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
Hi,
I had opened a PPF account in a location which is far from my current location.
I recently updated my PPF passbook in a local branch and realized that I had missed making the minimum deposit for the year FY13. So, I tried to make the minimum deposit of Rs. 500 along with penalty of Rs. 50 (for each year of delay) in a local branch. However, they refused to accept the amount citing that my account had become irregular (since I missed making the deposit for last year) and told me that I can make the payment only in the branch where I had opened the account (i.e. original branch).
It is practically impossible for me to go all the way to the original branch only to make this minimum deposit + penalty.
Given that SBI has the concept of branch banking, I found this quite shocking. Why can’t I make a money deposit for last year in my nearest local branch?
I then checked if I could transfer my PPF account from the original branch to my local branch? Subsequently I can make the required deposits in the local branch itself. When I asked SBI employees in the local branch if I can do this, she said that I would have to approach the original branch only for this and that I cannot apply for the transfer from another branch (as my PPF account had become irregular). I find all this quite baffling.
Please let me know a convenient solution to this problem.
Thanks,
AM
sir , my mom has an a/c in pnb & she gets pension as an employee’s nominee .she’s senior citizen .could she invest in ppf a/c from her savings a/c. if she invest 30000 p.a., after 15 yrs. howmuch money would she get.
Can i take benifit of PPF amount investing in my Wife Account
Sir.
Regarding P.F for hotel shteemaya recifancy indore. I am Dilip patidar my monthly salry 7250 only
And my pf no.MP/17645/226 this is account no.
Dilip patidar
Shreemaya recusancy indore
[email protected]
Hi,
I have a simple query : I have a joint savings bank account in SBI along with my father . Can I open a PPF account in that SBI branch and link it to my joint account ? If I do so, will I get all the tax benefits associated with PPF as the actual PPF account will be in my name ?
Hi, I have Opened PPF account this month June 2015 and transferred some amount. Now i am getting doubt like whether this amount will be considered for next financial year or for this year i mean interest and in Next April 2016 i can deposit 1.5 lakhs or the only the remaining amount i need to deposit against the last year.
Good Day
I am a seafarer and remain more than 190 days per financial year outside the country (sailing on board)…. My earning are tax exempt as self eligible for NRI status.
Can i invest in PPF.
Brgds
Balraj
If i deposit Rs. 500 in ppf account for one year how much amount we can show for tax exemption
How much amount we can show for tax exemption if we deposit only Rs. 500 for one year in ppf account
Can you continue your PPF account after you become citizen of other country assuming you were resident Indian when you opened the account
I am having an Individual PPF Account in my name in which I deposit Rs.150,000 every year and claim deduction of Tax U/s. 80(C). I am having a 6 years old son for whom I would like to open a minor PPF Account and I will be his Natural Guardian in this minor account. I would firstly like to know that if I open a minor PPF Account in her name, can I deposit 150,000 each in both the PPF Accounts every year. As he is a minor, her account will be clubbed in my Individual Account. So can I deposit 150,000 each in both accounts every financial year. I know that I can claim only 150,000 U/s. 80(C) in my Individual Account, but I would like to know whether I can deposit 150,000 each in both the PPF Accounts every year.
Sir. GOVT. SERVENT KO ARRIER SE MILNE VALI DHANRASHI KO PPF ACCOUNT MAIN DEPOSIT KAR SAKTE HAIN KEYA.
My PPF account is matured on 01.April.2015 but I am in USA and unable to come is near-future… Can my brother in India (who also has PPF account in same post office) withdraw it/take cheque in my name .. any formality i need to send apart from signed withdrawl application, letter.. Pl help my 8 Lac is stuck
Can my minor son earn tax-free interest on the amount deposited in his PPF account?
is there any problem if i deposit Rs.150000 each to my account and my 2 daughter’s account is there any taxation problem on maturity or else otherwise
Guru,
Can you pls explain do we need to showcase every year investment to the IT department or else we can do one time investment and show that until get maturity period. Because I am not aware and pretty sure about money savings from the tax deduction.
Can I open two PPF account in two different bank. I have one PPF account in Bank of India and that account 7 years old. now ome of company to deposit some amount to our ppf account. But company said PFF account should be in SBI Bank only.
