[ruzbehxyz]

The PPF scheme rules have been changed with immediate effect.

The applicable interest rate is 7.9% per annual.

The government has introduced a new Public Provident Fund (PPF) Scheme 2019 replacing all the previous rules with immediate effect. Under the new rule, it has brought in many changes in PPF.

Among the changes, 50 percent withdrawal from the PPF account balance will be allowed any time after the expiry of five years from the end of the year in which the account was opened.

Besides that, PPF account will not be liable to attachment under any order or decree of any court in respect of any debt or liability incurred by the account holder, said Jitendra Solanki, a Sebi registered tax and investment expert.

New PPF rules 2019: Here are five major changes:

1. With this new rule, now the PPF investors will be able to withdraw 50 percent of their fourth-year end balance. Earlier, a PPF account holder would able to withdraw 25 of the accumulated amount after seven years, Solanki said.

2. The amount in the PPF account will not be liable to attachment under any order or decree of any court in respect of any debt or liability incurred by the account holder.

3. There can be only one account in the name of a minor and joint account is now allowed.

4. An account can be opened by the guardian of an individual or children with unsound mind, special needs.

5. Earlier, there was provision for opening PPF account in the name of a minor, but there was no clarity in the rule on this. In the new rule, it is more clearly specified, Solanki added.

The maturity period for a PPF account is 15 years and accountholders may extend their account for a further period of five years or its multiple years. An individual can deposit minimum Rs 500 and maximum Rs 1.5 lakh in a financial year in PPF account.

The maximum deposit limit is inclusive of the deposits made in the subscriber's own account and in the account opened on behalf of the minor.

Source: https://www.google.com/amp/s/www.cnb...893741.htm/amp

[VWAllstar]

'Will not be liable to attachment' What does this statement mean? If someone can explain with an example.

I don't see any change in the rules or am I missing something?

[sdp1975]

Originally Posted by VWAllstar

'Will not be liable to attachment' What does this statement mean? If someone can explain with an example.

I don't see any change in the rules or am I missing something?

Say you face a civil lawsuit and lose it. The court orders you to pay 20 lacs and you don't have enough money to pay it. The court cannot recover the amount from your ppf account by attaching it.

PPF can still be attached for recovery of dues by other authorities, such as the Income Tax dept.

I see very little meaningful change in the rules. Just the old wine in a new bottle. An increase in the investment limit would have helped. The combined limit for minors and guardians remains at 1.5 lacs. Having a separate 1.5 lac limit for minors would have benefited.

[comfortablynumb]

Originally Posted by VWAllstar

'Will not be liable to attachment' What does this statement mean? If someone can explain with an example.

I don't see any change in the rules or am I missing something?

Only changes are rate of interest and point number 1. Points 2 - 5 were applicable even before these "new" rules, I think.

"Will not be liable to attachment" probably means a court can't touch the money in your PPF a/c, even if you default on any loans or declare bankruptcy.

Disclaimer: I am not a finance expert.

[ruzbehxyz]

Originally Posted by VWAllstar

'Will not be liable to attachment' What does this statement mean? If someone can explain with an example.

I don't see any change in the rules or am I missing something?

Please refer this link which explains things in more detail:
https://www.google.com/amp/s/taxguru...19.html/%3famp

[kavensri]

Originally Posted by ruzbehxyz

The applicable interest rate is 7.9% per annual.

Does that mean, now the interest will be declared for full financial year and not like the existing method of declaring it every quarter?

[bluevolt]

Wasn't the interest rate already 7.9%? What's new in it.

[kavensri]

Originally Posted by bluevolt

Wasn't the interest rate already 7.9%? What's new in it.

May be, they will declare the interest rate annually (like EPF) instead of quarterly? That must be the new thing?

[ruzbehxyz]

Originally Posted by kavensri

May be, they will declare the interest rate annually (like EPF) instead of quarterly? That must be the new thing?

Currently, the rate of interest that is provided on a PPF account is 7.9% p.a. wef 01st October 2019 and it is compounded on an annual basis. The interest is paid on March 31st every year. The PPF interest rate is set by the Finance Ministry on a quarterly basis.

[kavensri]

Originally Posted by ruzbehxyz

Currently, the rate of interest that is provided on a PPF account is 7.9% p.a. and it is compounded on an annual basis. The interest is paid on March 31st every year. The PPF interest rate is set by the Finance Ministry on a yearly basis.

The Ministry of Finance, Government of India announces the rate of interest for PPF account every quarter. The interest rate compounded annually and paid on 31 March every year. Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.

Source: https://en.wikipedia.org/wiki/Public...nt_Fund_(India)

[VWAllstar]

Not quoting any of the post but thank you for the inputs. As mentioned, there is only the change in percentage of withdrawal from 25 to 50 and reduced the period from 7 to 5 years.

Is there a rational of depositing the amount before 5th of every month in order to get interest on the amount?

"Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month" - From the previous post by Kavensri.

[kavensri]

Originally Posted by VWAllstar

Is there a rational of depositing the amount before 5th of every month in order to get interest on the amount?

"Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month" - From the previous post by Kavensri.

Yes, if you deposit the amount after 5th, then you won't get the interest for the deposited amount for that month.

[ruzbehxyz]

Originally Posted by VWAllstar

As mentioned, there is only the change in percentage of withdrawal from 25 to 50 and reduced the period from 7 to 5 years.

PPF withdrawal from account will be allowed any time after the expiry of five years from the end of the year in which the account was opened. The account holder may, avail withdrawal of an amount not exceeding 50 per cent of the amount that stood to his credit at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower.

The finance ministry is considering to increase the Public Provident Fund (PPF) investment limit from Rs 1.5 lakh to Rs 2.5 lakh under section 80C of the Income Tax Act, according to a report by The Economic Times.

If agreed upon it will be announced in the budget of 2020.

Source: https://www.moneycontrol.com/news/bu...c-4814681.html

[vibbs]

Guys, I have a question. Sorry if directly not connected with the topic of this thread.
What happens to your PPF account if become an NRI?

Do you have to close it? Or can you continue with it?

[pradkumar]

I thought the government wants us to spend more and save less to help boost the economy.

Originally Posted by ruzbehxyz

The finance ministry is considering to increase the Public Provident Fund (PPF) investment limit from Rs 1.5 lakh to Rs 2.5 lakh under section 80C of the Income Tax Act, according to a report by The Economic Times.

If agreed upon it will be announced in the budget of 2020.