PPF account holder? Your Public Provident Fund account has changed, check top 5 changes and their impact

PPF New Rules: As per the Ministry of Finance notification dated 12th December 2019, there have been some changes made in the Public Provident Fund or PPF. Some of the major changes being made by the Modi Government are — decreasing the interest rate on loan against PPF from 2 per cent to 1 per cent, one PPF account for one person including minor child, maximum limit of Rs 1.5 lakh by an individual shall be inclusive of the deposits made in his own account and in the account opened on behalf of the minor, etc. So, a PPF account holder needs to know the major changes that have happened to the PPF investments post 12th December 2019 notification.

Hailing the major changes made in PPF investments Jitendra Solanki, a SEBI registered tax and investment expert said, "Most important change made in recent Finance Ministry's notification in regard to PPF is lowering the interest rate on loan against PPF from 2 per cent to 1 per cent. Earlier, premature closure of PPF was not allowed, now one can close one's PPF account after five years of investment and joint PPF account can't be opened."

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Asked about the top five changes being made by the Modi Government in PPF investments, Solanki listed out the following:

1] Earlier, an earning individual was allowed to deposit in one's PPF account in the multiple of Rs 100, which has now been decreased to the multiple of Rs 50. However, the combined PPF deposit limit has been restricted to Rs 1.5 lakh per annum means one's PPF limit of Rs 1.5 lakh is inclusive of his or her PPF account and minor child's PPF account.

2] Premature closure of the PPF account was allowed earlier also with some terms and conditions. Now, one more criteria have been added. The new criteria change in residential status of the PPF account holder. But, for closing the PPF before 15 years but after 5 years, one will have to produce a copy of one's passport and VISA or income tax return. One per cent lesser PPF interest rate on premature closure is still applicable.

3] Earlier, a PPF account holder was allowed to invest money 12 times in a year only. Now, this maximum number of investments cap in PPF account has been abolished.

4] A PPF account holder is allowed to avail of loan against PPF. Earlier, the interest rate on loan against PPF was 2 per cent which has been now lowered to 1 per cent.

5] The Department of Post in its notification dated 2 December 2019 has allowed deposit of post office savings account cheque of any amount into one's PPF account, subject to overall limit, at any non-home post office branch. The earlier limit was Rs 25,000. The same rule applies for post office recurring deposit, PPF and Sukanya Samriddhi accounts.

The latest PPF notification says, "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 SOLs or service outlets ( without the restriction of amount, for credit in POSB/RD/PPF/SSA accounts, subject to the limits, if any, prescribed in the scheme."