These changes, outlined in a circular issued on August 21, 2024, are set to take effect from October 1, 2024.

PPF Accounts for Minors

For PPF accounts opened in the name of a minor, the Ministry has clarified that these accounts will earn interest at the rate applicable to Post Office Savings Accounts (POSA) until the minor reaches the age of 18. Once the account holder becomes an adult and is eligible to open their own PPF account, the standard PPF interest rate will apply. The maturity period for these accounts will begin from the date the minor turns 18.

Handling Multiple PPF Accounts

The new rules also address the issue of individuals holding multiple PPF accounts. Investors can regularize two accounts, choosing one as the primary account, which will earn the scheme’s prevailing interest rate as long as the annual deposit limit is not exceeded. The balance from the second account will be merged into the primary account, and any excess funds in the second account will be returned without interest. Importantly, any additional PPF accounts beyond the primary and second accounts will not earn any interest from the date they were opened.

Extension of PPF Accounts by NRIs

NRIs who hold active PPF accounts opened under the 1968 Public Provident Fund Scheme will see a significant change. If the account holder became an NRI during the account’s tenure and if Form H did not specifically ask about their residency status, the account will earn interest at the POSA rate only until September 30, 2024. After this date, the account will no longer accrue interest.

These updates are part of the Ministry’s effort to streamline and regularize irregular PPF accounts, ensuring clarity and consistency in the handling of such accounts moving forward.