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 certificate purchase 28/03/2005 they are deductiable or not u/s.80-c
does ppf n interest taxable as income when it matured?
Hi,
My parents wants to save some money for my daughter(means for their grand daughter).
Can my father open a PPF account on my daughter’s name & Can my father get the TAX benefit for the same.Please suggest.
Thanks
Gunjan.
i have opened a PPF account as a guardian to my 3yrs old son, i am mother of a kid wether i will get interest on the deposited amount.As I have read somewhere that mother and grandfather can’t be guardian .
DEAR SIr,
MY PPF IS MATURED AFTER COMPLETING 15 YEARS.
I COULD NOT GET THE EXTENSION DONE FOR NEXT 5 YEARS
EVEN I COULD NOT GO TO THE BRANCH OF SBI TO GET THE MATURITY PROCEEDS.
MY QUESTION IS WHETHER I WILL BE PAID INTEREST OF 8% AFTER THE EXPIRY OF 15 YEARS TERM.IF SO HOW LONG THE INTEREST WILL BE PAID ON SUCH MATURED ACCOUNT.
THANKS,
DR.PRASHANT RASTOGI
DEAR SIR,
I AM RUCHI MISHRA.I WANT TO KNOW ABOUT OTHER INVESTMENT IN WHICH TAX IS FULLY EXEMPT AND ALSO ITS PRONS &CONS.
Thanks and Regards
Ruchi Mishra
dear sir
manimum or max.deposits of PPF A/C within year.
Dear Sir,
I open minor ppf account & guardian name is mine. i deposited ammount in minor accout. this amount deduction in my income tax return.
I have PPF account open on 28/03/2005.
I have checked and found that i can withdraw 50% of balance on 31/03/2008.
can you tell me that withdrawble abount will be taxable.
Thanks
I wish to know if there is any different intrest rates in PPF account for senior citizen and secondly what is the age to be eligiable for senior citize benifit.
Thanks
Dear Sir,
I have opened a PPF account on 29.03.10 and deposited a amount of Rs 5000/-. But I have not deposited any amount between 01.04.10 to 31.03.11. In this condition I want to know that my account was in running condition or it is closed due to non deposit of any amount between that financial year.
With Regards
Ravi Kumar
dear sir,
I am a Widow. My husband had a ppf account in SBBJ bank, bikaner rajasthan.
he opened that account in year 1999 and he expired in 2005, there was no nominee
mentioned in that account.The balance at that time was 65000rs.
Now the balance is 105000 rs (with interest) till date.
when i went to the bank manager he said that he is unable in issuing the ammout
as it is above 1 lakh. After producing all the documents and affidavits from all
my children and myself, manager is unaware of the process of issuing the claim.
he asked me to go to jaipur, just to avoid me. After repeated follow up he told
me that he didn’t know the process and asked me to look for it over internet.
I request you to show me the right way, so that i can get the ammount as soon as
possible.
thanking you in anticipation
Smt. Santosh Kanwar
PPF account can be opened in any Head Post Office also and this is the account which can be transferred from Post Office to Bank and Bank to Post Office.
Good morning Sir,I am sachin from ludhiana.I invested 94,500 into 5 years fd in the bank under deductions of 80 c in the last financial year.I want to ask can I invest maximum of 100000(80c fd)in every financial year?Will all my financial year fd amount will be safe and legal?More over Can I save maximum 10 lakhs in 80 c fd in 10 years?
pls reply.
Sachin
Dear sir,
please tell me I opened PPF acount. whether differ amount can be deposit every year in PPF.
Thanking you
9031308994
Dear Sir, Last year I opened ppf accounts for my wife, myself, daughter who is eight years old and son who is 3 years old. I put 70000 rupees into each of the 4 ppf accounts thinking that it is allowed. I am the only earning member of my family.
Later I came to know that this is not allowed and I am allowed to invest only Rs.70000 in total distributed to 4 accounts and not Rs.2.8 lakhs as I did last year. I guess I will get the ppf benefit with interest from only my account and the other three acounts I will just get the principal without interest after 15 years even if I continue to invest Rs.70000 every year into each of the 4 accounts every year which would be a waste.
Are you in agreement with what I understood? Thanks for your help
Hi..
I have a query regarding the PPF account. After the period of seven years my PPF account holds upto Rs 3 lakh, if i withdraw an amount of 70,000 Rs and redeposit on the next day to the PPF account and also use the same deposit slip as a current year savings proof. Then the amount, which i m liable for Income TAX for the current years includes the amount which i was supposed to deposit in the PPF, but i didn’t.
Hi,
it’s very important information are provided.
and it help me to how i can open the PPF A/c.
And also diff between NSC and PPF is realy good.
now i know the diff between NSC and PPF.
Thank you very much.
regards,
Anil
Dear Sir,
My Self Ruchi Sahu. I want to know about PPF opening a/c procedure & opening date.
And its benefits & demerits also.
