Public Provident Fund

Question 1

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

Answer

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.

Answer

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.

Answer

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

Question 2

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.

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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

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Public Provident Fund Articles

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PPF Interest Rates

03 July 2018, Tuesday

The RBI hiked the repo rate by 25 basis points in its bi-monthly policy review. The repo rate was hiked from 6 to 6.25%. The aim of this was to control the rising inflation in the economy. Retail Inflation measured by the Consumer Price Index (CPI) was 4.58% for the month of April. It h ....

Everything You Need To Know On Public Provident Fund

17 January 2018, Wednesday

The Public Provident Fund (PPF), is a favorite among many investors, as it is backed by the Government of India and offers attractive interest. PPF enjoys the EEE benefit. The money invested in PPF will be tax exempt up to Rs 1.5 Lakhs under Section 80C of the Income Tax Act. The money accumulated and withdrawn at maturity, are also tax-free. Investment in PPF is in fixed income and is not exposed to equities. You can expect steady, risk-free returns from PPF. Currently, PPF o ....

Small Savings Rate Cut: Where To Invest?

30 December 2017, Saturday

You and other investors simply love small saving schemes. Small saving schemes like PPF, NSC, Senior citizens saving schemes and Kisan Vikas Patra are very popular, as they give high returns compared to FD's and your money is safe. But, there's a problem. After demonetization, banks were flush with cash, as citizens deposited old 500 and 1,000 rupee notes within the set deadline. Banks cut interest rates offered on savings bank accounts and FD's. RBI wants banks to ....

Public Provident Fund News

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CBI registers case against unknown MEA officials for fraud

Friday, July 13, 2018, 3:49 PM

The CBI registered a case against unknown officials of Ministry of External Affairs under forgery, cheating, and other offenses based on a complaint that around Rs.92 lakhs have been fraudulently withdrawn from various General Provident Fund accounts of the Ministry during August 2017 to February 2018. The alleged fraud took place before the Finance Minister Arun Jaitley inaugurated Centralized GP Fund Module of PFMS.

NRIs can continue their PPF account now

Monday, February 26, 2018, 3:51 PM

Non-resident Indians (NRIs) who have invested in the Public Provident Fund (PPF) may have got temporary relief for now. The Department of Economic Affairs (DEA) has released an office memo on February 23, 2018, keeping its earlier notification regarding the Non-resident Indians (NRI's) PPF account released on October 2, 2017, in abeyance (or temporarily dismissed).

PF interest reduction fallout of PNB scam: Mamata Banerjee

Thursday, February 22, 2018, 7:21 PM

West Bengal CM Mamata Banerjee today claimed that the fresh reduction in provident fund interest is a fallout of the PNB-scam and that the working class would suffer hugely due to the rate cut. The Trinamool Congress supremo claimed that the funds were being drawn from the people's pockets to balance the loss of an estimated Rs 11,400 crore suffered due to the PNB-scam.

Public Provident Fund Videos

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1 Month Ago

In this video, our Founder & CEO, C S Sudheer on News 18 Kannada in Money Doctor Show has explained the necessity of EPF.

Invest in PPF Account - Risk Free Investment Options in India - Public Provident Fund

2 Months Ago

#GrowYourMoney - Invest in PPF - Risk-Free Investment Options - Public Provident Fund. In this video, we have explained the risk-free investment options with Public Provident Fund.

Public Provident Fund Education

Home Education

3. Public Provident Fund (PPF)

Tuesday, January 9, 2018, 7:13 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, 4:10 PM

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, 11:21 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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Investment Calculator

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What is investing?

Setting aside your money now to get more money in the future.You earn an income each month. You set aside some amount for your basic needs as savings. You maintain 3-6 months of expenses in your savings bank account for any contingencies and invest the rest.

If you are a conservative investor you will invest in fixed income securities such as fixed deposits. The amount you invest (Principal) is safe and you get interest on this amount. If you are an aggressive investor you invest in equity. You get a higher return at a higher risk. The amount you invest could double in a short time or even be lost. You may get a higher return than fixed income investments but the risks are high.

How to invest?

You can invest fixed amounts of money every month for a fixed period of time in an equity mutual fund. This is a systematic investment plan (SIP). You can calculate returns you get through an SIP using an SIP calculator.

You may have an investment goal where you may need a few lakhs for your child's college education in 5 years time. How much money you need to set aside now to achieve your investment goal can be calculated using the investment goal calculator.

How an online investment calculator works?

You can easily calculate your investment returns with a high degree of accuracy using the online investment calculator.

This online investment calculator has 2 options:

• Calculate your investment returns yearly.
• Calculate your investment returns monthly

How to calculate investment returns yearly using online investment calculator?

Step 1: You have to fill the amount you want to invest each year by adjusting the slider on the scale of the monthly investment in the investment calculator. You can also fill the amount directly.

Step 2: You fill the rate of return you would like to get. If you are a conservative investor you fill 8-9%, and if you are an aggressive investor you fill 11-12% using the slider on the scale of the expected rate of return in the investment calculator. You can also fill the expected rate of return on your investment directly.

Step 3: You have to choose a period in years which you intend to stay invested. You fill this time period using the slider or directly in the total investment period of the online investment calculator.

Step 4: You have to enter any current investments you hold in the current investments slot. The investment calculator will calculate your returns on this amount as per the expected rate of return you have entered earlier.

What does this online investment calculator shows you?

Your investment calculator will give you the future value of your investment. You are also shown the total investment you have made and the total amount your investment has grown to.

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Public Provident Fund

Get the best advice onPublic Provident Fund

What is a public provident fund?

Ask Wealth Doctor

Safety with Returns

Pledge as Collateral

Tax Benefits

In Minor's Name

How much interest can you get from the PPF?

PPF enjoys EEE exemptions

How to apply

Concepts & FAQ's Public Provident Fund

What is a Public Provident Fund?

Ask Wealth Doctor

How do I open a PPF account?

What is the duration of a PPF scheme?

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?

What is the mode of holding of a PPF account?

How can the nominee claim dues from the PPF account?

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

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

Can a PPF account be sold in the secondary market?

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

Can I borrow against my PPF account?

Public Provident Fund Articles

PPF Interest Rates

Everything You Need To Know On Public Provident Fund

Small Savings Rate Cut: Where To Invest?

Public Provident Fund News

CBI registers case against unknown MEA officials for fraud

NRIs can continue their PPF account now

PF interest reduction fallout of PNB scam: Mamata Banerjee

Public Provident Fund Videos

Public Provident Fund Education

3. Public Provident Fund (PPF)

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

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

Calculator

Investment Calculator

Future value of investments

Total investment made

Your investment has grown to

What is investing?

How to invest?

How an online investment calculator works?

How to calculate investment returns yearly using online investment calculator?

What does this online investment calculator shows you?

PPF Interest Rates

Everything You Need To Know On Public Provident Fund

Small Savings Rate Cut: Where To Invest?

How to Make Claim on a Life Insurance Policy?

ELSS - Utilizing the power of compounding

Why one must never neglect estate planning

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Public Provident Fund