What I can do ????????????
1. Fresh another PPF account in SBI
or
2. Transfer PPF a/c BOI to SBI
how to Transfer Processor PPF a/c from one bank to another a/c
Thank you for the correct information on premature withdrawal rule for PPF account.
While searching for PPF account’s comparison with Sukanya Samriddhi Account, most of the places it is given as, premature withdrawal is possible only in the case of death of the account holder, which I guess is a confusion between premature withdrawal & closure. In this article the clauses are given elaborately to understand all the bottom-line aspects.
K.sanjay say:-
sir,
I want to know that whether interest on matured ppf account is exempt from tax or not (ie. A ppf matured after 25year but still continued in bank and earned intrest during the year,is this intrest will be taxable or non taxable)
Respected Sir,
i wanted to ask that i have a 3 PPF Acounts
1. In MY Name
2. My Wife Name
3. MY Daughter Name (Minor)
i submit individual income tax return file on my & my wife name
now i opened a HUF Account where me, my wife & my daughter are members in it.
so i just wanted to ask can an HUF contribute in PPF in my Daughter Name (Rs. 1,50,000/-)
myself & my wife also deposit Rs. 1,50,000/- each in our individual PPF Account.
I am a retired man of 69 years . I get Rs.1072 only as pension from EPFO . Recently my wife has retired from govt service , she has got around Rs. 15 Lakhs from GPF. If I deposit that money in senior citizen savings scheme in my name , will it be treated that I have earned Rs.15 Lakhs in this FY from income tax point of view?
Sangeeta Says:
03/21/2015 At 12:42 PM
Can a single installment of Rs.1.50 lakh be deposited into PPF A/c on April 1 of each year?
Yes Sangeeta, You can deposit entire amount
Sir My HUF PPF Account mature on march 2014 and i Withdraw amount on nov 2014 Please clearify i will get interest from April 2014 top Seo.2014
Whether NRI parent can open PPF account in the name of resident minor son
I got interest on PPF acount credited in my account on 31 March 2013(from my Account statement), So i will declare it in ITR of Assessment year 2013-2014, given the fact that Previous year in which this interest was credited is 2012-2013(1 April 2012-31March 2013) ?
My PPF A/C is maturing this 31st March. I intend to extend it for five more years.
I will keep the a/c operational by depositing rupees five hundred.However the PPF a/c is earning some amount of yearly interest every year. Nothing is being withdrawn.
Is the interest earning amount can be considered as investment under 80cc?
I am not withdrawing any amount .That means the earned interest remains in PPF account.
Best Regards
M G Choudhury
You have made a significant error in that the maximun that can be deposited in a ppf a/c is rs. 10 lakhs and of this only rs.1,50,000 is eligible for deduction
please clarify this
Can a single installment of Rs.1.50 lakh be deposited into PPF A/c on April 1 of each year?
Sir,
How many ppf a/c can I open on behalf of my children?is there any restriction?
Can I nominate a nominee while I am opening the PPF on behalf of my Child?
Regards,
Sumita Naskar
sir
is total deposit of rs.150000 in a financial year gets benefit of 80 c.
SIR,
MY PPF ACCOUNT IS MATURING IN JAN. 2016, IF I DEPOSIT A SUM OF RS. 1.00 LAC IN MY PPF ACCOUNT IN THE MONTH OF SEPT 2015 WHETHER THAT AMOUNT WILL BE ELIGIBLE FOR REBATE UNDER I.T ACT.
REGARDS.
GIRISH KUMAR
Dear Sir,
i was having a PPF account with post office for a long time. last year i get open one more account in bank. as an individual can have only one account what should i do??
1. can i transfer my latest account to my minor son or my wife???
2. Is there any procedure to merge these two accounts???
3. can i close my latest account???
4. what is the procedure to close my latest account with bank???
i am having a salaried a/c with icici bank and i will receive my first salary on 1st april. but till now i didn’t get my pan card from pan card office, is there any procedure to deduct minimum tax from my salary as i am unable to submit my pan number before april?
If I am opening a ppf account today will I be able to get tax benifit on my salary?
