The Department of Posts of Ministry of Communication has recently communicated 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. The gazette notification for the new rules was issued on December 12, 2019. The Public Provident Fund Act, 1968 stands repealed and along with the Government Savings Certificates Act, 1959 both now come under the Government Savings Promotion Act 1873.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.
While the minimum and the maximum amount that can be deposited in PPF remains the same, the minimum amount required to open 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.
Earlier, a maximum of 12 deposits were permitted in a period of one year into a PPF account. But now 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.
For opening a PPF account, one needs to fill and submit Form 1 instead of Form A used earlier.
After 15 years, PPF Account can be extended after maturity with deposits within 1 year of the of date of maturity original PPF Account or it can be extended by submitting the application in Form-4, instead of Form H used earlier.
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 PPF Account is retained without deposits, the account holder can make one withdrawal in each financial year.
A PPF account holder can apply for loan between third to sixth financial year of opening an account. The government had reduced the interest rate charged on loan taken against PPF balance to 1% above the prevailing PPF rate from 2% earlier.A PPF account holder has to repay the loan before 36 months. Where the loan is not repaid or is repaid only in part, the penal interest will be charged at the rate of 6% per annum.
PPF account can be closed prematurely on change in residency status of the account holder (to non resident) on production of copy of passport and visa or income tax return. Earlier, the government allowed premature closure of PPF account only under specific circumstances: If funds were needed for medical treatment and higher education only after five years after account opening.
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 intimated 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.