New Public Provident Fund rules – what has changed?

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PPF Scheme introduced in the year 1968 has been replaced by the ‘PPF Scheme 2019’ recently by the Government.

The new scheme brings in 5 key changes that will definitely benefit the account holders in a number of ways.


  • Reduction in the rate of interest payable on loan:


The account holders are allowed to take loan from their PPF account and interest is charged accordingly on the amount. Earlier, interest was charged on the amount of loan at the rate of 2%. Now, this rate has been reduced to 1% of the loan amount. It is charged from the month in which the loan is sanctioned till the month in which it is repaid. This provision is applicable only to such loans that are taken in or after December 2019. Thus, interest on loan taken before December 2019 will continue to be charged at the earlier rate of 2%.


  1. Expanding criteria for which premature closure of PPF account:


In addition to the previous situations, 2 new criteria are introduced under which premature closure of account can take place.

Now an account holder can close his account in case:

  • There is a change in his residential status, or
  • If he needs amount to finance the higher education of the child dependent on him.

However, certain documents such as passport, visa or admission form will be required under these circumstances to close the account. Also, as a result of premature closure of account, the holder will get the interest at a rate 1% lower than the rate at which interest was being credited to his account.


  1. Continuance of PPF account after maturity:


Earlier, it was not clarified whether the account can be continued by the account holder after maturity date or not. The new scheme provides a clarification on this doubt. The account holder will be able to continue his PPF account even after maturity date without depositing any amount. But once it is continued without deposits for a year, no further deposits can be made in the account thereafter. Interest will also be received in the account until the time account is closed by the account holder.


  1. No restriction on the number of deposits


Under the earlier scheme, the account holder was not allowed to make more than 12 deposits in a financial year. But in the new scheme, the account holder is permitted to make the deposits any number of times he wants. However, the total amount deposited by an individual in a period of 1 year should not exceed Rs. 1.5 Lakh.


  1. Name of forms in the new PPF scheme.

The new scheme has revised the existing forms for the opening, closing, extension, loan and continuance of the account. Earlier the forms were identified as Form A, Form B, Form C etc. Now they are named as Form 1, Form 2, Form 3 etc.




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An MBA in finance, I like to cover the wide range of topics related to Taxation, SEBI, Finance and anything that is Public Helpful. The motive is always to make it simpler for the taxpayers understand the system better and take informed decisions.

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