Department of Economic Affairs has issued new guidelines for PPF and SSY accounts. What are these new PPF and SSY Rules Effective From 1st October 2024?
All these new rules are applicable to PPF and SSY accounts which are accounted for without following the proper rules.
New PPF and SSY Rules Effective From 1st October 2024
a) More than one minor account – As per the rule, you are allowed to open only one PPF account in the name of the minor, and a joint account is not possible. However, by surpassing this rule, if you have opened multiple accounts in your minor kid’s name, then for all such irregular accounts Post Office Savings Account interest will be payable until the minor becomes the major (18 Yrs).
The maturity period for such accounts will be calculated from the date the minor becomes an adult, that is, the date from which the individual becomes eligible to open the account.
b) More than one PPF Account – The primary account will earn the scheme rate of interest subject to the deposit being within the ceiling applicable for each year (Rs.1,50,000). (The Primary Account is one of the two accounts chosen by the investor in any Post Office/ agency bank where the investor prefers to continue with the account upon regularisation).
The balance amount in the second account shall be merged with the first account subject to the primary account remaining within the applicable investment ceiling in each year. Post-merger, the primary account will continue to enjoy the prevailing scheme rate of interest. Excess balance in the second account, if any, shall be refunded with Zero percent rate of interest.
Any additional accounts beyond the primary and second accounts will earn a zero percent rate of interest from the date of opening of that account.
c) Extension of PPF account by NRI – If you have a PPF account but you extended it as Form H (extension), it will not specifically asking residential status does not mean you are eligible for an extension of the PPF account. Hence, for such unauthorized extended accounts the post office savings account interest rate will be payable (I think up to the maturity (15 years) of the applicable PPF rate but from the extension period the savings account interest rate) till 30th September 2024. After that, such accounts will not earn any interest.
d) SSY Accounts opened by grandparents – If accounts are opened by grandparents (who are other than legal guardians), the guardianship shall be transferred to a person entitled under the law in force, that is, to the natural guardian (alive parents) or Legal Guardian.
e) If more than two SSY accounts are opened – As per the rule, one can open a maximum of two accounts within a family (for two children). However, if you have opened more than two accounts within a family, then the irregular accounts will be closed by treating them as accounts opened in contravention of the scheme guidelines.
Conclusion – Earlier there was no such mechanism to track such unauthorized accounts. Now due to PAN and Aadhaar linkage, it is easy to track all accounts. Hence, it is better to stick to the rules and regulations set by the government for opening and operating of both PPF and SSY accounts.
Dear Basu,
I have four PPF accounts in my family, one minor account each linked to my PAN card and my wife’s PAN card. I deposit 1.5 lakhs in my account. My father-in-law deposits 1.5 lakhs in my wife’s account. My mother-in-law deposits 1.5 lakhs each in two minor accounts (3 lakhs total). Are we breaking any rules?
Daer VM,
Officially YES and unofficially NO.
Dear Sir
I an earning and deposit 1.5L in my PPF
My wife also earns and deposits 1.5L in her PPF. We both get 80c deduction on our contribution in our accounts.
Can I deposit 1.5L to her account? and will she get interest on that amount? I understand that I wont get any tax deduction on this additionaln1.5L
Similarly can she deposit 1.5L to my account? Will i get interest on that additional 1.5L also?
Kindly reply and oblige
Dear Pradeep,
You can’t deposit more than Rs.1.5 lakh in one PPF account.
Dear Sir,
When I was a resident Indian, I opened a PPF account. Now that I have become an NRI, I am continuing my PPF account. As per the new policy effective from October 1st, if I make fresh contributions, will I receive 0% interest? Is my understanding correct?
Should I continue the account until the 15-year maturity ?
Dear Venkatesh,
You can continue (invest also) the PPF and can’t extend it as your status is NRI.
Hi Basu Bro,
I have one PPF account (@ SBI) for me, and one for my wife (@ post office). So two PPF accounts. For my daughter I have one SSY account opened at Indian Bank. For the past 4 years I am saving only Rs 1000 each in to these 3 accounts, just to avoid penalty or fine. Because I am now investing only in mutual funds. Will these 2 PPF accounts and 1 SSY in my family will create a problem. Is it okay?
