The Public Provident Fund (PPF) is a highly popular savings scheme that offers a low-risk investment option. As you prepare for Diwali 2024 festivities, consider opening a Public Provident Fund (PPF) account to secure your financial future. However, before you proceed, it's important to be aware of three significant changes that could affect your investment:
Individuals can now open only one Public Provident Fund (PPF) account for each child. Any additional accounts will be deemed irregular and earn interest at just 4%, compared to the standard rate of 7.1%. Furthermore, non-resident Indians (NRIs) who fail to declare their residency status while opening a PPF account will cease to earn interest. All these changes came into effect from 1 October 2024. These changes were outlined in a Department of Economic Affairs circular released on August 21, 2024, by the Ministry of Finance, which also includes new guidelines for regularising irregular accounts across various small savings schemes, including certain PPF accounts.
"Going forward, you can open only one PPF account for a child. Any extra account will be considered irregular and earn interest at 4% against the regular interest rate of 7.1%. Also, Non-Resident Indians (NRIs) who didn't declare residency status when keeping a PPF account will stop earning interest on their accounts starting October 1," said Abhishek Soni, CEO and Co-founder of Tax2win.
PPF Accounts for Minors: These accounts will earn POSA interest until the minor turns 18. Once they reach adulthood, the applicable interest rate will apply.
Multiple PPF Accounts: The scheme's standard interest rate applies only to the primary account. Any excess balance in secondary accounts does not earn interest.
NRI PPF Accounts: If the account holder becomes an NRI during their lifetime, they will receive POSA interest until September 30, 2024; then, interest will drop to zero.
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 blend of safety, decent returns, and tax-saving advantages.
Individuals can initiate a PPF account at any bank or local post office, with a prerequisite deposit of at least ₹500 annually. The maximum allowable deposit into a PPF account is capped at Rs. 1.5 lakh. A PPF account matures after 15 years.
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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
