Have a look at the New PPF Rules i.e. PPF Scheme 2019 and the various changes introduced in this popular long term investment tool.
Public Provident fund or more commonly known as PPF, is one of the oldest tax schemes available in India. It was 1968 when the scheme was first launched and very less has been amended through.
But last year, the Government of India has made some minor changes. On 12th December through official notification, the old scheme of 1968 was replaced by the New PPF Scheme of 2019.
New PPF Rules 2019: Public Provident Fund India
Although the baseline of the scheme remains the same, there are few important changes which were brought in the new scheme. You may go through the complete PPF Guide to get into more details on this investing alternative.
Here we have covered the significant amendments under the new PPF scheme:
1. Amendment of the Loan Interest Rate Payable:
PPF account holders can take loan against their account. Earlier the rate of interest on such loan was 2%, which has now changed and brought down to 1%, if the loan is disbursed from the PPF account. So, there’s been a reduction in the interest rate that is payable on such loans.
2. Number of Deposits Limit:
If you remember, there used to be a limit on the number of deposits a person can make to a PPF account. You could make 12 deposits in multiples of Rs.5 only. The new PPF rules have withdrawn the cap on this limit. So, you can deposit in multiples of Rs.50 any number of times during a financial year. However, the maximum investment for a particular year can be done upto Rs.1.5 lakhs only.
3. Conditions for Pre-mature Closure of PPF Account:
Previously, PPF recognized only certain medical conditions for premature closure of account. In addition, higher education for dependent children was considered as the reasons for such premature closure. But, as per new PPF rules, additional provisions have been added that allow for such account closing:
- For higher education of the dependent child, for whom one is a legal guardian.
- For settling abroad i.e. with change in your residency status. This carries a penalty where you get 1% lower interest than interest rate as credited to your account.
4. Account Maturity & Closure:
Clarification on details if an individual wants to continue such account after maturity: The account holder on the completion of fifteen years (i.e. the maturity) from the end of the year, in which such account was opened, can now prolong the closure of such account for an additional block period of the next five years.
5. Restriction on Number of Account Holding:
An individual can open an account by making an application in “Form-1”. Before 2019, an individual can open only account in his or her name. The same has been revoked, and now: An individual may also open one account on behalf of each minor or a person of unsound mind of whom he or she is the guardian.
Note: Only one guardian can link the PPF account with the name of a minor or a person of unsound mind. The maximum tax-free limit for each individual remains the same i.e. 1.5 lakh each year including the deposits made in the own account and in the account opened on behalf of minor.
Also, a joint account cannot be opened under this Scheme.
6. New forms:
All the old forms have been replaced by new forms under this regime.
PPF is already a trending and prudent investment option for long term investors. Any fresh changes in favour of the common man are likely to attract more people towards this tax saving instrument. What do you think? Do you like investing in traditional investment options like PPF or you like to explore a bit riskier ones like stocks and shares also? Feel free to share your feedback.