The Department of Economic Affairs has issued new rules for Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) accounts, which will take effect from October 1, 2024. These regulations are aimed at addressing irregularities in the opening and management of such accounts, ensuring stricter adherence to the existing guidelines.
Key Changes in PPF and SSY Rules:
1. Multiple Minor Accounts
Under the new rules, only one PPF account can be opened in the name of a minor, and joint accounts are not permitted. If multiple accounts have been opened for a minor in violation of this rule, these irregular accounts will earn interest at the Post Office Savings Account rate until the minor reaches the age of 18. The maturity period for these accounts will start from the date the minor becomes an adult, marking the point at which the individual is eligible to open the account.
2. Multiple PPF Accounts
For individuals with more than one PPF account, the new guidelines specify that only the primary account will earn the scheme rate of interest, provided that deposits remain within the annual ceiling of Rs. 1,50,000. The balance in any secondary account will be merged with the primary account, which will continue to earn the scheme interest rate. If there is any excess balance in the second account, it will be refunded at a zero percent interest rate. Any additional accounts beyond the primary and secondary accounts will also earn a zero percent interest rate from the date of opening.
3. PPF Account Extension by NRIs
Non-Resident Indians (NRIs) who have extended their PPF accounts using Form H will be impacted by the new rules. If the extension did not explicitly confirm their residential status, these accounts will only earn the Post Office Savings Account interest rate up until September 30, 2024. After this date, such accounts will no longer accrue any interest.
4. SSY Accounts Opened by Grandparents
The guidelines clarify that SSY accounts opened by grandparents, who are not the legal guardians, will see guardianship transferred to the appropriate natural or legal guardian as per the law. This ensures that the accounts are managed in accordance with the intended legal framework.
5. More than Two SSY Accounts in a Family
Families are allowed to open a maximum of two SSY accounts, one for each child. If more than two accounts have been opened, the additional accounts will be closed, as they are considered to have been opened in violation of the scheme’s guidelines.
Conclusion
Previously, there was no robust mechanism to track unauthorized PPF and SSY accounts. However, with the integration of PAN and Aadhaar, the government can now easily monitor compliance with the rules. Taxpayers and account holders are advised to strictly adhere to the regulations to avoid penalties and ensure the smooth operation of their PPF and SSY accounts.
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