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
Dear Sir,
maine ek PPF a/c 1998 me apne son ke nam se khaola hai jab uski age 1 year thi. Jis name se maine PPF a/c khola tha, but school admition ke time uska name change kar diya tha. ab kya PPF a/c me name change kiya ja sakta hai.
I have PPF account but i want to open this account for my son also but he is right now 5 months, is this possible for my child?
I Have opened a PF Account in Post Office.
Monthly i will pay Rs.1000 /- for 15 years..
I want to know who much amount will i get after 15 years.
Please explain me…
dear sir
please tell me what will be the ideal date in the year of deposit the money to gain maximum rate of interest.
You can open three account one for yourself, one for wife and one for your child and you all can invest up to 70000/- in one account.
Here I would like to mention that one Individual can have only one account and minor is a separate individual despite the fact that his income get clubbed with his parents.
admin says:
November 1, 2010 at 1:02 pm
Yes you can invest up to 1.40
Dixit says:
November 1, 2010 at 10:06 pm
70000 in each PPF accountof self and child is a violation of the PPF principle of investing more than 70000 by an individual (My thoughts).
I will be very glam if I am wrong here.
As long as child is account is linked to self account the combined limit is Rs. 70,000.00. But if self account is separate and child account is linked to wife account then the limit will be Rs. 70,000.00 for self and Rs. 70,000.00 for wife and child together. So, for all three limit will be Rs. 140,000.00
Dear Sir,
I will definately open a PPF Account instead of RD.Good Information is posted. Keep it up.Regards.
Hi ,
I am paying money for PPF account of my wife. Can i claim IT expemption for that under section 80C ?
Hi,
I had opened PPF account with SBI in 1998. I opend it myself (not through agent) and deposited 1000 Rs in it.
Then in 1999, a PPF agent contacted me and told me that if I open PPF account (through him) then every year he will give me 0.5 % of the amout deposited. I told him about existing account, then he told me that its not problem. He adviced me not to deposit anything in that account so as to make it disabled (or dormanant).
So finally I opened account as per his advice. I am depositing regularly Rs 70000 in it and I am not depositing anything in the earlier account (which I had opened myself).
Now I am reading on site that the second account will not get interest.
What will happen in this case? will I get deposited money along with interest? or will I get only deposited money?
Please let me know.
Thanks,
Kingsam
dear sir
please tell me what will be the ideal date of cheque reliesation date to gain maximum rate of interest
70000 in each PPF accountof self and child is a violation of the PPF principle of investing more than 70000 by an individual (My thoughts).
I will be very glam if I am wrong here.
Yes you can invest up to 1.40
dear sir,
i have 2 ppf a/c one for me and one fo my son. can i invest 70000 rs in both a/cmeans 140000 in one year.
I Have opened a PF Account in Post Office.
Monthly i will pay Rs.1000 /- for 15 years..
I want to know who much amount will i get after 15 years.
Please explain me…
Kindly tell me that how much amount i can withdraw after how many years of opening of account?
I opened a PPF account on dt. 27.03.1991 and after 15 years I extended the period for next 5 years which will be complete on dt. 27.03.2011.My account is now active. Can I extend the period for next 5 years again.
I opened a PPF account for myself with a nominee during the year 1996. It’ll soon reach its maturity period of 15 Years. Currently I’m NRI and becoming US citizen.
Should my nominee can withdraw the matured amount who is living in India.
Thanks
Jay
i want form st-3. in excel format
Please give me the details about NSC Scheme. if I am investing rs. 500 per month in this scheme then what will be the maturity amount of my nsc certificate after 6 years. my cell no. is 9272838707. let me know about the calculation of interest in this scheme.
