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
NSC provide Net amount after 6 year as per intrest rate at the time of NSC purchase.(For ex-Rs.10000/- at the rate of 8% will get Rs.16010/- after 6 year). But intrest rate of PPF variable time to time. If at the time of PPF a/c opening intrest rate is 8% and after 1-year increases to 9% then which intrest rate will be applicable? and what amount will get after 15 year?
Sir
On 31/03/2011 my PPF A/C
IS DUE after 20 (15+5) years. Can i extend it for further 5 years with same benefits.
Thanking you
VINOD
can a huf open account. if not can membar of huf open account on huf behalf
Sir, I and my wife both are employee & both have PPF A/C. I want to know that, If my wife deposite Rs.70000/- in my ppf A/C ONLY FOR THIS YEAR, can she get tax exempt ONLY FOR THIS YEAR.
Dear Tax Guru,
First of all thanks for such a detailed and updated information about the PPF.
My question is if I am depositing 70000 INR every year in month of April for continous 15 years then my principle investment would be around 10.5 Lacs INR.
Can you give rough idea about the amount i will get back after the maturity of my account after 15 years.
Thanks
Sir I contribute Rs:16000/- a year towards Contributory Provident Fund in the Company where I work. If I want to contribute to PPF what will be the amount? Will it be Rs:70000/- per year or Rs;54000/- per year (ie) after deduction of CPF for eligibility under 80C.Please give your valuable advise.
I am facing the same problem as Jiten Rai. I already have three PPF accounts in SBI. one is in my own name, and the other two are in the name of my minor daughters, with me as the guardian.
The SBI officials refuse to accept deposits totalling more than Rs.70,000 (combined) in all the three accounts.
I am more interested in the interest earning, and not so much interested in sec.80C exemption.
Can you please provide any ruling, PPF act section number, or something like that which I can show or quote to the SBI officials, so that they will accept separate depsoits of Rs.70,000 each PER ACCOUNT?
If this is indeed permitted under law, I intend to take it up seriously, and I am prepared to fight it out through consumer forums and/or banking ombudsman to make the SBI officials accept the deposit and pay the interest thereon.
Your earliest help and guidance will be greatly appreciated.
Thank you.
i wantTDS in excel table format.
I have opened 2 ppf accounts on my children individually when they were minor. They have become major now. There are still a couple of years before the ppf matures. Pl clarify if I can still claim income tax benefit when i contribute to the children accounts.
i had continued ppf account for 15 years. then extended it for further 5 years.
Then i did not make any deposits for 5 years
CAN I continue this account ?
if the deposits of rs. 500/yr and penalty for each year is paid can this ppf a/c be continued ?
please let me know the correct position
The duration investment of PPF is 15years. Can i close and withdraw the amount in the interim say at 5 yrs or before 5 5 yrs ? Is that option available.
I want to close my PPF account of SBI, Ojhar, Nasik
Pl. advise the procedure to extend the period from 15 years to 20 years.
Can we draw the amount from 15years to 20 th year, if yes, to what extent.
Please advise.
Regards
MUKESH
Dear Sir,
I opened my PPF a/c in 1993 ith a brach of SBI and got shifted to another location of SBI in 2004 . In 2008 , 15 yrs compled and I requested for the formalities to be done for extension of 5 years.
SBI officials are confused, sometime they say it is automatic or these is no need for a written request or form to be filled.
I am continuously depositing my contribution, whether this amount is earning normal interst otr what should I do to regularise.
Kindly advise.
Regards
MUKESH
Dear Sir,
I am a final year Bcom Student. My lecturer says that in the Meharotra text book it is given that we can invest more than 70000 in ppf a/c in a year but we will get interest for 70000 only. It also states that the excess amount over and above 70000 is also subject to deduction u/s 80C upto 100000. Please comment on this issue. Thank you.
want to know that once deposited 70,000 in a current finan. year the tax benefit would be applicable for next 15years or u have to make a fresh investment further of 70,000 to take the benifiet year.
