The Reserve Bank on Friday notified the increase in deposit money under Public Provident Fund (PPF) to Rs. 1.5 lakh from Rs. 1 lakh earlier.
"We forward herewith a copy of the Government of India notification...The Government of India, vide this notification, has enhanced the individual subscription limit under the Public Provident Fund (PPF) Scheme, 1968, from existing Rs. 1,00,000 to Rs. 1,50,000 in a financial year," RBI said in a communication to banks.
Earlier, this week, the government had notified the same in pursuance to an announcement made by finance minister Arun Jaitley this month.
After the new ruling, people can now deposit up to Rs. 1.5 lakh annually in their Public Provident Fund (PPF) account.
RBI asked the banks to communicate the same to their branches operating the PPF scheme.
It also advised them to display about the enhanced limit under the scheme on the notice boards of their branches for the information of the PPF subscribers.
PPF is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal.
The interest rate on deposit in PPF for 2014-15 fiscal is 8.7%.
Jaitley had increased the PPF investment limit in line with the hike in cumulative tax exemption limit under 80C Income Tax Act from Rs. 1 lakh to Rs. 1.5 lakh.
He raised the investment limits in tax saving schemes with an aim to encourage household savings.