P.P.F. Account is a LONG TERM SAVING INSTRUMENT provided by the CENTRAL GOVERNMENT, came into force from 1 July 1968. This investment gives us ASSURED RETURNS & PROVIDE OLD AGE INCOME SECURITY TO EVERY ONE. By investing in P.P.F Account we can see the POWER OF COMPOUNDING in the long run. This account is under the E.E.E regime of income tax.
FEATURES
WHO CAN – Any person – resident, above 18 years of age, Minor through Guardian. ELIGIBILITY
Who CAN-NOT – Non-Resident, H.U.F, Foreigner.
ENTRY AGE
No Age Limit for A/c opening
INVESTMENTS
MINI – 500 P.a.
MAX – 1,50,000 P.a.
(There is no limit on number of deposits in the account).
INTEREST-
7.1% Compounded annually.
TENURE
15 years, on completion of 15 years the account can be extended to 5 years at a time
Account holding category-
1. Individual.
2. Minor through guardian only one account can be opened for each person.
DOCUMENTATION
1. Proof of Identity
2. Proof of Address
3. Passport size photographs
4. And a Account Opening Form.
OPENING
P.P.F account can be opened at any nationalized bank & post office.
By submitting form 1 along with relevant documents.
Only one account can be opened in the name of individual, or can open in the name of minor of whom he is a guardian of.
EXTENSION OF P.P.F ACCOUNT
The account holder may opt to continue even after the expiry of 15 yrs.The extension can be taken in blocks of 5 years can be continued with or without deposit. Extension can be done within 1 yr of maturity date of account opening.
WITHDRAWAL
50% withdrawals are allowed any time after expiry of 5 years from the end of the year account was opened.
Withdrawal facility is available once a year.
If loan taken against P.P.F then have to repaid before withdrawal request.
PREMATURE CLOSURE
Premature closure is allowed for –
1. Treatment of life threatening disease of holder, spouse or children
2. For higher education of account holder/children
3. Change in residential status.
CLOSURE
Account closes in event of death of holder & no nominee shall be allowed to continue.
In other case withdrawal can be done after expiry of 15 years.
LOAN AGAINST P.P.F
The account holder may apply for loan against P.P.F account.
Loan can be applied between 3rd – 6th financial year of account opening with interest @1%.
Penal interest of 6% p.a. shall be charged.
Loan can be repaid in installments or lump sum.
BENEFITS
Attractive long terms goals – These account serve long term investment goals,
Deposit period – 15 years
Lock in period – 5 years
Useful for retirement planning- Long tenure, Tax Benefit, Capital Protection makes it ideal for Retirement Corpus.
Tax free units- Tax free interest, withdrawals and tax- deduction investments
Low Risk- There is Minimum Risk of default.
Easily Accessible- A/c can BE opened at nationalized, public or private bank, post office
No Attachment- Cannot be attached under court order or laid claim to by creditors.
NOTES -:
A person can hold only one A/c in his name.
No interest will be credited if the A/c is in-active/ dormant.
Tax benefit (1.5 lakh) allowed if the contribution is made in spouse or minor child P.P.F A/c.
Author Bio
Yes. A parent of a minor child in whose name a PPF A/c is opened, can avail of tax benefit under the overall limit of 1.50 lakhs u/s 80C for the amount deposited in the minor’s account.
Subscription to PPF a/c of a minor will it get benefits of Sec.80 c.c . If the minor has his taxable income but is clubbed to parent’s income.