Public Provident Fund: Five PPF reforms you MUST be aware of


New Delhi: PPF, or Public Provident Fund, is an excellent choice for a secure investment. You can begin with a small initial investment by opening a PPF account at a bank or post office. A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be deposited annually. The current PPF interest rate is 7.10 percent. The PPF interest rate is expected to rise in the September quarter. The government has changed its rules in recent years. Let’s have a look at the rules that the government has changed in the quarter.

1. Rules for money deposit in PPF account

The investment in the PPF account should be in multiples of Rs 50. This amount should be at least Rs 500 or more annually. You can deposit up to 1.5 lakhs in the PPF account during the entire financial year. Only on this, you will get the benefit of tax exemption. Apart from this, money can be deposited in a PPF account once a month.

2. Interest rate on loans

A loan can also be taken against the balance in the PPF account. This interest rate has been reduced from 2 percent to 1 percent in the last few days. After paying the principal amount of the loan, you will have to pay the interest in more than two installments. Interest is calculated on the first of every month.

3. Account will be active after the maturity period

After investing in PPF for 15 years, if you are not interested in investment, then you can continue with the PPF account even without investment. It is not necessary to deposit money in this account after the completion of 15 years. You can withdraw money only once in a financial year by opting to extend the PPF account after maturity.

4. Form 1

To open a PPF account, Form 1 has to be submitted instead of Form A. For extension of the PPF account after 15 years (with deposits) one year before maturity, one has to apply in Form-4 instead of Form H.

5. Loan on PPF

The rule of taking a loan against a PPF account is that you can get a loan up to 25 percent of the total balance in your account two years before the date of application. That is, you applied for the loan on 31 August 2022. Two years before this (31st August 2020), if you had 1 lakh rupees in your PPF, then you can get 25 percent of it i.e. up to 25 thousand rupees.

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