I Had opened the PPF ac in head post office 6 years back ,i did not deposit the minimum required Rs 500 /= per year, but deposited Rs in breaks is there any penalty for making this as continuation, I like to continue as per the norms , please advise
I Had opened the PPF ac in head post office 6 years back ,i did not deposit the minimum required Rs 500 /= per year, but deposited Rs in breaks is there any penalty for making this as continuation, I like to continue as per the norms , please advise
i have two ppf account one favouring myself another favouring my minor daughter,sbi official does not accept 70000/-on each of the account telling me maximum cealing is 70000/-for my account and my daughter account.kindly furnish me circular in this regard.
Please clear my doubt’s, I want’s to invest 50,000/- one time for tax benefit:
1.There is any entry and exit load in PPF.
Ans:
2.It’s the regular or one time investment.
Ans:
3.Correct Look-in-Period i.e. 5 or 6 Yrs.
Ans:
4.Withdrawal condition: A)Can I Withdrawal full amount upon completion of look-in-period. If no,then when it is eligible.
Ans:
5.Current rate of interest.
Ans:
Awaiting your early response.
Thanks
Deepak
I wants to invest in PPF for taxation purpose this FY.
Kindly confirm,can I invest in as one time.
kindly inform me as and when this question of PPF INTEREST HIKE IS FINALLY SETTLED
This is regarding PPF(posted above by R L Garg on 7th sept 2010 at 9:34 am).this is an important question that needs to be answered by an authentic agency in clear and unambiguious terms quoting the correct rules(with latest amendment,if any).Right now,there are doubts and differing opinions even among SBI staff,as far as renewing the same ppf a/c after 15+5 years for a furher period of 5 years ,and 5 years, and so on for ever(with all the benefits assosiated with the original a/c). The very fact that exactly the same question has been raised by more than one person appears to suggest that there are geuine doubts. It is not a happy situation to be in perpetual doubt, because it has implication of tax free interest/withdrawal and also Section 80C beneft.To be told later,that all those benefits are not applicble to you from the date the a/c completed 15+5 years can create difficult situations. Tax guru may please disseminate the right advice from the authentic person/agency at the earliest in the true spirit of social service for which tax guru is known,by now
this is regarding
Dear Sir,
as rate of PPF interest is hike by 1% w.e.f sept. and the 1% is taxable as per it rules. as per present rule the rate of interest in IT Rules is 8% . on the other places it has mentioned entire inteest from PPF is exempt from the tax.
as per new interest rate, who will be liable to pay tax? is Tax has been deducted at sources?if yes, then if someone has come the high tax bracket the diffrence betwwen the TDS deducted and the rate after incuding interest of PPF arise , when it has been paid because interest amount has been credited by the respective institution at the end of the year.
pls clarify the matter.
regards,
MK
Dear Sir
My PPF account matured in 2005 and I extended it for 5 years.maturing in 2010. I didn’t make any deposit during these years.If I draw the amount in 2011, will I get the interest for one more year?
Regards
Kamal
I have opend PPF account in wife name whether it is elegibel for tax exemption for me. Pl clarify.
Hi Jitin,
I just read that it is allowed to make an investment of more than Rs.70000/- in PPF account, but those should not be in the same name. The best thing you can do is mail SBI Ombudsperson. They will come back, if they don’t then contact Ombudsperson from RBI directly.
Regards,
Mallikarjuna
Dear Sir,
Dear Sir, I have open a PPF account in SBI in my own name and depsit 70000/- in 2007-08. Rs 500/- in 2008-09.
In 2009-10 I have not deposit any amount. Now my account is continew or not. i.e. Is it compulsury to deposit some money in PPF A/C in every finencial year?
Thanking you R.K.Tewari
Dear Sir.
I retired from PSU & having PPF in SBI. Please clarify
1. whether the amount recd. on Maturity will be Taxable or Tax Free.
2.If I withdraw some permissible amount after 7 years & in subsequent years,will that be Taxable / or tax free.
Thanking You .
Jagjit Singh.
Dear Sir,
1. I retired from PSU & having a PPF a/c in state bank of India.Please clarify, the amount which i receive on maturity will be Tax free or Taxable.
2.If I withdraw some amount after 7 years, & thereafter every year, will it be tax free or taxable.
Thanking u.
