Investors in small savings schemes must be aware of the PPF and SSY scheme new rules that will take effect on October 1, 2024 (the third quarter of FY 2024-25).

Earlier last week, the Department of Economic Affairs introduced new guidelines to standardize irregular savings accounts opened without adhering to the proper guidelines under National Small Savings Schemes (NSS).

PPF and SSY Scheme New Rules Effective From October 1, 2024

1️⃣PPF (Public Provident Fund)

(a) Multiple minor accounts

You must open only one PPF account in the name of a minor, and a joint account is not allowed. If you have opened more than one PPF account in the name of a minor child, the rest will earn post office savings interest until the child turns 18.

The maturity period for these irregular accounts will be calculated starting from the date the minor reaches adulthood when the individual becomes eligible to open the account.

(b) More than one PPF Account

According to the regulation, one person can open only one PPF account. If you hold multiple PPF accounts, then here know below:

• 🔹The primary account will earn the PPF prevailing rate if deposits are within the annual limit of Rs. 1.5 lakhs.
• 🔹The primary account is one of the two accounts the investor chooses to retain after regularization.
• 🔹The balance from any secondary accounts will be merged into the primary account subject to the primary account remaining within the applicable investment ceiling each year. In case of excess amounts beyond the limit, if any, the secondary account will be refunded with zero interest.
• 🔹Any PPF account beyond the primary and secondary will earn zero interest rate from the account opening date.
• 🔹After the merger, the primary account will continue to get the prevailing scheme rate of interest.

(c) Extension of PPF account by NRI

According to the regulation, NRIs cannot extend the PPF account. However, as NRI, you extended the same using Form-H (as Form-H does not ask for residential status); it will be considered an unauthorized extended account, and the post office savings account interest rate will be payable from the extension date until 30 September 2024. Post that, no interest will be paid to such accounts.

2️⃣SSY (Sukanya Samriddhi Yojana)

(a) SSY Accounts opened by grandparents

Suppose sukanya samriddhi account is opened by grandparents who are not a legal guardian. In that case, the guardianship must be transferred to the rightful legal guardian, i.e., biological parents or legally appointed guardians.

(b) Exceeding SSY accounts limit

According to the regulation, a family can open a maximum of two accounts for two girl children (one SSY account per child). However, if you have opened more than two accounts, the extra account will be closed, considering they violated scheme guidelines.

Conclusion

With the linkage of PAN and Aadhaar, tracking all accounts has become easy, unlike previously. Therefore, it is suggested that government regulations be adhered to when opening and managing PPF and SSY accounts or other investments. It is always easier to follow the rules than not adhering and getting into difficulty due to not following the regulations. With financial planning, you can always plan your financial future and follow the rules.