Public Provident Fund

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What is a public provident fund?

You invest your money in a PPF. You get interest on the money, you invest in the public provident fund. On maturity of the PPF, you get your principal (money you have invested), back along with interest. You can make up to 12 transactions a year.

Minimum amount: You can invest a minimum amount of INR 500 in a year in a PPF.

Maximum amount: You can invest a maximum amount of INR 1.5 Lakhs in a year in a PPF.

Lock in: The PPF has a lock in period of 15 years. You can extend your PPF in blocks of 5 years, with or without making a further contribution.

If you continue your PPF after 15 years without making any contributions, you can withdraw any amount from this account, subject to a single withdrawal a year.

If you continue your PPF after 15 years and you make contributions (invest money into the PPF), then you can withdraw up to 60% of the amount in the PPF account, at the beginning of the 5 year block.

Why invest in Public Provident Fund

Safety with Returns

The investment you make in a PPF is not only safe, but also gives high interest. The interest you get is unmatched among fixed income securities.

Pledge as Collateral

You can pledge the amount in your PPF up to a certain limit and avail a loan. This loan being secured, you pay a lower rate of interest.

Tax Benefits

You get a tax deduction on the amount you invest in a PPF. You also get EEE benefits, which signifies a complete tax exemption.

In Minor's Name

You can open a PPF in the name of your minor child. Helps you save for your child's education and marriage.

Eligibility for Public Provident Fund

You need to be an Indian citizen to invest in the PPF. This account can be opened only in the name of a single holder and no joint account is permitted. The account can be opened in the name of a minor, by parents or legal guardian. An NRI and a HUF is not allowed to open a PPF account. A resident turned NRI is able to invest in the PPF account, through NRE/NRO bank accounts till maturity. After the completion of 15 years the amounts can be remitted to the host country. No extension is permissible for the NRI beyond the 15 year term. The amount is not taxable in India but might be taxed in the country of residence.

How much interest can you get from the PPF?

The interest on the PPF is calculated on the lowest balance between the 5th and the last day of the month. The interest rate payable by the PPF is linked to the Government securities rate.

For the FY 2015-2016 (April 1st 2015 - March 31st 2016), interest rate is 8.7% a year.

PPF enjoys EEE exemptions

"EEE" means exempt exempt exempt. The PPF enjoys a deduction under Section 80 C of the income tax act up to INR 1.5 Lakhs a year. You can invest a maximum amount of INR 1.5 Lakhs a year in a PPF and avail a deduction under Section 80 C of the income tax act on the full amount invested.

The money accumulates with time (increases as you get interest on this amount over 15 years) and no tax is charged on this amount. The money you withdraw on maturity is tax free.

PPF has a new name. Riskless and taxless.

How to apply

  • A public provident fund can be opened at any branch of the State Bank of India or its subsidiaries. It can also be opened at any post office and some nationalized banks, which even allow you to open an account online.

  • The public provident fund form can be downloaded from the SBI website. A photograph and a pan card are necessary. An identity and residence proof is a must. A passbook is given to you, which has all subscriptions, withdrawals, interest accrued and loans which are recorded.

  • You need to have identity and address proof as part of the KYC (Know Your Customer), procedure.


Concepts & FAQ's Public Provident Fund

What is a Public Provident Fund?

The Public Provident Fund Scheme is a statutory scheme of the Central Government of India for a period of 15 years. Any individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund any amount not less than Rs. 500 and not more than Rs. 1, 00,000 in a year. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.

Interest is not contractual but rate is notified by Ministry of Finance, Govt. of India, at the end of each year. The facility of first withdrawal can be done in the 7th year of the account, subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter one withdrawal is permissible every year. Pre-mature closure of a PPF can be done only in case of death. The account holder has an option to extend the PPF account for any period in a block of 5 years on each time. The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.

Non residents are not eligible to open a PPF account. Those who are contributing to GPF Fund or EDF account can also open a PPF account. No age is prescribed for opening a PPF account. The PPF account is opened in the State Bank of India or a subsidiary of the State Bank of India or in Post Office. Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office. Account is transferable from one Bank to another bank as well as within the bank to any branch.

Tax Benefits : Deposits in PPF qualify for rebate under section 80-C of Income Tax Act. The interest on deposits is totally tax free. Deposits are exempt from wealth tax also. The balance amount in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.

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Frequently Asked Questions

How do I open a PPF account?

A PPF Account can be opened in any Head Post-Office, GPO, any Selection Grade Post Office, any branch of the State Bank of India, and selected branches of other nationalized banks.

What is the duration of a PPF scheme?

The duration of a PPF account is 15 years, i.e., 15 complete financial years. The PPF Account can be extended for duration of five years at a time.

If one wishes to continue a PPF account after the completion of 15 years tenure, is it better to go for extension in blocks of five years or should one start a fresh account after closing the previous one?

