New PPF rules effective October 1: Key changes for investors

The Ministry of Finance's Department of Economic Affairs has announced significant updates to the Public Provident Fund (PPF) regulations, effective October 1, 2024. These changes aim to streamline the management of PPF accounts, especially for minors, individuals with multiple accounts, and Non-Resident Indians (NRIs).

One of the major updates focuses on PPF accounts for minors. Under the new rules, these accounts will now earn interest at the rate applicable to Post Office Savings Accounts (POSA) until the account holder reaches the age of 18. After they attain adulthood, the standard PPF interest rates will apply. This provision is designed to provide minors with a more favorable interest rate during their formative financial years. Furthermore, the maturity period for these accounts will now be calculated from the date the minor turns 18, facilitating easier financial management as they transition into adulthood.

For those holding multiple PPF accounts, the updated guidelines clarify interest calculations. The primary account will continue to earn interest at the scheme rate, provided the annual investment limit of ₹1.5 lakh is maintained. Any excess balance in secondary accounts will be consolidated into the primary account, but if any secondary account exceeds this limit, the surplus will be returned without interest. Importantly, additional accounts beyond the primary and secondary will not accrue any interest.

The new regulations also address NRIs with existing PPF accounts. These individuals can maintain their accounts until maturity; however, they will only receive POSA interest until September 30, 2024. Following this date, accounts that do not meet specific residency criteria, as outlined in Form H, will not earn any interest. This change primarily affects Indian citizens who became NRIs while their PPF accounts were active.

With these updated guidelines, the government aims to promote efficient management of PPF accounts while ensuring that investors can maximize their benefits. Investors are advised to review their account statuses and make necessary adjustments in light of these changes.