Please can you respond to this query of Jatin Rai of 15th June 2010. Very interesting question and will clarify many doubts: – As I came to know through SBI officials, maximum amount of Rs. 70000/- can be deposited in a PPF account combined together with accounts opened in the name of minors. For Example if I have opened the a/c of two minor daughters and have three PPF accounts ( one in my name and two in the name of minors ) …I can deposit only Rs. 70000/- combined in above three accounts and not Rs. 70000/- in each account. Is it true or not as per current PPF rules? If it’s not true then is PPF accounts of my daughters will earn the interest or not? Last week the SBI officials was denying to open the minor ppf a/c by giving refernce of year 2005 notification, but i opened the ppf account of my elder daughter in july 2009, so i gave them this reference and forcibely opened the ppf a/c of my second daughter. Plz advise for the same.
Respected sir,
I want to know that in which year intrest on NSC is taxable. weather it is taxable in the year of accrual or in the year of reciept.
please reply soon.
In the information it was written that we cannot withdraw the money before 15 years and on the contrary at one place it was written that we can withdraw 50% amount after 7 years. Please clarify whether after 7 years 50% amount can be withdrawn or not ?
Hi,
We had a PF account. We have not paid min amount for last 2 years and please can you advise if I pay the amount tomorrow, will I get interest for the last 2 years on the actual principal amount
Hi We have PPF accounts in name of- Myself , My husband and our two minor kids. Can we open PPF account in name of our HUF which is being separately taxed. Thank You . Savita
Query :- my father have ppf huf account. he is Karta & he only operated this. before 6 month he is expired & in this march his account is matured. what is the procidure?
How can i claim?
what i have to change a karta first?
Pls. guide me.
Pls. help me as soon as possible
THanks & regards
Kalpesh
Hi,
I have one PPF account on my name & one on my wife’s name… & i am depositing 70,000 each in both the accounts p.a
Can i open 1 account for my son & daughter seperately making my wife as guardian & deposit 70000 additional in their account every year.
what shall be the tax implications for that year & at maturity
Thanks
It has came to know that maximum amount of Rs. 70000/- can be deposited in a PPF account combined together with accounts opened in the name of minors. For Example if I have opened the a/c of two minors and have three PPF accounts ( one in my name and two in the name of minors ) … Can I deposit only Rs. 70000/- combined in above three accounts or deposit 70000/- individually in each account. Plz advise for the same.
Mukesh Mittal
Sir,
The rate of interest will be same for 15 years once we opened the ppf account.
I have one query regarding investment in PPF.
Like i would like to invest full 70000 per year but in 12 installments.Now suppose in first two months i am giving 500 for next months i am giving 2000 and rest of the months giving rest of the amount.Is it possible to invest like this in PPF .Plz throw some light on this.
I have following doubts on PPF: I appreciate your response to this:
1. whether simple Interest for PPF will be calculated monthly apart from compounded annually
2. Is it wise to invest annually lumpsum or monthly
3. More will be accumulated when we invest max 70,000 in first year and there on 60, 50, 40 for subsequent years, when compared to reverse scenario like 40 K in first year and increase to 70 k for subsequent years.
4. If interest calculated annually during March then is it good to invest only during that month of year or do you suggest monthly
Please clarify these points, Thanks in advance
As I came to know through SBI officials, maximum amount of Rs. 70000/- can be deposited in a PPF account combined together with accounts opened in the name of minors. For Example if I have opened the a/c of two minor daughters and have three PPF accounts ( one in my name and two in the name of minors ) …I can deposit only Rs. 70000/- combined in above three accounts and not Rs. 70000/- in each account. Is it true or not as per current PPF rules? If it’s not true then is PPF accounts of my daughters will earn the interest or not? Last week the SBI officials was denying to open the minor ppf a/c by giving refernce of year 2005 notification, but i opened the ppf account of my elder daughter in july 2009, so i gave them this reference and forcibely opened the ppf a/c of my second daughter. Plz advise for the same.
I have a query. The Act clearly states that an individual can open an account in his name OR on the name of a minor for whom he is a minor. But the above article says that an andiviual can open for himself and also for his minor child and invest 70,000 per year in each account. So I am a little confused.
Also the PPF account opening form of SBI has a declaration section where it is to be declared that “I do not have any other account in my individual name”. Can someone please clarify.
I had read in one of issues of ‘Business Line’ (Aril,2010) that there is a ruling of the Hon’ble Karnataka High Court that the upper limit of annual PPF currently @ Rs 70 K should be enhanced to Rs 1 Lakh so as to bring the former on par with the amount under 80C qualifying for full exemption. If so, why has it ( enhancement of the PPF ceiling) not been effected ? Enlighten please.
