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.
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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
You can get No benefit, because you have already deposited Rs 150000 which is the Max. Qualifying amount of Exemption under 80C of Income Tax Act.
Yes You can get full deduction under 80C of RS 150000
80C of Income Tax Act
Yes but exemption would be limited to only 150000 Rs under Sec 80C of Income tax act.
You can claim entire 100000 Rs
No u cannot use your PPf a/c investment in such a way, entire amount deposited by u can be claimed as an exemption only by the a/c holder under 80C
It will be independent
no, a person is allowed to open only one PPF account and that too in his own name, hence your Wife’s PPF account exemption part can not be claimed.
I have two PPF accounts: one in my name and other in my spouse name. My spouse is non-working. I deposit total 3L (1.5L in each) annually. I cliam only 1.5L under 80C in my IT return. I do not show interest earned on my spouse PPF account in my IT return as it is tax free as per my understanding. Please tell me if whole thing is legal?
Very good Article for understanding PPF. Thank you Mr. Sandeep Kanoi.. Just 1 suggestion, please also add the point about distinction of PF with PPF.
Hello,
If suppose I have opened an PPF account and I want to deposit one time 1,50,000 Rs. in my PPF account then what date or month do I need to deposit amount?
I prefer both monthly or yearly payment option. Please help me. If yearly then I can deposit 1,50,000 in any month and any day of that financial year? & will it be beneficial for 80C that financial year example 2016-17?
I believe that from April2016, the PPF account can be preclosed on a penalty of 1% on Interest, Is this TRUE? This news has come in Times of India.
My PPF Account is maturing on 31 March 2016, If I invest any amount in March this year, whether this investment will be eligible for Exemption under 80 C or I have to extend my account for being eligible? Please reply as soon as possible so that I may invest accordingly. Thanks in Advance
PPF Account opened in 1996 can be continued or not Please reply
contribution in ppf a/c can made by income of relevent year or can we make it by our other investments
Kindly confirm whether PPF amount after maturity i.e., after 15years will be taxable. As per new Budget 2015 -2016 tds will be applciable on EPF at maturity on 60% amount. Will that be applicable on PPF. Kindly guide.
PPF account is on the name of dependent contribution is totaly mine in that case can I show the same infavor of mine to get tax rebate??
Ok.. So now if I have to pay a tax of Rs 4000. In order to get an exemption, what is the amount do I have to save in PPF. Is it 10 times of Tax amount i.e., 4000 x 10 = 40,000 OR 5 times i.e., 4000 x 5 = 20,000 ? Im very confused, Kindly guide me.
i open my ppf accounts 1.6.2001 and it maturity date 30.5.2016 so, in the last year i can make deposits 1.50 lac dt. 30.4.2016 and maturity taken in 30.5.2016 , this deduction available.
Whether a Tax Payer can open a PPF A/c for Mother & claim deduction upto Rs.1.5lacs
Good explanation
Dear Sir,
I have invested Rs 40000 in financial year 2015-16 in my ppf account. In the month April 2015 an entry showing interest Rs 16000 earned in 2014-15 in my ppf pass book.Which deduction am I be entitled for whether Rs 40000 or Rs 40000+16000?Please guide me. Thanks
Hi,
I have a doubt. Suppose if I invest 100000 Rs. in a year so whether that 1 lakh rupee is 100% tax free or not?
Hi all,
Can anyone confirm if I can show my wifes PPF account under 80c this year….as I have invested 100000 already
Are PAN card and opening of saving ac is mandatory before opening PPF ac in a bank
Dear Sir,
Myself & my wife, both are holding individual separate PPF accounts. Now we intent to open PPF accounts for for my children ( 19 years & 14 years. How both we can contribute in our children’s PPF accounts?
Regards.
Sir, I have an SBI PPF account in my name. If I make two deposits in a financial year. Can I use first deposit for my own 80 C exemption and second deposit for my wife’s 80 C.
Reply,
Thanks.
Janardan
Hi Sandeep , I just want to ask two questions about PPF I have one account for self and one for my son.
1.Weather i can claim income tax rebate on my ppf account after 15 years complete when i would extend my ppf account for 5 years block in period twice or thrice ( extension with further contribution)
2. After 15 years, if i extend my ppf account with no contribution – can i take out entire amount (with interest till date) at any time before completion of extension period that is 5 years
Please reply
Regards
Sanjeet Kumar ([email protected])
whether interest on PPF over 1.5 lacs deposited with permission of the PF Commissioner is exempted from the tax.
Sir/Madam,
I have opened a PPF account in the name of my minor child.The cash gifts received (of rs 50000)by the minor child ,i have deposited in her PPF account. Also , I have deposited Rs.50000 out of my pocket in my PPf account . How much deduction under section 80c can i claim?
Whether I can claim Rs 100,000 or Rs.50,000??
Sir, Pls. tell me that if somebody’s wife is housewife and there is no income but if she open a PPF account and her husband put their money in her account whether he can take Tax rebate or not and same is in their son also now they are about 40 years age, father is depositing the money in their son’s PPF account and taking rebate from so many years because their income tax Chartered Accountant is saying that you can take banifit from both the case, so you are requested kindly tell me about this types of situation but I am saying that there is NO he can’t take tax banifit from their all family members only individual can take banifit so tell me your opinion of this tax clause in PPF A/c.