Thanks for your reply.
Raja.
Dear Raja,
No issues at all. You continue all three accounts and invest to the maximum of Rs.4,50,000 (in each account Rs.1,50,000) in a financial year.
Sir,I have one ppf account,after its maturity,I will close and redeem it.,can I open new ppf after the closure of old ppf account?
Dear Subashree,
Yes, you can do so.
If I have a ppt account on my name, can I open one more ppf account on my minor child name and deposit upto maximum ceiling limit in both the accounts? I mean if 1.5L is limit can I deposit 1.5L in both the accounts per each financial year.
Dear Shravani,
You can open your own account and one more account in your kid name and you can be a guardian of that account. However, make sure to deposit the combined limit of Rs.1.5 lakh a year than Rs.3 lakh.
Hi Basu,
Thanks for this timely article. We opened a SSY account for our only daughter 5 years ago. It was opened in the bank in which my wife had an account. I shifted abroad 4 years ago, and my wife and daughter shifted with me 2 years ago.
Now, we decided to keep the account and are still adding money to it whenever we visit India. Is this wrong, considering that we are all NRIs now. If yes, what should I do and what will happen to the account and deposited funds?
Dear KC,
As per the current rule, once daughter turn NRI, then you are not allowed to continue the account. Hence, better to close it.
Thanks Basu.
1- Till this financial year, I have invested 1.5 lakh seperately (Total 3 Lakh) in my PPF & my Minor son’s PPF. Will that be a problem?
2- From next financial year i will ensure it does not cross more than 1.5L for both the accounts.
3- Also, if after 15 years, if we dont extend for 5 years (using form H) or close PPF, what will happen by default? Will the PPF still continue to earn interest (without me depositing any further money)?
Thanks
Avi
Dear Avi,
1) As per the rule, the combined limit of self and minor account (where you are a guardian) should be Rs.1.5 lakh but not Rs.3 lakh. Hence, obiviously this is a problem.
2) But regarding whatever it happened, the above rules will apply.
3) Default option is extention of 5 years WITHOUT CONTRIBUTION.
Dear Basu. Thanks
I remember earlier in 2019, you put a blog post saying we can invest in Wife, Self & minor son’s name, seperately each with 1.5L. pls see comments section timeline November 29, 2019 at 12:29 PM
https://www.basunivesh.com/ppf-account-for-minor-and-wife-rules-tax-benefits/
3 – Default option is extention of 5 years WITHOUT CONTRIBUTION – will i get the the same PPF interest, if i go for this type of extention?
Thanks
Avi
Dear Avi,
Please check properly. I have clearly mentioned that fund transfer should not be from your account.
Dear Basu – Thanks. This is what i plan to do going forward.
1 – I will put 1.5L in my Minor son’s account
2 – MY wife will put 1.5L in my account
3 – I will put 1.5L in my Wife Account.
So total 4.5L. Is this fine as per new rule and will i be getting regular PPF interest rates?
Thanks
Avi
Dear Avi,
Yes. Because there is no restrictions on your wife to put Rs.1.5 lakh in your account.
Sir i have 3 accounts one in my name and two in my minor kid’s name, where i collectively deposit 1.50L only. What am i supposed to do in this scenario .
Dear Amar,
As you are following the rules properly by depositing not more than Rs.1.5 lakh a year, you no need to do anything.
Hi Sir – I have one PPF account in my name and one in my minor son’s name.
So with just two ppf accounts, is this as per new policy?
Or interest rates would be lower as per post office savings scheme.
Dear Avi,
Having your own account and one more account in your minor son’s account (where you are guardian) is not an issue. However, make sure that the combined investment in both the accounts must not cross more than Rs.1.5 lakh a year.
My PPF account could not be extended as i forgot to make any contribution last year. Can i open a new PPF accouht?
Dear Dinesh,
As you have not closed nor closed it, by default it got extended to another 5 years with an option of no further contribution allowed in that. However, if the maturity date is within one year, then you can still apply for extension (with contribution option) or can close. But if it is more than a year, then you can do so. Hence, without closure of the existing PPF account, you are not allowed to open one more PPF account.