The Public Provident Fund is the darling of all tax saving investments. You invest in it and you get a deduction on your income. Besides, the interest you earn on it is tax-free. Since it is a scheme run by the Government of India, it is also totally safe.
PPF refers to Public Provident Fund and is a Long Term Debt Scheme of the Govt. of India on which regular interest is paid. Any Individual (whether Salaried or Self-Employed or any other category) can invest in this scheme and can earn a handsome tax-free return on the same which is usually higher than the return offered by Banks on Fixed Deposits.
Page Contents
- 1. Where You can open a PPF Account and How?
- 2. Who can and who cannot not open PPF Account?
- 3. You can have only one PPF account in your name
- 4. PPF Account cannot be opened Jointly with another individual
- 5. Minimum and maximum deposit limit for PPF
- 6. Continuing PPF after the 15 year period
- 7. Deposit date in payment of PPF by Cheque
- 8. Opening a PPF account for a minor
- 9. Loans on PPF Account
- 10. Benefit of Investing in PPF – Taxation of PPF
- 11. Premature withdrawal from PPF
- 12. Pre-mature closure of a PPF account is permissible only in case of death.
- 13. From which account can an NRI invest in the PPF account?
- 14. What happens on maturity of PPF Account of NRI?
- 15. What are the differences and similarities between the National Savings Certificate (NSC) and PPF?
- 16. Only the person actually depositing the PPF amount gets section 80C benefit
- 17. You cannot claim section 80C deductions for any amount deposited by you into PPF account of your parents’ or siblings’ accounts
1. Where You can open a PPF Account and How?
a. To open a PPF account, drop by a State Bank of India branch. SBI’s subsidiary banks can also open accounts. A list of these subsidiary banks is available on the bank’s Web site.You can even visit the nationalised bank in your neighborhood. Selected branches of nationalised banks can also open accounts.The head post office or selection grade sub-post offices also open PPF accounts.
b. You will have to fill up a form. You can take a look or download the form from SBI’s web site. Along with the form, attach a photograph and submit your Permanent Account Number. If you do not have a PAN, then furnish an attested copy of either your ration card, voter’s identity card or passport. When you open an account, you will be given a passbook (just like a bank pass book) in which all subscriptions, interest accrued, withdrawals and loans are recorded.
Image courtesy of Mister GC at FreeDigitalPhotos.net
2. Who can and who cannot not open PPF Account?
a. Who Can Open PPF Account – Any Individual (whether Salaried or Self-Employed or any other category) can invest in this scheme. HUFs are no more allowed to open any PPF account
b. Who Can Not open PPF Account- NRI’s are not allowed to subscribe to PPF Account. 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. An NRI can invest up to Rs 1,00,000 per financial year in an existing account, that is, an account that he opened prior to becoming an NRI. If someone inadvertently opened an account after becoming an NRI, it is best to close it before it comes to the attention of the concerned authorities in India.
3. You can have only one PPF account in your name
You can have only one PPF account in your name. If, at any point, it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest. What if an Individual have two PPF Account in his/her name?
4. PPF Account cannot be opened Jointly with another individual
4. You cannot open a joint account with another individual. The account can only be opened in one person’s name. You are free to nominate one or more individuals. On the death of the account holder, nominees cannot keep the account going by making contributions. If there are no nominees, the legal heirs get the money. You can open one account for yourself and others for your child/ children. But, on your death, your children cannot make any additional contributions.Regularisation of PPF accounts opened in Joint names
5. Minimum and maximum deposit limit for PPF
A minimum deposit of Rs. 500 must be made during one whole financial year. The maximum that could be deposited is Rs. 1,50,000 in a financial year. The interest you will earn is currently wef 01.01.2018 is 7.60% per annum (compounded yearly). Deposits could be in either one go, or in flexible installments (in multiples of Rs. 100). You could vary the amount and the number of installments, as per your convenience, provided you do not exceed 12 installments in one financial year. Failing to deposit the minimum requirement, would lead to your account being discontinued. Interest would however continue to accrue. You could regularize the account again on paying the prescribed default fee along with subscription arrears.FM Increases PPF Investment Limit in a year to Rs. 1.50 Lakh
6. Continuing PPF after the 15 year period
The PPF account is valid for 15 years. The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account. Once your account expires, you can open a new one. The only limitation is that you cannot withdraw it until seven years are completed, after which 50% of your deposits can be withdrawn, if needed.How to extend PPF account beyond 15 years
PPF account holders have an option of extending their accounts after the 15 year tenure with or without further subscription, for any period in a block of 5 years. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed. In case the account is extended without contribution, any amount can be withdrawn without restrictions. However, only one withdrawal is allowed per year.
