The government of India has been changing a few rules in the PPF Investment plan and you need to know about them before you start investing in them.
To start with, if you take a loan against the amount you deposited in your PPF account, you will be charged an interest rate of one percent. It was two percent earlier, which has been reduced to one percent only making your repayments cheaper.
There have been multiple changes made in PPF Investment rules and regulations that you should be aware of. Read the following points to understand what kind of changes have been made and how they will affect you:
1. Contribution in Multiples of 50
While you are making your deposit with your PPF account, you would be required to deposit the money in the multiples of 50 and the minimum amount should be at least Rs. 500 annually. Also, you can not deposit more than Rs. 1.5 Lakh in a year. In addition to everything, you should also know that you can deposit your money in your PPF account only once every month.
2. Fill Form-1 to Open PPF Account
Initially you were supposed to fill Form A in order to open your PPF Account but after the change in the rules, you are supposed to fill Form-1 instead. After 15 years, if you wish to extend a year of your PPF account maturity, you would be required to fill Form-4 instead of the older Form H.
3. You can choose to continue even after maturity
Although the basic maturity time for a PPF account is 15 years and you are not supposed to deposit money after that. But you can continue earning interest after maturity without depositing money in it. If you opt for this option then you can withdraw your money only once a financial year.
4. Interest on Loan
Like I mentioned in the beginning of this article, taking a loan against the amount deposited in the PPF account has become cheaper by a percentage. The interest rate against the mentioned loan has been reduced from two percent to one percent. Also, the interest amount is calculated from the 1st of every month.
5. 25 Percent Loan
You can borrow a loan of 25% percent against your PPF account. But let me explain to you how this 25% is calculated. This 25% is calculated on the amount you had two years prior to the date of your application.
For example, if you applied for a loan on 31st March 2022, and you have Rs. 1 Lakh in your account on 31 March 2019, then your loan will be calculated on this Rs. 1 Lakh, which would be Rs. 25,000.