December 24, 2019

PPF (Public Provident Fund) Scheme 2019 – 5 Important Changes

Recently Government notified the PPF rules by withdrawing the earlier notifications. This notification is called as PPF (Public Provident Fund) Scheme 2019 which removed the earlier notifications with respect to Public Provided Scheme 1968.Let us see the major changes that happened in this new PPF (Public Provident Fund) Scheme 2019.

PPF (Public Provident Fund) Scheme 2019 – 5 Important Changes

PPF (Public Provident Fund) Scheme 2019

# Premature Closure is allowed for NRIs

When in the year 2016, PPF premature rules were announced, the Government introduced certain eligibility to opt for premature closure of the account and they are as below. (Refer my old post “Premature closure of PPF account – New Rules 2016“)
  • Premature closure of the account is allowed in the event of the death of the account holder (This is the old rule and will continue).
  • Premature closure of account is allowed in the event of serious ailments of holder, spouse, parents or children.
  • Premature closure of the account is allowed in the event of the amount required for the higher education account holder or minor account holder.
However, with the new PPF (Public Provident Fund) Scheme 2019 rules, if the account holder turned NRI, then they are allowed to opt for premature closure. Refer the notification wordings “on change in residency status of the account holder on production of copy of Passport and visa or Income-tax return”. This facility of premature closure of account for NRIs will be available only after the completion of 5 years of period.

# Interest Rate on the PPF Loan is reduced

If you took a loan against your PPF Account, the PPF Scheme 1968 laid down an interest rate of 2% per annum above the prevailing PPF interest rate. For example, suppose the prevailing interest rate is 7.9%, then you used to pay the interest of 9.9% on your loan on PPF.This interest rate on PPF loan is reduced to 1% from the older 2%. Hence, if the prevailing interest rate is 7.9%, then the applicable interest rate on PPF loan is 8.9%. I think this is a big booster for many who can easily avail this rather than going for other forms of loans like a personal loan.In both cases, the interest is levied from the first day of the month in which the loan is taken to the last day of the month in which the last installment of the loan is paid.Refer to our earlier post on PPF Loan and Partial withdrawal “PPF-Loan and Withdrawal“.

# No upper limit on the number of deposits in a Financial Year

Earlier, the maximum number of deposits you are allowed to deposit in PPF is restricted to 12. The meaning of the year is FINANCIAL YEAR. In other words, you can make deposits to the PPF account as many times as you want, subject to the maximum limit.This gives a big booster and flexibility for many investors. Because if one has to fill Rs.1,50,000 a year, then his every contribution should be Rs.12,500 as he has to fill the maximum limit within 12 installments. With this change, PPF turned more flexible.

# Deposit in the multiple of Rs.50

Earlier the minimum deposit in a year was Rs.500 and thereafter in the multiple of Rs.5. This now increased to Rs.50. This change is required as there is no value for Rs.5. Hence, I think it is a good move.

# Change in the Forms

To streamline the process, the PPF(Public Provident Fund) Scheme 2019 rules changed the complete form structures and the new forms are as below.
  • Account Opening Form-Form 1 (Earlier it was Form A)
  • Contribution Form-Earlier it was Form B. However, nothing is specified under the new scheme.
  • Partial withdrawals- Form 2 (Earlier it was Form C)
  • Account closure after maturity: Form 3 (Earlier it was Form C)
  • PPF Loan- Form 2 (Earlier it was Form D)
  • Extension Form- Form 4 (Earlier it was Form H)
  • Premature Closure: Form 5 (This was not specified earlier)
  • Nomination-Form 1 (Earlier it was Form E)
Refer to the complete Government Notification HERE.

14 Comments

  1. ERRONEOUSLY TWO UIN CREATED AND IA AM UNABLE TO TRANSFER MY OLD PF TO NEW UIN PLS SUGGEST WHAT CAN BE DONE IN THIS REGARDS

    Reply
    • Dear Amol,
      First request EPFO through your employer to merge the both UAN.

      Reply
  2. My PPF account which has already been extended 4 times after maturity and is WITHOUT contribution is due for payment in March end 2020. I intend to extend it further. Whether it will be automatic or I have to give Form No.4 as per December 2019 notification.

    If I have to give form No. 4, then can I give it within one year of maturity or prior to date of maturity which falls by end of March 2020. How much amount in percentage of balance after this extension I can withdraw in installments or lump-sum during next 5 years and balance will continue to earn interest at applicable rates? Please advise at the earliest.

    Reply
    • Dear Bhatia,
      If you wish to extend without contribution, then it is by default. Otherwise, you have to submit the application (rules explained above).

      Reply
  3. Sir, can i transfer my PPF account from POST OFFICE to say HDFC Bank ?
    What FORM or STEPS may be required ?

    Reply
  4. Is your other post regarding spouse investing in each other PPF and own children 1.5 lacs each (total 6 lacs) still valid after above changes??

    Reply
  5. Hi,

    What is the age limit for open the PPF account? How much cost minimum we invest in PPF?

    Reply
    • Dear PMS,
      There is no such maximum age limit. The minimum is Rs.500 a year.

      Reply
  6. Sir, can i open an a/c in my sons name, he is 9.6 yrz old

    Reply
    • Dear Suma,
      Yes, you can open PPF account in his name but you or your husband as a guardian.

      Reply
  7. Is this applicable with immediate effect? I have exhausted my 12 number of deposits and was getting an error,that i cannot do it when i tried to do the 13th.This was 1 month back.

    Reply

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