If you continue the account after 15 years, with continued deposit, withdrawal up to 60 per cent of the balance at the beginning of each extended period (block of five years) is permitted.
7. Deposit date in payment of PPF by Cheque
In case of PPF account money deposited by means of a cheque or demand draft, the date of encashment / Realisation of the cheque or demand draft will be treated as the date of deposit. This issue becomes particularly relevant in respect of deposits made towards the end of the financial year by cheque / demand draft because if the same is not realised by March 31, then the same will be treated as deposits for the following financial year. This would also have ramifications in respect of the tax deduction being claimed by the individuals in a particular tax year. PPF Circular clarifying regarding reckoning of date of deposit
8. Opening a PPF account for a minor
Under PPF scheme, an individual may on his own behalf or on behalf of a minor of whom he is a guardian, open a PPF account. Further, either father or mother can open PPF account on behalf of his / her minor child, but both cannot open the account for same child. Instructions on opening of account for minor
9. Loans on PPF Account
Loans can be availed from the 3rd financial year excluding the year of deposit. Amount of such loans must not exceed 25 percent of the amount that stood to the account holder’s credit at the end of the second year immediately preceding the year in which the loan is applied for.
A fresh loan is not allowed when a previous loan or interest is outstanding. Interest is charged at a rate of 2% if repaid within 36 months and at 6% on the outstanding loan after 36 months. The repayment may be made either in lump-sum or in Installments.
10. Benefit of Investing in PPF – Taxation of PPF
a. Benefit u/s 80C – The Investments made in PPF Account are eligible for deduction u/s 80C
b. Tax Free Interest – No Tax is payable on the Interest Earned on PPF Account.
11. Premature withdrawal from PPF
The entire amount in your account could be withdrawn only on maturity. However, in times of financial crises partial withdrawals are permitted subject to certain ceiling limits. You could withdraw once a year, from the 7th year onwards. Such withdrawals, must not exceed, 50% of the balance at the end of the fourth year, or 50% of the balance at the end of the immediate preceding year, whichever is lower.Tax effect in case of premature closure of PPF Account
12. Pre-mature closure of a PPF account is permissible only in case of death.
The Interest Rate of PPF is decided by the Govt. The Current Interest Rate on PPF is 7.60%. The Interest is computed for a calendar month on the basis of the lowest balance in an account between the close of the 5th day and the end of the month and the Interest is credited to the account of the account holder at the end of the year.
13. From which account can an NRI invest in the PPF account?
An NRI can use funds in the NRE account or the NRO account to make investments in the PPF account. It is important to remember that the PPF rules require you to invest at least Rs 500 per financial year in the PPF account. If you fail to make the minimum investment in a year or years your account will be considered dormant. Subsequently, when you want to revive the account, you would need to invest Rs 500 for each year that you missed plus pay up a penalty of Rs 50.
14. What happens on maturity of PPF Account of NRI?
If you are an NRI at the time the deposit matures, you would need to withdraw the balance. An NRI is not eligible for extension on the PPF account. What happens if you leave the account unattended past the maturity date? “In such cases the account will be considered ‘extended without contribution’ in blocks of 5 years for an unlimited period of time. Extended without contribution means that the NRI will not have to make the minimum yearly investment of Rs 500. His account will continue to earn interest at the prevailing rate. According to the PPF deposit rules the extension can be made for an unlimited period of time.
15. What are the differences and similarities between the National Savings Certificate (NSC) and PPF?
| National Savings Certificate (NSC) | Public Provident Fund (PPF) |
| Interest Rate: 7.60 %, compounded annually but payable on maturity(wef 01.01.2018) | Interest Paid: 7.60 %,(wef 01.01.2018)compounded annually |
| No monthly/yearly payments | No monthly/yearly payments |
| Minimum investment: Rs 100 and in multiple of Rs 100/-
Maximum investment: No Limit |
Minimum investment: Rs 500 (required annually)Maximum investment: Rs 1,50,000 |
| Duration of investment: 5 years for NSC VIII Issue | Duration of investment: 15 years |
| Can be used as a security for mortgage and other purposes | Cannot be used for such purposes |
| Tax benefit under Section 80 ‘C’ available.Maximum limit: Rs 150,000 | Tax benefit under Section 80 ‘C’ available.Maximum limit: Rs 1,50,000 |
| Good medium-term investment option | Good long-term investment option |
| Interest accrues annually is taxable under Income From Other Source and is deemed to be reinvested and therefore allowed as deduction u/s 80C | Interest is fully Exempt |
Do consider opening a PPF account if you do not have one. You can put in as little as Rs 500 a year to keep it going.