Dear Sir,
I Am a Seafarer, Residing in India, We have complicated TAX Rules for individuals. So I want to ask u one question. Whether We can open a PPF account,because we might be sometimes considered as NRI(if we stay >183 days outside india) and Resident Indian (IF <183 outside india). So in this case can i open PPF account in my name.
Pls Guide me.
I opened PPF account in the year 1991 and extended it twice.
In case of my death, weather nominees will get total amount (Investment plus interest) or only part of it?
M P Bhat
Respected Sandeep Sir,
I am really thankful for your reply but there is one more question. As you have said in your answer “investment is exempt so even if it is clubbed it will be tax neutral”. My question is Sir, should I have to show this interest (earned through spouse from PPF) in my ITR , in column income from other sourse. K.G. Kapoor
Sir,
Can I open PPF a/c in my wife name and deposit Rs 150000/- in instalment or at one time regularly for 15 years.
1. Will the interest earned be clubbed in my income?
2. What will be the effect at time of maturity i.e. after 15 years?
3. My wife is a housewife and not a earning member.
K.G.Kapoor
Sir,
Can I open PPF a/c in my wife name and deposit Rs 150000/- in instalment or at one time regularly for 15 years.
1. Will the interest earned be clubbed in my income?
2. What will be the effect at time of maturity i.e. after 15 years?
3. My wife is a housewife and not a earning member.
K.G.Kapoor
Sir,
I want to know the solution of the following questions-
1. Can I open a PPF a/c in my wife/spouse name who is a housewife not a earning
member?
2. Can I deposit the amount from my income/pension?
3. Will the interest earned on PPF every year , be clubbed in my income?
4. What will happen at the time of maturity?
Dear Sir,
I have one query about interest of PPF account.
Whether interest earned on PPF a/c can be considered as investment under 80C?
i.e. if I invested Rs.30000/- in particular year and earned interest of Rs.2580/- then can I claim only Rs.30000/- as investment under 80C OR Rs.30000/- + 2580/- = Total Rs.32580/- can be claim as investment under 80C for particular year?
Please confirm me.
Sir,
I want to open a PPF account in my daughter’s name. She is 8 years old. I also having PPF account. Can i get deduction under 80C for the amount deposited in my daughter’s account ? If my and my daughter’s PPF deposit for the year is Rs.150,000, can i get full deduction under section 80C ?
Regards,
Fenil
Can a H.U.F karta invest in PPF and NSC
Let me know under which section of income tax interest of ppf account is exempt ?
let me knopw under which section interest on ppf is exempt
Hi,
I am going to open PPF account in SBI bank with payment 120000 per annum. How much amount including interest, I can expect after 15 years. If you provide the idea, It will be helpful for me to plan my scheme. In PPF scheme, the Interest is not tax payable, Whereas the total payment is taxable or not after 15 years. i am looking forward for your reply.
Thanks,
Suresh kumar
Sir,
I am an NRI since 1992. I opened a PPF account in 1987 with SBI while I was still a resident Indian. The maturity of the same has been extended twice in blocks of 5 years; the first time in 2007 and once again in 2012 by submission of Form H after discussing with the Manager and stating that I am Non Resident. I have been making contributions every year from my NRO account at SBI. However from the above article it seems this is not allowed by the rules! What are my options now? Can I send the passbook and request for closure of the account immediately and receive the funds in my NRO account?
i open new ppf account september 2015, can i open sbi bank or iob bank
Manish Prajapati Says:
08/03/2015 At 8:28 PM
Hi
i want to know can i deposit 150000 in my a/c and 150000 in my son’s a/c
pl.suggest
– See more at: https://taxguru.in/income-tax/public-provident-fund-ppf-scheme-investment-limit-income-tax-benefit-features.html#comment-1778105
Hi,
I want to open ppf account in sbi but they are saying sb account is mandatory for opening ppf as during withdrawal it creates practical problems. can you please let me know the problems during withdrawal and their possible solutions so that i do not have to open sb account in sbi.
varun
Sir, i depositing rs4000 per fomth from June 2015 for 15 years, sir pls tell me how much i will get after 15 years.
Hi
i want to know can i deposit 150000 in my a/c and 150000 in my doughter’s a/c
pl.suggest
Dear Sir,
I have one query about interest of PPF account.
Whether interest earned on PPF a/c can be considered as investment under 80C?
i.e. if I invested Rs.10000/- in particular year and earned interest of Rs.870/- then can I claim only Rs.10000/- as investment under 80C OR Rs.10000/- + 870/- = Total Rs.10870/- can be claim as investment under 80C for particular year?
Please confirm me.
With warm regards.
Sir,
Tax rebate in ppf interest ex. My yearly deposited in ppf account Rs.60000/, and its intrest Rs. 4562/ , what I will show saving + Intrest Rs.60000 + 4562 = Rs.64562 (sir pse my confusion end as for possible as )
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