FAQ
This article discusses the new Department of Economic Affairs rules regarding irregular PPF and Sukanya Samriddhi Accounts as applicable from 1st October 2024.
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An irregular PPF/SSY account breaks rules like NRIs extending PPF after 15 years, minors having more than one PPF or SSY, a family having more than 3 lakhs invested in PPF in the name of parents and children etc. New rules for dealing with such irregular accounts have been notified by the Department of Economic Affairs which will be applicable from 1st October 2024.
A PPF account becomes irregular for NRIs if the account holder extends the account beyond the initial 15-year period. After September 30, 2024, these extended accounts will no longer earn any interest.
No, NRIs cannot extend their PPF accounts beyond the 15-year maturity period. If an extension was already made, interest will be paid at the Post Office Savings Account (POSA) rate until September 30, 2024. After that, the account will earn no interest.
For PPF accounts held by minors, irregular accounts will earn interest at the Post Office Savings Account (POSA) rate until the minor reaches the age of majority (18 years). After the minor turns 18, the standard PPF interest rate will apply.
Only one PPF account can be opened in a minor’s name. If multiple accounts are found, the primary account will continue to earn interest at the scheme rate, while the other account(s) will not earn any interest from the date of opening.
When a minor turns 18, their PPF account can be continued, and it will start earning interest at the prevailing PPF rate. The maturity period is calculated from the date the minor reaches adulthood.
The total annual deposit limit for PPF accounts, including those held by a husband, wife, and minor children, is Rs. 3 lakhs.
If you have multiple PPF accounts, you must regularize them by selecting one primary account to continue. The primary account will continue earning interest at the prevailing scheme rate. The balance in the second account will be merged, but any excess beyond the yearly deposit limit will be refunded without interest. Additional accounts will not earn interest from the date of opening.
No, PPF or Sukanya Samriddhi Yojana (SSY) accounts can only be opened by the parents or legal guardians of the minor. If grandparents open an SSY account, the guardianship must be transferred to the rightful guardian, typically the parents.
For NRIs with irregular accounts, the interest rate will be reduced to the Post Office Savings Account (POSA) rate until September 30, 2024. After this date, no interest will be paid on these accounts. For minors with irregular accounts, the POSA rate will apply until the account is regularized when the minor reaches adulthood. Such accounts will start the 15-year clock on the 18th birthday of the minor.
For families with more than two SSY accounts, the excess accounts will be treated as irregular and will be closed without interest, as per the new rules. Only two SSY accounts are allowed per family, one for each girl child.
For reference, here is the complete list of FAQs on PPF accounts: Frequently asked questions on Public Provident fund (PPF): the complete guide
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Published: 20 November 2024
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This post titled Frequently Asked Questions on New Rules for Irregular PPF and Sukanya Samriddhi Accounts from 1st October 2024 first appeared on 05 Sep 2024 at https://arthgyaan.com