16. Only the person actually depositing the PPF amount gets section 80C benefit
This means if your spouse deposits any amount into your PPF account, you will not be able to claim the deduction benefits under section 80C. Infact, your spouse will be able to (rightfully) claim section 80C deductions on his/her income.
17. You cannot claim section 80C deductions for any amount deposited by you into PPF account of your parents’ or siblings’ accounts
While tax laws allow you to claim 80C tax benefits for deposits into your spouses account, the same rule does not apply to your parents, siblings or relatives.
(Republished with amendments)
Author Bio
I had a PPF a/c. After 15 years I renewed it for furthur five years. This extended period is also expiring.I do not want to renew furthur. I also do not wish to close a/c and get the acrued balance. Is it possible to keep the a/c without depositing any amount after expiry of extended period. Can i withdraw the amount as and when required by me and will I continue to get interest till I withdraw complete amount and close the a/c.
Reply for Jigna:
Jigna u can withdraw after 6th year from ur date of starting the investment.. Withdrawal amount wil be approx 1,68,000/-
Reply for Ashok b Waghmare..
If u invest 50,000/- every year for a period of 15 years.. than ur accumulated balance will be Rs. 14,66,212/- after 15 years..
main conditions for it is dat u invest 50,000/- between 1st & 5th of April of each year…
Hope ur doubt is cleared!!
If i invest 50,000 for 15yrs,
how much returns i will get back.
Read more: https://www.taxguru.in/income-tax/public-provident-fund-ppf-scheme-investment-limit-income-tax-benefit-features.html/comment-page-2#comment-28980#ixzz0jZoXJBOU
If i invest 50,000 for 15yrs,
how much returns i will get back.
i have my ppf a/c opened in march 2008,i deposit 70k every year.When can i make first withdrawal & how much ?
Jigna
Thanks for ur reply
In case I do not withdraw the amt on 17/11/2010 on maturity ,will i continue to get 8% interest thereafter and secondly will the new tax code affect my dicision adversally
I have opened my PPF ac on 17/11/1995 when is it getting matured for total withdrawal
My father in law as opened HUF PPF account with SBI dated 10/04/1996. He expired in 1998. Now we contacted branch where our account is there, but the branch has misplaced the form which was filled during the time of opening this account and also on the front page of passbook they have mentioned “RECEASED account”.
Now my query is that, who is entitled to get this money. Yaah i have my brother in law who is also adult. Also which are documents to be submitted??? Unfortunately we don;t have DEED for the same.
I opened my PPF account with SBI on 24/11/1995. What is the maturity date? Is it 24/11/2010 or 31/03/2011? Kindly clarify.
Thanks for providing great information.
Saw the website just today, SUPERB
thanks on behalf of all the readers.
Me and my wife already have two separate ppf accounts.
I have a daughter 4yrs and son 4 months.
Can we open two more PPF accounts one for son and one for daughter.
I have one ppf account on my name and nominee as my wife.Can my wife open another ppf account in another SBI branch and can i be nominee there?
Can I invest in PPF if my gross taxable income is lower than basic exemption limit? Can I invest an amount in excess of my GTI? I don’t necessarily wish to get S. 80C benefit.
ppf account is very fine the concerend authroity can intriduce the risk factor scheme in this if subscriber dies in the middle of tenure his dependent should be compnesated with lump sum amount to them and they can fix slabs according to that dependants interest other than tax benefit is protected
I am 62 years old. Is it possible to open a PPF account in my name?
Am I to hold it for 15 years?
Is a short duration option available?
Ramaswamy
I have a doubt regarding the calculation of inerest in PPF.Will the interest for the current year be calculated on the amount deposited in March of the same year PLUS the balance as on 31st March of the previous year or the interest is calculated only on the balance as on 31st March of the previous year irrespective of the amount deposited in the current year.
Should PPF be withdrawn by the nominee after death of account holder or can it be retaind without making any further contributions?
Hi,
I wanted to know if a PPF amount should be withdrawn by the nominee after the demise of the PPF account holder?
