Introduction
PPF is money that will be yours forever.
Knowledge of the different features of the PPF account will help you when you want to take a loan against the account, withdraw from the account, re-activate a discontinued account etc.
Here an attempt is made to introduce you all features of Public Provident Fund (PPF) Scheme, 2019.
What is PPF?
Public Provident Fund (PPF) is a scheme of the Central Government, framed under the PPF Act of 1968. Briefly, PPF is a government backed, long-term small savings scheme which was initially started by the Government in order to provide retirement security to self-employed individuals and workers in the unorganized sector. Today the PPF is the Indian citizens’ darling investment avenue.
But keep in mind, you need to be disciplined to make the most of the PPF investments, and also meet your liquidity needs elsewhere; because under this investment avenue your money is blocked for 15 years.
Main Features
| Eligibility | You need to be a Resident Indian Individual |
| Entry Age | No age is specified (Minor is allowed through guardian) |
| Interest rate | 7.90% p.a. compounded annually* |
| Tenure | 15 complete financial years plus the first year of investment means total your fund will get blocked for minimum 16 years |
| Extension in tenure | On completion of 15 years, the account can be extended in a block of 5 years. However there is no restriction on no. of extension an investor can availed. |
| Minimum Investment | Rs 500 p.a. |
| Maximum Investment | Rs 1,50,000 p.a. |
| Limit over no of deposits in a financial year | A maximum of 12 deposits were allowed in a financial year earlier but now the restriction on number of deposits in a year been removed vide Public Provident Fund Scheme, 2019 but maximum deposit amount limit remains |
| Tax Benefit | Up to Rs 1,50,000 under Section 80C; |
| Interest exemption under EEE model | Interest earned is exempt from tax and so are the maturity proceeds |
| Can be opened at | Any Post Office and Authorized branches of Banks |
| Who cannot invest | Hindu Undivided Family (HUF’s);Non Resident Indian’s (NRI’s); and
Person of Foreign Origin |
| Mode of Payment | Cash Crossed Cheque
Demand Draft Pay Order Online Transfer in favour of the Accounts Officer |
| Nomination | Nomination facility is available |
| Interest rate | Declared annually.The interest rate is currently 7.90% p.a.- This is subject to change. |
Change in interest rates over year
PPF interest rate has steadily dropped over the years, and can be expected to slowly fall as the years proceed. Here’s a look at what rates used to be:
| Period | Interest Rate p.a. |
| 01st Dec 2011 – 31 March 2012 | 8.60% |
| 01st April 2012 – 31st March 2013 | 8.80% |
| 01st April 2013 – 31st March 2014 | 8.70% |
| 01st April 2014 – 31st March 2015 | 8.70% |
| 01st April 2015 – 31st March 2016 | 8.70% |
| 01st April 2016 – 30th Sept 2016 | 8.10% |
| 01 Oct 2016 – 31st Mar 2017 | 8.0% |
| 01st April, 2017 – 30th June, 2017 | 7.9% |
| 1st July, 2017 – 30th September, 2017 | 7.8% |
| 1st October, 2017 – 31st December, 2017 | 7.8% |
| 1st January 2018 – 31st March 2018 | 7.6% |
| 01st April, 2018 – 30th June, 2018 | 7.6% |
| 1st July, 2018 – 30th September, 2018 | 7.6% |
| 1st October, 2018 – 31st December, 2018 | 8% |
| 1st January 2019 – 31st March 2019 | 8% |
| 01st April, 2019 – 30th June, 2019 | 8% |
| 1st July, 2019 – 30th September, 2019 | 7.9% |
| 1st October, 2019 – 31st December, 2019 | 7.9% |
It is noteworthy that the interest rate on PPF is benchmarked against the 10-year G-Sec yield and is usually 0.25% higher than the average yield on G-Secs. The interest rates on PPF are announced every year by the Reserve Bank of India (RBI) for the upcoming financial year.
By: Sensys Technologies- For any further information or query you can be reached to experts of our panel at contact@sensysindia.com
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(Republished with Amendment)
Is it permissible to open more than one PPF account one in the name of Parent and one in the name of minor child. Is interest on both accounts are tax free
What happens if one deposits Rupees 300000(Three Lakhs) in PPF Will it not fetch Interest or is the Interest above 150000 taxable.May be one can not claim under sec80c but I think interest will be tax free
Limit over no of deposits removed now