Dear Sir,
Dear Sir, I have One PPF account in SBI in my own name & I want to open another account in the name of my 5 year old ( minor ) son. Is it allowed ? & I am already deposited full Rs. 70,000/- in my account ( FY2010-11).
Can I deposit additional money in my sons account, around Rs.10 or 20 thousand ?
Please Reply, Thanking you in Adavance !
Sir,
1) I opened my ppf a/c with SBI on Aug,1995. Can I take maturity value right now.
2) What is the best option i.e To close this A/C and Open New-One or Extend it. (If I open New A/C is there any change in New Direct Tax Code Draft regarding rebates and tax free maturity value)
3) If I extend it for furthur 5 yrs, am I eligible to get all tax concessions u/s 80C for these all extended 5 yrs and tax free intt. & Tax free Maturity value after 5yrs.
4) How much money I can withdraw every year, & Is this annual withdrawl and Maturity Value after 5 yrs is Tax-Free.
(Hoping for an early Reply)
pf
please tell me will ppf interest rate increase or not ??
please tell me will ppf interest rate increase ??
dear sir,
i am working in govt.company..i am planning to invest money in such a scheme which will reaps me good returns.i am not intrested in tax relaxation,as my savings already crossed limit. which will be the best option for me in ppf or nsc or post office.
My PPF A/C NO. 1051774862-6 AT STATE BANK OF INDIA, MAIN BRANCH,BHILWARA. I HAVE MANY TIMES CONTACT AT SBI BANK, MAIN BR. BHILWARA FOR TOTAL YEAR OF THIS ACCOUNT BUT UNABLE TO RECD.PROPER REPLY, ACTUALLY AFTER ONLINE OF SBI PREPARE MY NEW PASSBOOK AND IN PASSBOOK NOT MENTIONED THE STARTING DATE, IN THIS CASE, I HV DEPOSITED AMT IN THIS A/C AND CONTINUE TAKE ITAX INVESTMENT BENEFITS…PLEASE ADVISE..MP JAIN/9987267025
Dear Sir,
please tell me on what amount bank give interest on PPF a/c .I think interest will be given on minimum balance between 5th and 30th of each month.is it right?
What is the current intrest rate of PPF account. And will my maturity amount will be taxable if i open an account now? Please reply
i have been depositing money in my account 4 the last 4 years and now i wish to discontinue the same and withdraw the amount.what is the way to do it?please inform me
I have a PPF opened in the name of my minor child.Now, since the name of the child has been changed.
Pl. intimate the procedure for change in name.
Hi,
My father expired 2 months back and my mother will get the PPF dues for my fathers account. Will this income be taxable for my mother?
can i submit a fixed amount in six month or i year in ppf account
Dear Tax Guru,
Is there any connection between EPF interest rate and PPF interest rate, as the government has increased EPF interest rate to 9.5%, will the PPF interest rate will also go up?
Pl advise.
Regards
I have heard that with direct tax policy coming in the next year, maturity amount of PPF is fully taxable.
Suppose if I invest 70000 Rs per year, in 15 years my principle investment is 1050000.
Assume if the maturity amount is 20 lacs.
What will be the taxable amount on maturity, is it the whole maturity amount of 20 lacs or Interest earned amount of 950000.
I am not going to avail tax exemption under 80C for the principal investment every year,Since my contributions for New Pension scheme and LIC premium is exceeding 2 lacs per annum.
Thanks in advance
Rudresh
HOW LONG P.P.F.A/C CAN BE CONTINUED AFTER THE INTIAL PERIOD OF 15 YEARS. I THINK ONE CAN CONTINUE TO KEEP THE a/C ALIVE FOR INDEFINITE PERIOD BUT IN THE BLOCKS OF 5 YEARS AFTER THE INTIAL PERIOD OF 15 YEARS. PL ADVISE WHETHER I AM RIGHT OR WRONG. IN FACT NOTHING IS MENTIONED IN THE RULES WITH REGARD TO MAXIMUM PERIOD.