PPF- What is the new rule of PPF? Know here

PPF: The Public Provident Fund (PPF) is among the most reliable and favored investment options in India. Supported by the government, it provides long-term secure savings along with tax advantages. Nevertheless, many investors question if they can have more than one PPF account.

The government regulations are explicit on this issue, An individual is allowed to open just one PPF account in their name. Whether through a bank or a post office, having multiple accounts is not allowed. If someone inadvertently opens two accounts, one will be closed, and the funds will be transferred to the remaining account.

Important Terms and Conditions

– Joint accounts are not allowed. PPF accounts must always be individual accounts.

Parents can establish a PPF account for their children, but this does not increase their own tax-free limit. Thus, the maximum annual investment limit stays at Rs 1.5 lakh.

– If an individual has mistakenly invested in two accounts, tax exemption will apply only to one account.

– The duration of a PPF account is 15 years, which can be extended in increments of 5 years.

– The current interest rate for PPF is 7.1% per annum, and it is entirely tax-free.

Why was this rule established?

The government implemented this rule to prevent the misuse of tax benefits and to promote transparency within the investment framework. Allowing a single individual to open multiple accounts could lead to investments exceeding the tax-saving limit, which would defeat the purpose of the scheme.

Advice for investors

If you already possess a PPF account, refrain from attempting to open another. Instead, consider increasing your contributions to your existing account. Opening an account in your children’s name could be a beneficial option, but remember that the tax exemption limit remains unchanged.

There are numerous misconceptions among investors regarding PPF accounts, but the truth is that only one PPF account is valid per individual. This regulation is essential for protecting investors and ensuring transparency in the tax system. PPF is a long-term savings scheme run by the Government of India. You can invest a minimum of ₹500 and a maximum of Rs 1.5 lakh annually. Its lock-in period is 15 years, meaning you can withdraw the entire amount only after this period.

PPF currently offers an annual interest rate of 7.1%, which is determined by the government every quarter. Most importantly, the interest earned on this scheme is completely tax-free. Furthermore, the investment amount is tax-exempt under Section 80C, meaning it falls under the EEE (Exempt-Exempt-Exempt) category. There is no tax on the investment, interest, and maturity amount.