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
Form C for PPF A/c is not available on your site.
I have HUF PPF Account . My HUF PPF Account is renew after 15 years in 2009. What Should I do.
sir;
I started my ppf account on feb 2010,when i have to pay next due , is ther any time limitation, whether I may permitted to pay my due after march 2010
Dear Sir
My PPF A/C shall complete 15+5 yrs in Feb 2012 but i wish to withdraw full amount in December 2013.
Will i get full interest after Feb 2012 to Dec 2013?
Thanks
Regards
Subrata Mukhopadhyay
i am an govt employee .presently residing in pwd quaters.shall i deduct the amount of hra i recieved 80gg. i am owning a home at chickmagalore.
excellant article especuially useful after the maturity after 15 years and considering a furthe rextension of furthr time. a very sure asset in the wealth creation investment options A must for investors from all strata as it requires a min 500 rs to start the PPf. such good advice is much welcome for everybody using these excellant informative sites thanx!
My father had a PPF A/c in the post office.He passed away in 2008. My son is the nominee of this a/c. he at present is in USA. I visited him in May 2010 and he gave me notorised power of authority to collect the payment from the post office. Sanction for the payment has already been accorded but the GPO IS INSISTING that power of authority should come through AMERICAN embassy to the Indian embasSy for onward delivery to the post office. Only then P.O. WILL GIVE THE CHEQUE TO me. I have even requested that the P.O may send the cheque to the bank directly(SBOP)where my son has an account.But the response from P.O is negative. There is absolutely no dispute involved in this case. Kindly advise some solution . Regards
@Mamgain.
You do not have to worry. As I understand you will have to pay a fine of 50 Rs ( If not increased) and 500Rs as the minimum amount for that year.It will be done on the spot. Relax you can continue
I opened account under PPF scheme in SBI, during 2004, but last year I forget to deposite ethe amount.Pl.advice whether I can continue.
I opened the account in SBI during 2004. Last year viz., 2009-10 I forget to deposite the amounmt. Kindly advice whether I can continue wih out any complications.
don’t know the answer of Q.No.1.
But answer for Q.No.2 is
yes. you can have multiple accounts. can deposit total 70000/- per yr. But no-body will like to do this. instead of this he will simply open a fresh account (if 70000/- per year is not permitted in extended account).
Regards
Hi, I want to know the following…
1. PPF account after completion of 15 years can be extended for another 15 years ( 5 years each — 3 times max ). In that extended period can one make contributions also say 70000 / year after 15 years say 15~20 years.
2. If in case one cannot make contributions then can one extend the existing PPF acount after 15 years for another five years and also open a fresh PPF account to make make fresh 70000 / year contributions
Regards
Pradeep
Sir,
you stated that you can deposit 70000 in your account and 70000 in minors account . As I understand , this is not correct the limit of Rs.70000 including minors deposit. Can you please clarify on what basis this statement is made. I have read the rules of PPF , hence asking. If any clarification is there, it will help all us
Thanks
Kotak
para 6 ab0ve is a bit misleading. i am given to understand that an INDIVIDUAL can extend his ppf account any number of times in blocks of five years after completing initial 15 years on applying for each such extension on specified FORM available with the bank manager,within the stipulated time limit. i have not said here the “name of the form and the time limt specified” as they may change from time to time. it is best to contact the manager about a month before the date of completing15 years/20 years etc and apply(in prescribed form) for extension as per the instructions valid as of then.some expert may please validate/correct my above understanding. dattatreyahg
Dear sir..
After maturity i can received amount are taxable or not?
If i want to open a PPF account in wife and make the payment for the same using my bank account, will i get the benefit of the payment made in her PPF account
Please visit http://www.personalfn.com
They have a PPF calculator there.
It says if you invest 70000 for 15 years
The amount in account would be 20.5 Lakhs.
Anyway, please check that calculator and confirm
Dear Sir,
i am investing 70000 INR in my PPF A/C. So after 15 years how much i will get if i witdraw or close account.
With Regards
Subodh Singh
I have one query.
My wife is dependent on me.
So whether I get tax benefit on the PPF investment done on her name?
sir,
i take 55,000 amount ppf in sbi . i want clarification about the yearly paid amount if we not instlament amount requlary, what is the status about account and if any situation we need money before the locking period what we can follow the methods pl give me about this doubtes.
please let me know whether i can invest rs ten lacs in ppf account and earn tax exemption for the interest paid .whether interest will be paid yearly
can i deposit in ppf in my minor child and myself Rs.70000 each in a financial year how will get the tax benefit and what is interest for my child account. is this deposit allowed as per rule
I am the only earner in my family of three (myself, wife and a son). I know you already replied very similarly here, but just want to double check if the maximum investment that can be done is 2,10,000 (70,000, each into my, wife and son’s PPF account).
Husband ,Wife and One Minor Child;all have PPF accounts.What is the maximum total contribution that can be done in total for all these three accounts,without violating any of the rules
i am ppf account opening for 2008 . it is good for long term investment
if Monthly i will pay Rs.1000 /- for 15 years..
I want to know how much amount will i get after 15 years.
Please explain me…
I Have opened a PF Account in Post Office.
Monthly i will pay Rs.2000 /- for 15 years..
I want to know who much amount will i get after 15 years.
