PPF Scheme 2019 introduced - 3 key things you should know - Indian IPO Blog

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Wednesday, December 18, 2019

PPF Scheme 2019 introduced - 3 key things you should know

👉🏻 Deposits rules:


PPF Scheme 1968 allowed deposits to be made in multiples of 5. A maximum of 12 deposits were permitted in a period of 1 year

PPF Scheme 2019 changes this rule to allow deposits in multiples of ₹50. No upper limit on number of deposits has been specified.

The requirement of minimum annual contribution of ₹500 and the maximum annual contribution of ₹1.5 lakh have been retained, as is.


👉🏻 Interest rate on loan

If you took a loan against your PPF Account, the PPF Scheme 1968 laid down an interest rate of 2% per annum above the prevailing PPF interest rate. Thus for example, if the PPF interest rate was 8%, you would have to pay an interest rate of 10%.
PPF Scheme 2019 has reduced this rate to 1%. Hence if the PPF interest rate is 8%, you would have to pay a rate of 9% if you take a loan against PPF


👉🏻 Premature closure

In the PPF Scheme, 2019, premature closure is allowed after the completion of 5 financial years after the end of the year in which the account is opened, as was the case previously. However a special form, Form 5 has been created under PPF Scheme, 2019 for this purpose.

Earlier the Government had allowed premature closure of the PPF account on grounds of serious ailments or life threatening diseases affecting the account holder, spouse, dependent children or parents. This has been retained.

A second ground of premature closure allowed earlier was higher education of the account holder. This has been extended to higher education of the account holder or dependent children. However production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India or abroad is mandatory

The PPF Scheme, 2019 has introduced a third ground of premature closure, namely, a change in the residency status of account holder.

As was the case previously as well, premature closure means you get interest lower by one percent than the rate at which interest has been credited to the account.

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