InvestorQ : What are the new rules pertaining to Public Provident Fund (PPF) that has changed from 01 April 2020? How will that impact.
Anu Biswas made post

What are the new rules pertaining to Public Provident Fund (PPF) that has changed from 01 April 2020? How will that impact.

Answer
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Neelam Naik answered.
5 months ago


Here are some interesting changes you need to be aware effective from April 01 about the PPF as an investment instrument.

· Despite the recently announced 0.80% cut in interest rate for Q1, PPF still earns 7.1%, which is entirely tax free. This is far more tax efficient and also return generating compared to bank FDs

· On account of the COVID-19 lockdown, you can make PPF investments till June 30, 2020 and still claim the deduction in the financial year 2019-20. However, it can only be used once. This is applicable to all Section 80-C investments.

· Non-deposit of minimum mandated deposit in PPF account for 2019-20 will not attract any penalty. Such deposits can be made until June 30, 2020 and there will be no revival charges penalty in all such cases.

· Effective April 01, 2020, the depositor can make any number of deposits in the PPF account in a year, subject to a minimum deposit of Rs.50. The number of deposits was restricted to 12 deposits of minimum Rs.500 in the past.

· There is further relief for PPF holders who take loans against their PPF balance. Government has reduced the interest rate charged on loan taken against PPF balance to 1% above the prevailing PPF rate, as against 2% spread earlier.