If you close the account and open another fresh PPF account, you have access to 100% of your account balance, while extending the same account for a block of five years give you access to only 60% of your account balance at that time. This means that a large amount of money gets blocked for five years. Starting a fresh account gives you the opportunity to decide the amount you want to invest with the entire maturity amount at your disposal. This is an important factor keeping in mind the recent interest rate cut.

What is the mode of holding of a PPF account?

A PPF Account passbook is issued to the depositor by the bank where the account is held, which can be updated from time to time.

How can the nominee claim dues from the PPF account?

The nominee can claim dues on demand. However, the balance, if not withdrawn, continues to earn interest. Where there is no nomination in force, the balance will be paid to the legal heirs on production of succession certificate/probate.

How assured can I be of getting my full investment back?

Your principal is assured. The PPF Scheme has the backing of the GOI, and is considered completely risk-free.

Can I open an account in the name of a minor?

Certainly, Under the Public Provident Fund Scheme, an individual may open one Public Provident Fund account on behalf of a minor child of whom he is the guardian. It may be reiterated that only one account may be opened in one name. Thus, if a guardian opens an account on behalf of a minor child, another guardian cannot open an account on behalf of the same minor child.

Can a PPF account be sold in the secondary market?

No, a PPF account cannot be traded in the secondary market.

To what extent does a PPF account protect me against inflation?

A PPF account does not provide protection against high inflation. In certain years when the inflation rate is high, the real rate of return on your PPF may be marginal. This depends on the prevailing rate of interest on your PPF at any given time.

Can I borrow against my PPF account?

Yes, loans can be availed through PPF account


Public Provident Fund Articles

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What To Do If You Have Two PPF Accounts?

11 November 2019, Monday    

The Public Provident Fund or PPF is a very popular investment for conservative investors. PPF enjoys a sovereign guarantee on both the principal and interest earned. PPF currently offers an interest of 7.9% for the October to December quarter. PPF has a 15-year lock-in and enjoys Section 80C tax ....

Why PPF is a Great Investment?

08 October 2019, Tuesday    

If you are a conservative investor who always loves investing in fixed deposits, then PPF may be a great choice. Public Provident Fund or the PPF is a small saving scheme in India. PPF offers 7.9% interest rate for the October to December quarter. PPF interest rates are revised each quarter. So W ....

Earning while Learning

26 July 2008, Saturday    

Learning without understanding the need is of no use as it does not bring any value. Therefore, while learning we must always think of implementing the knowledge what we gained between the 4 walls in the entire place available between the earth and the sky. Money making must not be the only objectiv ....


Public Provident Fund News

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PPF, Senior Citizen Savings Scheme claim rules revised

Saturday, September 21, 2019, 10:34 AM

The Department of Posts has revised rules of various authorities to sanction deceased claim cases in respect of Post Office Savings Schemes, including PPF and Senior Citizen Savings Scheme, on death of the account holder when there is no nomination or legal evidence available or produced. The order also specified how long the authority should wait before sanctioning payment to the depositor's heirs.

Govt may cut interest rates of small savings for July-Sept quarter

Tuesday, June 25, 2019, 5:30 PM

The government may lower interest rates on small savings schemes for the July-September quarter, according to senior government sources. The cut may only be for some and not all small savings schemes, and could be as high as 30-50 basis points. The last round of changes in small savings rates were for the January-March quarter.

Good news customers! Govt hikes 1-year time deposit rates

Friday, January 4, 2019, 5:21 PM

The interest rate on 1-year post office time deposits, a small savings scheme, has been increased by 10 basis points (bps) for the January-March, 2019 quarter. According to a circular issued by the Finance Ministry, interest rates of other small savings schemes like Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) have been kept unchanged.


Public Provident Fund Videos

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Public Provident Fund Education

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3. Public Provident Fund (PPF)

Tuesday, January 9, 2018, 1:43 PM

The Public Provident Fund (PPF) is backed by the Government of India and offers attractive interest. Currently, PPF offers 7.6% rate of interest for the Quarter (January to March, 2018). PPF enjoys the EEE status. The money invested in PPF will be tax exempt up to Rs 1.5 Lakhs under Section 80C of Income Tax Act. The money accumulated and withdrawn at maturity, are also tax-free.

Public Provident Fund enjoys Exempt- Exempt- Exempt (EEE) tax status

Wednesday, November 29, 2017, 10:40 AM

Investment in PPF is tax deductible under section 80C, but the maximum cap is Rs.1,50,000 per year. The primary benefit of investment in PPF is Exempt- Exempt- Exempt status (EEE), investments, interest earned and withdrawal at maturity are not taxed. But the only disadvantage of PPF is that it is a 15 years investment and a partial withdrawal is only allowed after 7 years.

Low-risk, High-return Financial Instruments: #1 PPF

Monday, October 30, 2017, 5:51 AM

Public Provident Fund or PPF is the safest long-term investment option in India. The average 10-year return for PPF has been more than 8%. Also, the returns are totally tax-free. The only downside is that the money gets locked for 15 years. The upside to this downside is that you can truly explore the potential of compounding interest from this account.



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