Regards
Hi
Is there any one can tell me how I can close my PPF account it is 3yrs old. Actually I need money very urgently
sir,
I would like to know if the Account of minor has been opened in the FY2011, and the sum of Rs.70000 is deposited each year then the amount received on maturity will be taxable??
If yes then to what extent, i.e, complete amount or just the interest earned during the 15 years period??
looking forward for ur reply…
Can I deposit Rs 70000 in one month in a financial year to my PPF account instead of 12 monthly deposit.
POINT NO. 5 AS MENTIONED ABOVE IS NOT CORRECT.
Dear Sir,
As I understand, maximum amount of Rs. 70000/- can be deposited in a PPF account combined together with accounts opened in the name of minors. For Example if I have two minor sons and have three PPF accounts ( one in my name and two in the name of minors ) …I can deposit only Rs. 70000/- in above three accounts and not Rs. 70000/- in each account. This factor has been clearly mentioned in Nabhi’s Mini Tax RR . Please give your suggestions if any.
As my salary does not fall under the tax bracket, i have not taken PAN CARD. With out a pan card can we open a PPF a.c. Some people say that with some FORM 16 0R 60B we can open the A/c. Please throw some light on this information.
My PPF A/c has completed 20 Years on 31.3.2010. I want to close account on 15.5.2010. Will I be entiled to interest from 1.4.2010 to 15.5.2010?
Please reply as my Bank says that no interest will be given after 31.3.2010.
Heerachand Jain
Is it true that Investment in PPF account is highly safe investment. Particularly is it that No court in India can attach accumulated balance in PPF account of a person who is declared insolvent by any court.?
Kindly reply.
Regards,
I already have an PPF account with SBI and would like to open one account for my daughter who is just 1yr old. Please let me know is it possible to open an account on the name of minor whereas i have an account on my name? and can I get tax banefit if it is possible?
Vimal Kumar
I already have an PPF account with SBI and would like to open one account for my daughter who is just 1yr old. Please let me know is it possible to open an account on the name of minor whereas i have an account on my name? and can I get tax banefit if it is possible?
Vimal Kumar
Delhi
DEATH OF A PPF A/C HOLDER.AFTER 3 MONTHS CLAIMED BY NOMINEE. NOMINATION IS CONFIRMED.NOW THE AMOUNT IS TO PAY AT WHAT RATE?AC HOLDERS DEATH WAS IN DEC’09.
Dear Sir
Please clarify, wheather 80 C benefit is available on Extended PPF A/c (i.e for the 5 years after expiry of 15 years )on both principal & Interest
If i invest Rs.50,000/- p.a., can i get monthly amount after 15 years??? & how much?????
How to open a ppf account for my minor kid ? She does not have a pan card.
what will be the interest paid by the bank if the deposited amount in the ppf account for 1 year is Rs.50000
I hold a PPF A/C with SBI,Ultga,
Kolkata.I havebeen deposited a sum of rs 70000/-for subscription
relates to F.Y-2009-10 With SBI
Rashbehari Br, Kolkata on the morning of 27th March,2010.The same cheque hasbeen cleared from my bank on 3/04/2010 & got thr receipt from the Bank in the date of 05/04/2010.Bank hasnot menttioned the tender date.Can I claim the deduction U/S 80C for the A.y-2010-11 & could I deposit the subscription for the F.Y-2010-11.Kindly advice me.
I hold a PPF account with SBI. Last year, I have transferred my account from Post office to SBI. Till August 2009, the account was in the post office and there after it was requested to be transferred. The account creation and amount transfer was done on 23rd Nov. 2009 in SBI branch. Now when I look at the interest paid to me for Financial Year 2009-10, it is paid only for December 2009 Onwards. I have not been paid any interest for the period before that (from April 2009 to November 2009). Whom should I approach for this problem. Please help me on this.
My father was invested Rs. 10000 in PPf accunt in march 1991. But after he was not operated that account for single time. Due to this reason how much charge bank will offerd & how he can widraw that amount.
Hi..
I’ve just now made investment of 70000. It is 1st April 2010 today. Will i get the interest for this year or not or did i invest it too early?
Thanks
Interest from PPF is exempted. If same income come in HUF file then it is exempted or taxable?