New rules on PPF deposit: Here’re five changes you need to know

New Delhi: In December last year, the government made some changes in the way small savings deposits are managed. Following that change both the Public Provident Fund Act, 1968 and Government Savings Certificates Act, 1959 come under the Government Savings Promotion Act 1873. Other than this change, there were some procedural changes made in the PPF scheme rules. Here are five such changes you need to know.

(1) PPF contribution


The minimum and maximum contribution that can be made to a PPF account remain unchanged but the minimum amount required to open PPF account has changed along with the number of contributions that can be made in a financial year. The contribution amount should be in multiples of Rs 50 and should be equal to or more than Rs 500 but not more than Rs 1.5 lakh. Further, more than one contribution can be made to the PPF account in a month. Earlier, PPF contribution had to be in multiples of Rs 5 and the maximum number of contributions were capped at 12 in a year.

(2) New form 

For opening a PPF account, now you have to submit Form 1 instead of Form A, which was used earlier. For extension of PPF account (with deposit) after 15 years, an application has to be submitted one year before the maturity in Form-4, instead of Form H, which was used earlier.

(3) PPF account extension without deposits

In case you are opting to extend your PPF account after the 15-year maturity period without any further contribution, you can make one withdrawal in each financial year.

(4) Interest rate on PPF loan

The interest rate charged on loan taken against PPF balance was reduced to 1% from 2% earlier. Once you repay the loan principal amount, you have to repay the loan interest in not more than two instalments. The interest will be calculated from the first day of the month following the month in which you take the loan till the last day of the month in which the last instalment of the loan principal is repaid. Worth mentioning here is that when you take a loan against your PPF account, you lose interest on your PPF balance to the extent of loan amount till the principal and the interest is repaid in full.

(5) Loan amount

You can take a loan up to 25% of the PPF balance available in account two years prior to the year in which the loan is being applied.



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