New PPF rules changes one should be aware of

• The government has recently announced many changes in PPF rules for benefit of account holders. New PPF rules relate to deposits, loans & premature withdrawals.

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• PPF is one of the most popular small savings schemes offered by GOI & it offers a guaranteed safe return as back by GOI. PPF A/c has a maturity period of 15 years &  govt announces interest rates for each quarter. @ current quarter, PPF fetches interest rate of 7.90% per annum. Interest is calculated for a calendar month on the lowest balance at the credit of an A/c between close of 5th day & end of the month. Interest is credited to account at the end of each financial year i.e. on 31st March.

• Following are the new changes in PPF 

• According to new PPF deposit rules, an 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 year. Earlier, a maximum of 12 deposits were permitted in a period of 1 year. 

• The government allows premature closure of PPF account only under specific circumstances only after five years after account opening. Under current rules, premature closure is allowed for 
• Treatment of life threatening disease of the account holder, his spouse or dependent children or parents, on production of supporting documents & medical reports confirming such disease from treating medical authority & 
• Higher education of the account holder, or dependent children on production of documents & fee bills in confirmation of admission in a recognised institute of higher education in India or abroad. 
• Now, the government has added one more criteria for premature closure of PPF account: On change in residency status of the account holder on production of copy of passport & visa or income tax return.
• It is to be noted that in case of premature closure of PPF accounts, the account holder gets 1% lower interest than the rate at which interest has been credited to the account. 

• An account holder can take loans from PPF A/c's. Under the new rules, the rates at which the account holder can borrow from his account has been reduced to 1% above the prevailing PPF interest rate, from 2% earlier. In case of death of the account holder, the nominee or legal heir shall be liable to pay interest on the loan availed by the account holder but not repaid before his death. Such amount of due interest shall be adjusted at the time of final closure of the account.

• In addition, Dept of Post, through a notification dated 2nd Dec.'19, has allowed deposit of post office savings account cheque of any amount into your PPF A/c, subject to overall limit, at any non-home post office branch. Earlier limit was ₹25,000. The same rule applies for post office recurring deposit, PPF & Sukanya Samriddhi accounts.

• AII POSB cheques issued by any CBS Post Office, if presented at any CBS Post Office should be treated as at par cheques and should not be sent for clearing. POSB cheque can be accepted at other SOL's or service outlets (without restriction of amount, for credit in POSB/RD/PPF/SSA accounts), subject to the limits, if any, prescribed in the scheme," says the notification.