PPF: Did you Open Multiple PPF Accounts to Save Tax? Govt May Close them, Know New Rule

Do you have multiple Public Provident Fund (PPF) in your name? If you have opened two or more PPF accounts on or after December 12, 2019, the you can not merge them now. Earlier, the department of posts allowed the investors to merge multiple accounts into one single PPF accounts. However, the authority had set a cut- off for the merger of the PPF accounts which stands on December 12, 2019.

PPF New Rule

An individual can not have multiple PPF accounts under his or her name, according to the PPF rules, 2019. Earlier last month, the department of economic affairs (budget division) of ministry of finance directed the banks and post offices not to send any proposal for consideration of merger of PPF Accounts opened under the PPF Rules 2019, i.e. on of after December 19, 2019. The order was regarding a PPF account amalgamation request raised by Dr Anupam Mishra in Indian Bank, KGM College, Lucknow Branch.

On March 3, 2022, the department of economic Affairs (Budget Division), ministry of finance stated issued a letter to all head post offices mentioning, “In case any one of the PPF accounts or all the PPF accounts is/are proposed to be merged or amalgamated is / are opened on or after 12.12.2019, such account(s) shall be closed without any interest payment and no proposal should be sent to the Postal Directorate for amalgamation of such PPF Accounts.”

What it means for PPF Account holders

1) The cut-off date for the merger of PPF accounts stands at December 12, 2019, and any PPF account opened post that date is not eligible for regularisation.

2) If multiple PPF accounts opened under your name on or before December 12, 2019, they can not be clubbed. To save tax, many individuals end up opening multiple PPF accounts — one PPF account with the bank, one with the post office. Now, those accounts can not merged into one singular account.

3) “If a person has open another account after the mentioned date he or she will not be entitled for any interest amount on the amount deposited and such account will be closed after returning of the amount deposited. Therefore, an investor looking to invested in multiple PPF account will not to be able to do so and he will be bearing a loss of interest amount,” said Maneet Pal Singh, partner, IP Pasricha & Co.

What happened to your Multiple PPF Accounts Opened Before December 12, 2019?

For those who have opened more than one PPF account before December 12, 2019, can club them if the deposits made in both the accounts are within the prescribed deposit ceiling of Rs 1.5 lakh. PPF account holders will have an option to choose the account of his or her choice which he or she wants to continue. If the amount, exceeds the prescribed limit, the excess will be refunded to the investor without any interest. The refund will be done from the account the investor wishes to amalgamate.

“If the PPF accounts have been opened before the cut-off date, they can be merged if the deposits made in both the accounts taken together are within the prescribed deposit ceiling. The excess amount is refunded to the investor without any interest,” Abhinav Angirish, founder, Investonline.in.

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