PPF Account: Public Provident Fund or PPF is widely considered a long-term investment tool meant for retirement funds. An investor chooses PPF to save income tax as well. According to tax and investment experts PPF account has a maturity period of 15 years and the Department of Economic Affairs has kept PPF interest rate at 7.1 per cent in April to June 2020. Recently, in January 2020, some PPF rules have been changed. Therefore, a PPF account holder needs to know some information, which is important from an investor’s perspective.
Speaking on the PPF rules and recent changes made in January 2020, Jitendra Solanki, a SEBI registered tax and investment expert said, “Most important change made in regard to PPF is lowering the interest rate on loan against PPF from 2 per cent to 1 per cent. Earlier, premature closure of PPF was not allowed, now one can close one’s PPF account after five years of investment and a joint PPF account can’t be opened.”
Asked about the top 5 important information that a PPF account holder needs to be aware of Solanki listed out the following information:
1] An individual can have only one PPF account and one PPF minor account. The PPF minor account can be opened by either of the parents and in case of a specially-abled child, a guardian can open a PPF minor account.
2] A PPF account holder can invest a minimum of Rs 500 to a maximum of Rs 1.5 lakh per annum. The upper limit is inclusive of all other PPF accounts opened by an individual means the net investment by an individual in a PPF account and PPF Minor account should not go beyond Rs 1.5 lakh in a year.
3] In case of a change in one’s residential address, premature PPF account closure is allowed but not before five years of the PPF account.
4] In the case of any debt-default by the PPF account holder, the PPF account can’t be attached against any court decree. so, your PPF balance can be an emergency fund in the case of such financial default; and
5] PPF accounts can be revived during the maturity period through the payment of Rs 50 and Rs 500 arrears for each year of PPF investment default.