#FinancialBytes: Major changes to PPF rules you should know about

The government introduced a few changes to PPF contribution rules. While the minimum and maximum contribution amounts remain unchanged, the minimum required amount for opening PPF accounts and the number of deposit contributions have changed.

Earlier, subscribers could make only 12 deposits in a year. But now, they can make any number of deposits in multiples of Rs. 50 not less than Rs. 500.

Accountholders can take a loan on their PPF balance between the 3rd and 6th financial years of opening the account.

The interest rate charged on loan taken against the PPF balance has been reduced from 2% to 1% now.

However, subscribers must repay their loan within 36 months; if they fail to repay, a penal interest of 6% per annum will be charged.

Also, PPF accountholders are now allowed to close their account prematurely under two circumstances, but not before five years of opening it.

It is permitted either when there is a change in the subscriber's residency status (upon producing copies of passport and visa or income-tax return), or for financing higher education of the accountholder's dependent children (after producing offer letters from recognized Indian/abroad universities).

PPF accountholders can also extend/retain their accounts after the 15-year maturity period with deposits within one year of the date of maturity.

For extension of the PPF account, subscribers should submit an application with Form-4; earlier, they were required to submit Form-H.

Meanwhile, the form required to be submitted for opening a PPF account has now been changed from Form-A to Form-1.