Please explain me
Dear maitri ,
If you invest Rs. 1000/- for 15 years then you will have Rs. 351,891.40 at the time of maturity.
Regards,
Sangram
(9404366127)
[email protected]
Sir,
How to incorporate the change of residential address in my postal ppf ac.
Although it may be a small detail, it is to be noted that one need not compulsorily deposit the minimum of Rs 500 every year. The correct interpretation of the relevant rule is that in case you wish to deposit some amount in any year after opening the PPF a/c, the minimum acceptable for that year will be Rs 500, max being Rs. 70,000/
This clarification comes after some one forgot to deposit the minimum for many years and after 15 years, he found that the post office had closed the a/c, ie not adding interest to his a/c and he had to fight his case to get all that was due. This case was reported in the news papers during 1996-97.
Bank officers may wish to reconfirm the same as post office is not very responsive to such queries.
Can i deposit in PPF a/c more than 70000 in a FY.
If so, how much deduction will be allowed u/s 80C of IT Act
Hi
I have opened a ppf account in my mothers’ names and paid it through my bank account, will i get na exemption on tax? Thanks.
I am having a PPF account which is going to be matured on 01/04/2011.Now I want to make a deposit of Rs.70000/- in this Financial year.I wish to know whether I have to wait 3 more years for getting Tax benifit on the deposit made in this Finacial year.I am giving to understand by some people that I can withdraw entire amount on maturity date.Some are telling that I have to wait till 3 more years period from the date of last deposit.What is the correct position?
I opened PPF account in SBI. Fifteen years completed in 2010. Per officer of SBI, either I have to extend the account for another five years or has to withdraw the money from my PPF account before 31-Mar-2011.I don’t want to extend the account for another five years. Is it possible, if I don’t withdraw the money before 31-Mar-2011 and keep on getting the interest till I withdraw the money (which will be after 31-Mar-2011).
Thanks
RESPECTED SIR, I WANT TO ASK THAT INTREST RATE 8% PER YEAR CALCULATE ON WHOLE AMOUNT AT COMPLATE TIME PERIODS OR ONE YEAR PRINCPLE + INTREST ONE YEAR = NEST YEAR PRINCPLE
I am amazed at the number of questions posted on this blog (which can be answered by a simple google search).
A simple exercise of reading the PPF rules would answer most of the queries. Interest calculation requires a bit of effort (nothing exceptional) 8% interest on your deposit (amount deposited before the 5th of the month) earns the interest for the entire month.
Questions like open a ppf account at post office or bank (note SBI is not the only bank)…there are choices…would depend on the service level you get and the ease/comfort of visiting that place. Having a Savings account in the same bank would make it effortless as you would only have to transfer the funds.
If you have missed out on your minimum deposit requirement for the year, you are supposed to pay INR500 (MINM DEP) PLUS INR 50 (PENALTY) for each year you did not contribute to PPF.
So folks, look up the basic rules on ppf (minimum deposit per month), loan facilities/withdrawal & extension after 15 years…etc…
I OPENED ACCOUNT 2 YEAR BACK BUT I FORGOT TO PAY 2ND INSTALLMENT. WHAT IS HAPPEN DUE TO LATE AND I AM PLANNING TO PAY THIS YEAR 15000. SAME AS 1ST YEAR.
Good & informative article. Keep it up. I want to open a PPF Account, which one will be better, post office or SBI ?
if we pay 1000 p.m in PPF A/c for 15 Years it becomes 360000 to 375000 so our suggestion if dont have any ppf a/c Please open it.
Example:- 1000*12=12000*15=180000
9226851815
i am pradeep rai. i wanted to know if i open a PPF account for Rs 70,000. How much will i get after 15 yrs.
If a person at the age 55 years, opens a PPF account, would it be mandatory to continue 15 years tenure ?
Hello Sir ,
If I want to withdraw some money from my PPF account before 7 year , bank will allow to withdraw or not ?
If yes then how much they deduct from my money ..
Hi Team,
I am Sudhanshu Sharma. I opened a PPF account in SBI and I deposit some amount in this account through internet banking.
Please suggest me what proof i get from bank to shows for IT deduction before creating Form 16 for this year.
Hi,
I opened a PPF a/c in SBi 3 years back and at the time of opening i deposit Rs.500/- in account. After that i didnt deposit any amount. Pls suggest whether i need to pay any panelty and my account is still active. As per PPF rules, we should deposit at least Rs. 500/- . pls suggest
sir, i am 26yr old ,i want have RS 1crore at my retirement age .please tell how much amount i have to invest monthly in ppf .my expected age would be 55yr.
upto how much at one time can i invest in PPF ? i sold a property & can i invest that amount into PPF or whether it will be taxable on the interest earned
I Have opened a PPF Account in SBI.
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…
I Have opened a PF Account in Union Bank of india.
Monthly i will pay Rs.500 /- for 15 years..
I want to know who much amount will i get after 15 years.
Please explain me…
Thanks & Regards
Sunil Kumar Tiwari
91-8800242746
Dear sir,
My father opened a PPF account for me when I was minor (below 18), 11 years back. Now I am 27 and have my own child. Now if I open a PPF for my own child. Can we put 70000 each in each account?
thanks
I am also intrested in PF please let me how to invest in PF