Thanks & Regards
Ruchi Sahu
I Interest to PPF Account Invest yearly 15000 thousand
I am holding PPF A/c since about 25 years, with due renewal, after 15 years. In my PPFPass Book, it is Printed that subscriber is entitled to have FINAL BALANCE CERTIFICATE / STATEMENT SHOWING OPENING BALANCE, AMOUNTS DEPOSITED DURING THE YEAR AND INTEREST EARNED AT THE END OF THE YEAR. – Free of Charge. For Submitting to Income Tax Authorities, alongwith the return of Income.
Whereas, recently I am informed by the BANK OF INDIA to pay fees of Rs.200.00 for the certificate to be issued. Please confirm whether Bank is required to issue certificate free of charge or sucsriber has to pay for the same.
Kindly reply
one assessee 70K is the upper limit for one financial year.
sir
I am intrested to invest 10000 yearly in ppf account. so what amount we receive after 15 years.
My 15 yrs tenure of PPF is over on 31st March 2011. I will extend the account for another 5 yrs,My question is , have I neccessarily to withdraw the matured amount of 8 Lacs right now or I can withdraw it any time later
How much tax benefit can be availed on the amount deposited in PPF
sir i have invested by mistake 70000/= im my ppf account and another additional 10000/= in my sons account who is a minor on the advice of the banks manegirial staff reading thruough i think this is not allowed now how do i rectify my mistake please advise
thanks
vishal s gwalani
If i want to transfer my ppf account from one branch to another then the bank in which i have transfered will pay the previous interest
Dear Sir,
Can you please tell me, is it possible to continue the same PPF account for 30 yrs?
Yes you can do it.
i am having a HUF PPF account for 21 years. Also having personal PPF account. Pls let me know whether i can continue HUF PPF account till 25 years with interest or it should be withdrawn.
will i get same interest for ppf for 2011-12 if i deposit rs 70000 on 1.4.2011 or 31.3 2012.thanks . kripal singh dehradun
i have ppf account in sbi since dec 1987.even last year i have deposited.since 24 years are over, how 15+5 year rule can be applied in this case as bank has not pointed out any thing till date?
The point number 5 on ppf for minors is wrong. Please note that 70k is alllowed as a total between individuals and minors. Not 70k for each accounts. tks.
My PPF account has completed 20 ( 15+5 ) years on dt. 21.03.2011. If I closed the a/c on dt. 01/07/2011 , the interest upto 30th june 2011 will be admissible or not.
As per the PPF rules, in an year, a minimum of Rs.500 to a maximum of Rs.70000 can be paid to the PPF account. So 10lacs cannot be invested in a single year.
I wolud like to know what is the Rate of intrest for 2011-2012 For PPF deposits. Is there any link where PPF rate of intrest is published for the current fiscal? or PPF rate of interest is a constant at 8%?
Thanks
Sugar User
Dear sir,
My SBI PPF account has completed 15 years.Can I withdraw 90 % of the amount & then extend the account limit for next five years?Please,reply.
i open a ppf a/c in my minor daughter name.
can my wife deposited to above ppf a/c and take benifit in incometax
can a installment be deposited from funds already head amount of from taxable income.
gurpal0101@hotmail.com
I HAVE A HUF . CAN I INVEST IN PPF AND AVAIL TAX BENEFITS
I have opened a PPF Account in bangalore. Now i have got trasfer to chennai. Whether i can deposit money in my account in any of the nearby SBI branch?
Dear Sir
I have opened the PPF account in 2003 and from 2006 till 19.03.2011 i have not invested anything. On 19 th March i have invested Rs. 10,000/- what will be the penalty amount for defaulting 2006-07, 2007-08, 2008-09, 2009-10. Pl revert
I understand that a PPF subscriber cannot deposit not more than 12 times in a year. What if he deposits more than 12 times in a year? Will his contribution from 13th time onwards not bear interest? If yes, will it be ineligible for interest for that year only or will it be forever? Will he get some penalty? What are the consequences?
hi this is this
Dear sir,
Please provide PPF payment chq. details . what the name for PPF payment by cheque. and how can track my PPF account if any statement provide by PPF department. please let me know.
PPF account pay 8% interest as on 31 march , Installemnt frequency is Min 1 & Max 12. you can check your PPF status if u have SBI net banking, since PPF have a Lock in period of 15 years so you cannot withdraw money before 15 years in any case, although u can close your account anytime.
i am having a ppf account in sbi from last 2003. i have seen till date 13 th march 2011 my balance is almost 400000. i sudenly having a monotory problem n require urgent money. can i close my ppf a/c now and witdraw the full amount? please reply me soon……
I opened a PPF account in 2010.Can advise during maturity TDS deduct or no?
Dear Sir,
i am investing 70000 INR in my PPF A/C and my one year son. So after 15 years how much i will get if i witdraw or close account.
With Regards
ritesh cupta
I was working in a Pvt. Ltd. Company at Dadar wherein from the first day, PF was being deducted. I left the Company after five months of Service. Now the said company is telling that for Withdrawing PF, at least six months of Services is required. Can anybody tell me why so. Reply me at deep_m12004@rediffmail.com