Got Multiple PPF Accounts? Merge Them

Under the Ministry of Communications, the Department of Posts released a circular on 18 October 2021 regarding the Standard Operating Procedure (SOP) for dealing with cases of amalgamation of Public Provident Fund (PPF) accounts. 

PPF scheme is a popular government scheme for retirement planning. However, one citizen can only open one account under the scheme. The circular is for depositors who have multiple PPF accounts and relaxation of the rules. Only one account will be considered the PPF account, and all subsequent accounts are “irregular”. 

As a relaxation to the rules, due to requests by the PPF subscribers, the irregular accounts will be amalgamated into one account. The Head Post Offices will calculate the interest earned during the amalgamation process. The Post Offices will follow the SOP. Suppose the merged PPF accounts have outstanding loans. In that case, the subscribers will have to repay the outstanding amount with interest. 

The SOP mentions procedures for two cases of amalgamation to continue operating the PPF account at a post office. First, when one account is at a post office and the other at a bank. The second case is when all the PPF accounts are at either one post office or multiple post offices. 

The interest rate of PPF accounts in this quarter is 7.1%. PPF is a safe investment option because it is risk-free as it is not dependent on the market. The minimum amount to deposit is as small as Rs.500 up to the maximum of Rs.1.5 lakh. One of the most attractive features of the scheme is that it falls under the Exempt-Exempt-Exempt (EEE) category. EEE category means that deposit, accumulated amount and interest earned are exempt from tax during withdrawal. 

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