My father has been maintaining the account for 12yrs now. After his demise, should my mother who is the nominee, withdraw it immediately or can she retain the same if she wants to, even without making any further contributions?
If she wants to retain it till maturity then is the amount in the PPF account still be eligible to earn interest on it, from now unto maturity, or if we decide to retain the account (with no deposits made in the account in future) we will not get any interest on the money in the account?
Please guide us what is the best solution; since there no immediate financial need, would it be wise to retain the PPF account, with making any contributions to it (given that it has a good rate of interest and it is tax-free) or withdraw immediately, as that money will not attract any interest on it from here on?
Thanks & Rgds,
Rit12
Hi , in any of the scheme of 80 c , who can pay for whom? ( ie. husband can pay for wife ? , wife can pay for husband ? , son can pay for father or mother ? , grandmom can pay for grandson ?)
How can a minor create his income, and in what ways can that be invested.
My wife has one PPF account and i maintain it regularly. could i take a benifit of that in income tax saving?
One Query: every year equal amount need to deposit or can it be variable amount?
Great Job ! Firstly for providing this information, then for keeping in touch, constantly replying the queries.
Saw the website just today, could not resist confessing, this impressed me a lot.
thanks on behalf of all the readers.
I have a ppf account with SBI. I generally deposit money during jan-feb period. This year, i am yet to do it, as have other investments for tax proofs. Is there any last date for depositing the money into the ppf ? Or I can do it any time this month or next ?
Pls reply….I am an NRI , my son is 1.5 years of age, can i open ppf account on my sons name?
my mother is 64 and pension holder, can she open an account and nominate my son, What happens when the account holder deceases say after 10-12 years of account opening can the nominated one continue the account?
I would like to know can we used PPF a/c. as a security for mortgage and other purposes.
I have a PPF account opened in March 1996 and 15 years will be copleted by March 2011.If I deposit Rs.70,000 now will it be eligible for tax benefit? And what will be the position of deposits (assuming that the scheme rules continue to be the same )in the year 2010-11?
Can husband and wife both get tax benefit, for their Individual PPF a/c’s
I have just heard that the following changes are about to come soon to PPF :
1. The withdrawal will be taxable.
2. Inbetween withdrawals will not be allowed.
3. Interest rate may reduce.
How much of this is true & by when is this likely to be implemented.
I am an NRI , my son is 1.5 years of age, can i open ppf account on my sons name?
my mother is 64 and pension holder, can she open an account and nominate my son, What happens when the account holder deceases say after 10-12 years of account opening can the nominated one continue the account?
I am reading all this, and i wanted to open ppf account because it is necessary
I have a PPF account in your sbi bank from 2006.So,kindly reply my status account PPF on my e-mail account.
thanks
vivek verma
PPF ACCOUNT:30092933286
Sir,
I have a PPF account in which I have already deposited a sum of Rs. 50,000 and have touched my 1,00,000 limit by making 80C LIC investments.
Now, I have more money that I would like to invest for growth. Since bank FDs are delivering an interest of ~6.5% (max) these days, I want to invest in NSC and PPF instead.
1. Can I invest 20,000 or more in PPF? What would be tax implications on the interest accrued?
2. If further investments attract taxes, can these channels still be used for investment purpose?
Sir,
I have a PPF account opened in the year 1996. I opted for VRS in 2001. The account was regularly updated till then. Thereafter, I discontinued updating. I went to withdraw the eligible amount in the year 2006 and I was paid the same. I visited my bank in the month of December 2009 for another withdrawal, but I was asked to regularize the account with some penalty.
What was the minimum subscription then? (it was Rs. 100 when I paid in 2001)
What is the minimum subscription now?
What was the penalty then? (It was Rs. 50 in 2001)
What is the penalty now?
Can I regularize the account with the rates that were applicable in that particular year, or must I make payments as per the current rates?
Thank you. Please advice.
ppf can be extended, after completion of first 15 years, to another 5 years and for any no of 5 years period, as per one’s wish.
there is no need to open a new account after 20 years.
What happens if you put more than Rs 70000 in a year? First are we allowed to put more than 70000. If yes, while upto 70000 can be considered for 80C purpose, what happens to above above 70000? Will it earn interest?
And what happens after the account reaches maturity? Will it continue to earn interest?
Does the Rs 70000 limit for PPF accounts include self as well as minors account, or can I deposit Rs 70000 each in self and my two minor sons accounts ?
I opened PPF account in Sept 89 and extended it for 5 years which is now due.Can i extend it for a further period of 5 years.If so how much can I draw during this extended period if the need be.
