What is PPF ?
PPF stands for Public Provident Fund which is backed by
Indian Government. PPF is the most common investment for a number of decades.
Its features like guaranteed
return, tax exemption under section 80C as well as tax free interest makes it the most popular investment
among the risk adverse investors. Any person whether employed or self
employed can invest in the scheme.
Another benefit in PPF is that the amount in PPF account cannot be attached under a
court order for
recovery of a loan or liability.
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1.
Tax Benefits
1.
Tax
exemption under section 80C up
to a limit of Rs. 1,50,000.
2.
Interest
is tax free. It is not taxable at the time of accrual nor at the time of
receipt. Premature withdrawal is also exempt from tax.
3.
Tax
exemption under section 80C can be availed by parents in case of deposits by
minor. Total amount deposited by parent along with minor cannot exceed Rs.
1,50,000 thus total deduction under section 80C cannot
exceed Rs. 1,50,000 in any case.
2. Interest
Interest
rate is decreased to 8.10% for the year 2016-17.
Interest is
compounded annually and credited at the end of every financial year. If amount
is deposited on or before 5th of the month then interest is credited for the
whole month otherwise interest will not be given for the whole month. Interest
is not calculated day wise but calculated monthly.
PPF Interest Rate Chart
Financial
Year
|
PPF
Interest Rate
|
2000-01
|
11%
|
2001-02
|
9.5%
|
2002-03
|
9%
|
2003-04
|
8%
|
2004-05
|
8%
|
2005-06
|
8%
|
2006-07
|
8%
|
2007-08
|
8%
|
2008-09
|
8%
|
2009-10
|
8%
|
2010-11
|
8%
|
2011-12
|
8.6%
|
2012-13
|
8.8%
|
2013-14
|
8.7%
|
2014-15
|
8.7%
|
2015-16
|
8.7%
|
2016-17
|
8.1%
|
3. Opening PPF A/c
1.
Can
be open in post offices or any authorised banks.
2.
Can
be open by minors.
3.
Can’t
be opened in joint names.
4.
Can’t be opened by HUF, NRI. However, if someone opens a
PPF Account while he is a Resident of India but subsequently becomes a NRI, he
shall be allowed to continue investing in his account.
5.
Nominee
can be appointed by the account holder. After death of account holder, nominee
cannot continue the account.
6.
The
date of realization of cheque in Government account shall be date of opening of
account.
7.
A
Power of attorney holder can neither open or operate a PPF account.
8.
The
grand father/mother cannot open a PPF account on behalf of their minor grand
son/daughter.
9.
A person can open only one PPF
account.
Document required
for opening a PPF account
Account opening form
– Form A
4. Depositing Amount
1.
Maximum
amount that can be deposited in a year is Rs. 1,50,000
2.
After
opening account minimum Rs. 500 is to be deposited each year. Penalty is Rs. 50
for default per financial year.
3.
Amount
can be deposited not more than 12 times in a year and not more than 2 times in
a month.
4.
The
deposits shall be in multiple of Rs.100/- subject to minimum amount of Rs.500.
5.
Amount
can by deposited by cash or cheque or via online payment.
5. Period and Lock in period
PPF account is opened for a period of 15 years. However on
expiry account can be extended to a period of 5 years at a time. It can be
extended any number of times for a period of 5 years each.
Application form H for extension of period
6. Withdrawal of Amount from PPF
There is a
lock-in period of 15 years and the money can be withdrawn in whole after its
maturity period. However, pre-mature withdrawals can be made from the end of
the sixth financial year from the year in which account is opened.
The maximum
amount that can be withdrawn pre-maturely is equal to 50% of the amount that
stood in the account at the end of 4th year preceding the year in which the
amount is withdrawn or the end of the preceding year whichever is lower.After
15 years of maturity, full amount can be withdrawn.
7. Closure of Account
1.
Premature
closure is not allowed before 15 years except in case of death.
2.
Nominee/legal
heir of PPF Account holder on death of the account holder can not continue the
account, but account has to be closed.
8. Documents required for opening PPF account
·
A
recent passport size photograph.
·
Identity
Proof copy with original to verify (Even PAN Card may be accepted as all tax
payers are having it)
·
Address
Proof copy with original to verify
·
Account
opening form for PPF
·
Paying
in slip for PPF a/c
·
Nomination
form for PPF
9.PPF Forms
1.
Form
A – To open a Public Provident Fund (PPF) Account
2.
Form
B – To deposit amount in PPF Account or to repay loans taken against PPF
account
3.
Form
C – To make partial withdrawals from a PPF account
4.
Form
D – To request a loan against a PPF account
5.
Form
E – To add a nominee to a PPF account
6.
Form
F – To make changes to PPF account nomination information
7.
Form
G – To claim funds in a PPF account by a nominee/legal heir
8.
Form
H – To extend the maturity period of a PPF account
10. List of Banks where PPF Account can be opened
·
State
Bank of India
(SBI)
·
ICICI
Bank
·
Axis
Bank
·
State
Bank of Travancore
·
State
Bank of Hyderabad
·
State
Bank of Mysore
·
State
Bank of Bikaner
and Jaipur
·
State
Bank of Patiala
·
Allahabad
Bank
·
Bank
of Baroda
·
Bank
of India
·
Bank
of Maharashtra
·
Canara
Bank
·
Central
Bank of India
·
Corporation
Bank
·
Dena
Bank
·
IDBI
Bank
·
Indian
Overseas Bank
·
Oriental
Bank of Commerce
·
Punjab
National Bank
·
Union
Bank of India
·
United
Bank of India
·
Andhra
Bank
·
Vijaya
Bank
·
Punjab and Sind Bank
·
Uco
Bank
11. Extension of Account beyond 15 years
Basic period
of the account is 15 years however account holders can choose to extend the
tenure. Tenures can be extended in 5-year blocks with or without making further
investments.
·
If no fresh investments are
made after maturity, the account can continue earning
interest on the amount accrued in the account until the end of year 15. Also,
in this case, funds can be withdrawn freely once every financial year.
·
If fresh investments are made
after maturity – The interest will be calculated as
per available balance in account. However, in this case, withdrawals will be
restricted to a maximum of 60% of the amount held in the account at the start
of each 5-year period of extension.
