PPF Account new rules : A must read

Government of India released new rules for the PPF scheme called ‘Public Provident Fund Scheme 2019.

PPF is one of the most popular small savings schemes and it offers a guaranteed return.

Attachment Order not applicable on PF :

As per the new rules, the amount in the the PPF account will not be liable to attachment under any order or decree of any court in respect of any debt or liability of account holder.

PPF Deposit Rules:

As per new PPF deposit rules: Account holder can make deposits in multiples of ₹50 any number of times in a financial year, with a maximum of a combined deposit of ₹1.5 lakh a financial year. Earlier, a minimum amount of Rs.500 and maximum of 12 deposits in a financial year were permitted in a period of 1 year.

PPF Interest calculation :

Interest in PPF account is calculated on the minimum balance between 5th and the end of each month.

How to earn highest Interest: Subscriber should deposit the contributions or lump sums before the 5th of each month.

PPF Loan :

The rates at which the account holder can borrow from his account have been reduced to 1% above the prevailing PPF interest rate, from 2% in the past. Loan amount repayable in 24 months.

An account holder can take the first loan from the PPF account in the third year from the year of opening the account.

PPF Non-refundable withdrawal:

The non-refundable withdrawal from the PPF account will be available once in a five years. Now the PPF investors will be able to withdraw 50 percent of their 4th year closing balance. Earlier, a PPF account holder would able to withdraw 25 of the accumulated amount after seven years.

Premature closure of PPF account:

Premature closure of PPF account is allowed only under specific circumstances only after five years after account opening.

Premature closure is allowed for :
(i) Treatment of life-threatening disease of the account holder, his/her spouse or dependent children or parents.
(ii)Higher education of the account holder, or dependent children .

An account holder can close the account on change in residency status of the account holder .

For premature closure of PPF accounts, the account holder gets 1% lower interest than the rate at which interest has been credited to the account.

Joint account: Joint account is now allowed.

Minor account : There can be only one account in the name of a minor. The maximum deposit limit is inclusive of the deposits made in the subscriber’s own account and in the account opened on behalf of the minor.

Account of unsound Mind :
An account can be opened by the guardian of an individual or children with unsound mind, special needs.

Inactive account activation :
To revive an inactive account, you will have to pay a penalty of Rs.50 per year for the number of years the account has been inactive along with a minimum contribution of Rs.500 per year.

You can nominate one or more person.

PPF Account extension after 15 Years : PPF account can be retained after the maturity period of 15 years, with or without making any further contribution. The PPF account continues to earn interest till it is closed. Partial withdrawals are also allowed even if the PPF account is extended beyond 15 years. If he wants to extend beyond 15 years, he has to apply for the same in Form H within one year from the date of maturity.

PPF account for NRI :

NRIs are not eligible to open PPF accounts. NRI can continue to remit in PPF account when the account was opened when he was a resident and subsequently the residential status was changed. The account can be continued until the maturity period of 15 years. No further extension is allowed. Remittance can be made from NRE/NRO accounts.

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