What will be the implications of the new tax code on principal and interest after 31.03 2011.Please suggest.
suppose if i deposit Rs. 70000/- per year in my ppf account, then how much amount, i can get after the maturity and will it be tax free?
CAN I DEPOSIT MORE THAN 70,000.00 IN A YEAR TO A PPF ACCOUNT
I did not get the answer for my question on the applicable interest rate for ppf accts which are closed after one of 5 years ,after the initial 15 year period.
Again,what is use in continuing the ppf acct after the first 15 year period is over, when- after the new tax code comes in to directly at the 10% rate rather than extending and contributing to the PPF acc- whic also attracts tax at the same 10% rate for both the principal as well interst accrued?Again,it will be a commitment to continue for 5 long years during which I see there are restrictions to withdraw or take loan from the extended ppf acct?If ubconditional withdrawal is possible,then it is a good scheme to continue,enabling one to close any time during this 5 year extended period without losing the interest rate.If this facility exists in ppf rules atleast for senior citizens,it ia good scheme to extend and continue contributing till the need from the rules..That was my question.Pl give your expert view on this opinion too.Thanks-srinivas
PPF IS BEST!
Can the PPF account be closed after say one year during the extended period of 5 years after the first 15 years? IF yes,will the interest payable to the acct in that broken period of 1 year be same as 8% i.e. the normal ppf rate or will any reduced rate of 3%. Pl clarify
Thank you ,Sundeep.
MY questiion was -is it desirable for me now to close my ppf acct which has already matured on 1-4-2009 or extend it , for any specific advantage , by the mandatory 5 year period?I feel it may be desirableto close the the matured pp accton 1-9-2009 as it will get me interest up to Aug month of 2009 at the normal 8% p.a.Because of EET status,both fresh investments during the first extension period of 5 years and interst accruable on the ENTIRE BALANCE after 1-4-2011. &.Is ppf acct,I can pay off the 10% tax direcly and save the matured money now from tax.Is it not?
If you also suggest to me that it is better to close the ppf acct now,as there is no addl benefit after th new tax rule comes in to effect,can you please suggest any alternate saving scheme now available to fetch me decent return and safety.I am a senior the money for my children’s higher education next year around aug 2010..Pl suugestthe approprate action for me with regard to my present ppf acct-in your reply.Thanks very much.-srinivas
Sirs,
Can the ppf acct be extended for one year only?Extending for 5 long years may not be desirable considering the EET status of PPF from 1-4-2001.Pl clarify.If one wants to close the PPF acct after one yea of the extended 5 year period, if one had already extended the acct for a block of 5 years,as is being insisted by SBI,will there be a reduction of interst paid to the acct in the extended periodor it will continue to be 8% til the month end preceding the month of closure.Will there bethe PPF acct after one year of the extended period.Pl advise in the light of the new tax code just announced Although it is not law yet,but it is and made effective from 1st april 2011.My PPF acct matured on 1st april 2009.Now I am in a dilema whteher to extend it at all after reading the new tax code.i am yet to officially extend it still nor have I yet withdrawn the ppf balane amount.Pl advise which is better.I dont want to pay tax on the maturity ammount after 5 years.I would like to continue the acct otherwise as i can defer receiving the amount if there is no taxation on withdrawal after 1st april 2011 that will be amount also if IT benefit is availed in the year of contribution.Kindly advise now pl.
The new tax code (proposed) on 12th August 2009 says the tax deduction amt will be increased to 3 lacs. Is it the housing loan int deduction or max saving limit for rebate under Chapter vi? Pls clrfy.
I would like to know how much is the tax exemption, if I have Rs. 100000’s NSC, kindly throw light on this.
FOR QUERY OF JAYESH PARIKH:
REPLY: RS. 70000/- IS MAXIMUM LIMIT IN PPF TO CLAIM DEDUCTION U/S 80C.
Hi,
I would like to know what is the tax exemption for an amount of Rs. 70,000. Kindly throw light on this.
Arpita
There is no change in PPF, scheme, tax benifit etc. I would like to know if there is any additional tax benifit scheme. What is the maximum tax exemption limit, what is the maximum amount that can be invested in various scheme under different sections.
Sir,
Regarding PPF Scheme I have read in v.k.singhania’s book that one deposit in single account 70000 and 70000 in minor account and also eligible for tax benefit of Rs. 100000/- U/S. 80 C so you are requested to clarify this.
jayesh parikh