Government investment schemes have always remained quite popular amongst investors due to their security and good returns. PPF is one of the most popular schemes, especially for long term financial planning. Recently, the government has introduced new changes in Public Provident Fund rules as well as certain other investment schemes that every investor needs to know. Amongst these, changes in PPF interest rate has garnered significant attention. Let’s understand these changes in detail.

Changes in the Public Provident Fund Scheme

Following are the changes in Public Provident Fund Scheme that will become applicable with effect from 1^st October 2024:

• PPF Account of Minors

In case a parent or a legal guardian opens a PPF account in the name of the minor, then the interest as applicable on the Post Office Savings Account shall be paid. Once the minor attains the age of majority, then the applicable PPF interest rate shall be paid. Further, the maturity period in case of these PPF accounts should be calculated from the date the minor attains the age of 18 years i.e., the date from which a person becomes eligible to open the PPF account.

• Multiple PPF Accounts

It can happen that an individual hold more than one PPF account. In such cases, the interest shall be paid to the primary account where the total deposits across all the accounts remain under the prescribed annual limit. The balances with the secondary accounts will be merged with the primary account. Excess deposits beyond this limit shall be refunded without any interest. Further, more than 2 additional accounts will attract zero percent interest from the account opening date.

• PPF for NRIs

In case an NRI has an active PPF account and has not applied for the changes in the residency status through Form H, such NRI shall continue to earn the interest rate as per the post office savings account scheme till 30^th September 2024. From 1^st October 2024, the PPF account will not earn any interest for the account holder.

However, PPF account opened by NRI while he/she was resident in India can continue the contribution to the PPF account and the interest accumulated thereon. It should be noted that only the active NRI PPF account opened where the Form H did not specifically ask for the residency status of the account holder shall receive the interest rate of post office savings account till 30^th September 2024. After this date, the above-mentioned account will receive zero percent interest rate.

Changes in Other Investment Schemes

Apart from the changes in PPF interest rate and rules, the government has also made certain changes in certain other investment schemes. This includes:

• Sukanya Samriddhi Scheme

In case the Sukanya Samriddhi Account was opened by the grandparents (who are not the legal guardians), then the guardianship should be transferred to the person entitled as per the law i.e., legal guardian or natural guardian. If there are more than two Sukanya Samriddhi Accounts opened in a single family, then it acts as a contravention of Para 3 of the Sukanya Samriddhi Account Scheme, 2019. Therefore, then irregular accounts will be treated as accounts opened in violation of the scheme and shall be closed accordingly.

• National Savings Schemes

For the irregular accounts opened under the National Savings Scheme, the following are the changes being bought by the government:

• Account Opened Before 2^nd April 1990

In such case, the first account will earn interest at the current scheme rate while the second account will earn interest at the rate of the Post Office Savings Account scheme + 2% of the balance. From 1^st October 2024, both accounts will earn zero percent interest rate.

• Account Opened After 2^nd April 1990

In this case, the first account will earn interest at the current scheme rate while the second account will earn interest at the current POSA rate. After 1^st October 2024, both accounts will earn interest at zero percent.

In case you have invested in the above schemes, then you should take note of the above changes and restructure your investments accordingly. For more information, feel free to contact the ASC Group.