If you are investing in the Public Provident Fund (PPF) or planning to open one, this is a crucial update. The Finance Ministry has introduced major changes to PPF rules, effective from October 1, 2024, impacting NRIs, minor account holders, and nominee regulations. If you’re not careful, you could lose out on interest or face legal trouble later.
In this blog, we break down everything you need to know about the PPF rules changed, how they affect your money, and what action you should take right now.
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PPF Rules Changed: What You Must Know
The Public Provident Fund (PPF) is one of India’s most trusted small savings schemes, known for its tax benefits, guaranteed returns, and 15-year lock-in period. But now, several rules have been revised—especially concerning NRIs, minors, and nominee additions.
Here’s a detailed breakdown of all the PPF rule changes you should be aware of:
1. NRIs Can No Longer Extend PPF Accounts
Key Rule Changes for NRIs:
- New PPF accounts cannot be opened by Non-Resident Indians (NRIs).
- Existing PPF accounts (opened while they were residents) can be maintained until maturity.
- No Extension After 15 Years: NRIs will not be allowed to extend their PPF account beyond the initial maturity.
- No Interest on Extended Accounts: Previously extended NRI PPF accounts (using Form H) will now earn zero interest starting October 1, 2024.
- Premature Closure Allowed: NRIs can close their PPF account after 5 years, but a 1% interest penalty will apply.
Impact: NRIs should reconsider investing in PPF and may need to explore alternative investment options like NPS or ELSS.
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2. Big Update for Minor PPF Accounts
Many parents and guardians open PPF accounts for their children. The new rules significantly alter how these accounts function:
- Interest Rate Limitation: PPF accounts for minors will now earn interest only at the Post Office Savings Account (POSA) rate until the child turns 18.
- Once the minor becomes a major (18 years), the account qualifies for regular PPF interest rates.
- Maturity Period: Will now be calculated from the date the minor attains adulthood, not the date of account opening.
Impact: Parents need to recalculate the actual maturity period and potential returns. This rule discourages premature assumptions about tax-free wealth for children.
3. Strict Rules for Multiple PPF Accounts
While most investors know that only one PPF account is allowed per person, some unknowingly open multiple accounts. Here’s what the new rules say:
- Only one primary account will earn interest if contributions are within the ₹1.5 lakh annual limit.
- If there are two accounts, you can merge them, but any excess contribution will be refunded without interest.
- No Interest for More Than Two Accounts: Additional accounts will be deemed irregular and will not accrue interest at all.
Action: If you have multiple PPF accounts, get them merged immediately to avoid losing interest on your savings.
4. Nominee Rule Updated: Avoid Legal Hassles
In a major update, the process of adding or changing nominees has been simplified. Earlier, you had to pay ₹50 to add a nominee, which discouraged many people. Now, that fee has been removed to make the process easier.
Why This Matters:
- In the absence of a nominee, families face legal hurdles to claim PPF funds after the account holder’s death.
- With the updated nominee rule, you can now update or add a nominee without paying a fee, directly through your bank or post office.
Tip: Check your PPF account and ensure your nominee details are up to date to avoid complications later.
5. Regularization of Irregular Accounts
The Finance Ministry has now taken control over irregular accounts, including those opened wrongly by NRIs or for minors.
What You Should Do:
- Contact your post office or bank and verify your PPF account status.
- If your account is irregular, you may need to close or regularize it to avoid loss of interest.
- Merge any duplicate or ineligible accounts under the new regularization process.
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Final Words: Don’t Ignore These PPF Rule Changes
The PPF rules changed in 2024 are now fully active in 2025, and they’re more important than ever for investors. Whether you’re an NRI, parent of a minor, or just someone using PPF to build long-term wealth—you need to act now.