Dear Sir,
I am having one PPF account in my name at State Bank Of India and another PPF account in my Minor son’s name with same bank and branch. Please let me know whether the interest earned in my Minos son’s is exempt in my hands as a gaurdian or taxable.
Regards
GRKPS NARAYANA
9849955678
Sir
I and my wife both are tax payer and i have PPF account but the amount was deposited by my wife in my PPF account through cheque. Can she take the benefit of Tax or not.
NC uniyal, Dehradun
thanks sir.. also if you know any other best service then please tell us..
PPF account is my wife name & i have deposited the cash into her account from my income. can i show the same in my 80c
What are the rules for closing ppf a/c after 18 years . I have renewed for 05 years after 15 years. Now I wanted to close my ppf a/c.How can I close my PPF A/C
SIR
I HAVE GOT PPF AC WITH SBI I HAD OPENED IT ON 2010 CAN I TAKE LOAN FROM THAT AND WHAT IS THE RATE OF INTEREST FOR THAT AND HOW MANY INSTALMENT I HAVE TO PAY FOR LOAN REPAYMENT.
SP GHOSAL
sir my ac is sb in my account service tax and epf amount pay every year more then 1000000 pay my dout is any income tax raise on this or any other charges will be raise please give the clarification
Sir,
I open my ppf account in IDBI Bank Badlapur [E] Dist. Thane State Maharashtra. But from last two years i am unable to deposit in my account. Now i want to continue my same account what can i do for the same give me suggestion.
Sir,
I open my ppf a/c in IDBI Bank, Badlapur Dist- thane Maharashtra but last two years i am unable to deposit amount in my account now i want to continue this account what can i do. Please give me the suggestion.
Sir
I have nro account and have Indian income from pension/intrest/rent/agriculture income. How I can save my income tax by making savings in particular scheams(pl advise the scheam).Can take benefit of ppf on Indian income .Looking for your valuable advise.
Thanks
Kuljit
If anyone open PPF a/c on own name and another PPF A/c on spouse name what will be the total limit of deposite for both the a/c. is it total 1.5 lac or 1.5 lac per individual a/c ie Total 3.0lac.
i have two PPF ACCOUNT IN SBI .ONE ACCOUNT LIMIT IS OVER 15 YEAR. SECOND PPF ACCOUNT IS SINCE LAST 2 YEAR.WHAT IS RULES IF WE HAVE TWO A/C. WHAT IS PROCEDURE TO CLOSE SECOND A/C.WHEN I OPEN SECOND A/C I DONOT KNOW ANY RULES.I WANT WITHDRAW FIRST A/C MONEY. IF AS PER PAN CARD BANK FOUND TWO PPF A/C. ANY LEGAL ACTION TAKEN AGAINST ME OR BANK ADVISE TO STOP SECOND A/C.PL REPLY URGENT.
Kindly let me know under which clause of income tax , interest on PPF account is exempted,
I forgot to pay for ppf in the financial year 2013-2014. I have activated my account by paying a penalty of Rs 50.
Am I eligible for a tax benefit of Rs 1,00,000 by paying the same in ppf account for the FY 2013-14. Is such facility available after the FY has ended.
Sir,
I forgot to pay for ppf in the financial year 2013-2014. I have activated my account by paying a penalty of Rs 50.
Am I eligible for a tax benefit of Rs 1,00,000 by paying the same in ppf account for the FY 2013-14. Is such facility available after the FY has ended.
I am having an Individual PPF Account in my name in which I deposit Rs.100,000 every year and claim deduction of Tax U/s. 80(C). I am having a 6 years old son for whom I would like to open a minor PPF Account and I will be his Natural Guardian in this minor account. I would firstly like to know that if I open a minor PPF Account in her name, can I deposit 100,000 each in both the PPF Accounts every year. As he is a minor, her account will be clubbed in my Individual Account. So can I deposit 100,000 each in both accounts every financial year. I know that I can claim only 100,000 U/s. 80(C) in my Individual Account, but I would like to know whether I can deposit 100,000 each in both the PPF Accounts every year.
Awaiting your valuable and haste reply at the earliest.
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