Must know changes in Public Provident Fund Scheme 2019

Important and must know changes in Public Provident Fund before advising clients to invest in PPF Account

Salient features of new PPF Scheme are as follows:

1. Can Joint Accounts be opened under the PPF Scheme? 

• Joint account shall not be opened under new PPF Scheme.

2. What is minimum and maximum amount can be deposited in PPF Account?

• Earlier account holder was allowed to deposit in multiple of Rs. 100/- which is now reduced to Rs. 50/- 
• Minimum amount of deposit is Rs. 500/-  and maximum is Rs. 1,50,000/- in a year.
• Cumulative deposit in a account is restricted to Rs. 1,50,000/- (a person can deposit in PPF account up to 1,50,000/- including minors account)   

3. Limit on Number of deposits in PPF account:

• Earlier account holder was allowed 12 (Twelve) deposit transactions in PPF account, now there is no limit in making investment. I.e. no restrictions in the number of deposits in a year

4. Interest: 

• Interest @ 7.1% (FY 2021-22) p.a for calendar month on the lowest balance between the period of 05th day and end of the month. Therefore it is advisable to deposit in PPF before 05th day of month in order to get higher amount of interest.

5. Loan against PPF account: 

• PPF account holder is allowed to avail loan on PPF balance at 1%  subject to condition that principal amount of loan shall be repaid before expiry of 36 months post loan sanctioned. Else, rate of 6% will be applicable. 
• Loan can be availed after completion of 1 year from the end of year in which initial amount was deposited ( account opening year) but before completion of 5 years from the end of the year in which the initial subscription was made.
• amount of loan: not exceeding 25% of the credit balance at the end of second year immediately preceding the year in which loan applied.
• Loan can be repaid in installments or lump sum.