PPF Account New Rules 2020: The Department of Posts of Ministry of Communication has recently communicated regarding the amendments to procedural rules related to all the small savings schemes, including the Public Provident Fund (PPF) scheme. The changes will largely reflect in the post office savings bank manual governing the rules of PPF and other National Savings Schemes. 

PPF is one of the most popular small savings schemes, long-term investment instruments and it offers a guaranteed return. PPF accounts have a maturity period of 15 years and the government announces interest rates every quarter. For the current quarter, PPF fetches an interest rate of 7.9% per annum. 

It may be noted that the government had earlier in December 2019 brought about changes in the way small savings schemes are to be managed. The Public Provident Fund Act, 1968 stands repealed and along with the Government Savings Certificates Act, 1959 both now come under the Government Savings Promotion Act 1873. Along with this change, there were some other procedural changes made in the Provident Funds Scheme Rules 2019.

New PPF rules explained in 5 points:

1. PPF contribution rules

While the minimum and the maximum amount that can be deposited in PPF remains the same, the minimum amount required to open the PPF account has changed along with the number of times one can deposit contributions on the PPF account.

Any individual can subscribe to the Public Provident Fund on his own behalf or on behalf of a minor of whom he is a guardian any amount in multiples of Rs. 50 not less than Rs. 500 and not more than Rs. 1.5 lakh in a financial year. Further, the PPF subscriptions can be deposited in a lump sum or in installments of even more than one installment in a month. Earlier, the PPF subscription had to be in multiples of Rs.5 and could be paid into the account in one lump sum or installments not exceeding twelve in a year.

For opening a PPF account, one needs to fill and submit Form 1 instead of Form A used earlier.

2. PPF extension rules after maturity – With deposits

After 15 years, PPF Account can be extended after maturity with deposits within 1 year of the date of maturity original PPF Account or it can be extended by submitting the application in Form-4, instead of Form H used earlier.

3. PPF extension rules after maturity – Without deposits

Similarly, PPF Account can also be retained after maturity without further deposits and balance at the time of maturity shall continue to earn interest at the rate notified from time to time. In case the PPF Account is retained without deposits, the account holder can make one withdrawal in each financial year.

4. PPF loan interest rate

The principal amount of loan will be repaid by the subscriber through pay-in-slip and it will be credited to the Loan Account of the subscriber. After the principal amount is fully repaid, the subscriber shall pay interest in not more than two monthly installments at the rate of 1 percent per annum of the principal for the period commencing from the first day of the month following the month in which the loan is drawn up to the last day of the month in which the last installment of the loan is repaid. If the loan is not repaid or is repaid only in part, the penal interest will be charged at the rate of 6 percent per annum.

5. PPF- How interest is calculated

To get interest amounts for the entire month, it is suggested to deposit PPF contribution on or before the 5th of the month. If you want to use the PPF interest rate calculator, remember that the interest on subscriptions will be eligible for a calendar month on the lowest balance at the credit of an account between the close of the 5th day and the end of the month. The interest on the subscriptions made during the financial year and balance in the account will be at rates from time to time by the central Government. It will be credited to the account of the subscriber at the end of each financial year. The interest will be calculated on 31’t March day end and credited into the account on April 1.