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
i have two PPF ACCOUNT IN SBI .ONE ACCOUNT LIMIT IS OVER 15 YEAR. SECOND PPF ACCOUNT IS SINCE LAST 7 YEAR.WHAT IS RULES IF WE HAVE TWO A/C. WHAT IS PROCEDURE TO CLOSE SECOND A/C.WHEN I OPEN SECOND A/C I DONOT KNOW ANY RULES.I WANT WITHDRAW FIRST A/C MONEY. IF AS PER PAN CARD BANK FOUND TWO PPF A/C. ANY LEGAL ACTION TAKEN AGAINST ME OR BANK ADVISE TO STOP SECOND A/C.PL REPLY URGENT
Hello,
I have PPF account in SBI bank but don’t have saving account, now my question is how I can check my PPF account statement online, I do not want to open saving account in SBI.
IS it possible ?
Please Guide me
Thanks in Advance 🙂
Regards
Shobhit Agarwal
Dear Tax Guru,
This query refers to pint 2.b in the article ‘Public Provident Fund (PPF) Invetmentlimit… etc. I opened a PPF A/c in March 2003 (also 3 PPF accounts were opened with my children and self as guardian Total invested annually was Rs 70000) while I was a NRI. The account was maintained regularly since then. Under the latest laws, I will cease to be a NRI. All three children are already Major and their accounts are now separate (individual). As my residence status will now change, what would happen to these PPF accounts? Will the interest earned on the accounts for the period that I was NRI be forfeited? Will I be penalised on all 4 accounts? Will the accounts now be considered invalid? or can the accounts just be operated as normal? – Your learned advice will be highly appreciated. Thanks in advance – Edwin
My spouse has got a PPF account and she is un-employed. Is investments made in her PPF account can be counted for my IT exemption. May please clarify urgently.
TN Sivashankar
8754447731
I have deposited Rs. one Lac in PPF. in fin.Year 2011-12. Will this whole amt. ( 1 Lac) will be the qualifying amt u/s 80-c for Tax purpose or it will only be 70,000/= as of last year?
how many maximum limit investment in ppf (a.p.2011-12) and interest rate
what amount i will get,if i deposit RS 1500 p.a in my ppf account after 15 years and if i will deposit RS 2000p.a then what is the amount i will get after the maturity period.
clarify the exemption amount and limit amount to be deposited
pls. send the current rate of interst on ppf a/c.
Pls. send the rate of interest on PPf A/C
what is the ppf service my question is your ppf service is only government members ya any general members please answers me.
good information
good information
good information
Recently i heard from collegues that we can dedposit upto1 lac in PPF acount of SBI, is it correct
I wish to open PPF account on my son name. His date of birth is 30 Apr 1993 (above 18 years old ) Can I get tax rebate on my salary . I am a Haryana State Govt Employee.
i have a ppf account in my name.Can my wife deposit in my ppf a/c by cash or cheque and claim tax benefit in her return. please clarify.
s.puri
still waiting the ans.
PPF Account Opening Form “A” Para (iv) is reproduced below: I also declare that I shall adhere to the ceiling on deposits as provided for by Central Government from time to time, which is Rs. 100000 in a financial year at present, in each of the following types of PPF Account :- (a) Individual Self Account and Accounts on behalf of minors of whom I am the guardian, taken all the accounts together; (b) Omitted wef 13/05/2005; (c) Omitted wef 13/05/2005. In case, at the time the said declaration is found untru/false. no interest shall be payable to me/the subscriber on the amount of deposits found in excess of the prescribed limit. Limits of subscription Sec 3 (1) Any individual may, on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (hereinafter referred to as the “Fund”) any amount not less than Rs. 500 and not more than Rs. 100000 in a year. Hence investment limit of Rs. 100000 is applicable for the account of individual as well as minors putting together all the accounts.
If i opened a PPF account then can i deposit different amounts in a financial year,suppose i’ve deposit 500 1st month,1000 2nd month and the same as furthur on basis of my salary. can it will be possible.
i have a ppf account in my name.Can my wife deposit in my ppf a/c by cash or cheque and claim tax benefit in her return. please clarify.
s.puri
I have deposited 7,000 each in my and in my two children’s account in one financial year. I came to know that the collective amount of the three should not have been more than 70,000. Please suggest what PPF office generally do in such cases.
Thanks for your updated version on PPF d/d 26 jan 2012. It has answered one of my questions on extension of PPF a/c unambiguiously. Readers may see that. H G Dattatreya
Point # 8 in this article states- “Let’s say you open an account for your minor child. You can deposit Rs 70,000 in your account and Rs 70,000 in your child’s account”. This is completely wrong. See- Point # 26 at www. statebankoftravancore.com/ppf.htm.
Point # 26 is reproduced below which specifies that the overall limit one can contribute his self PPF account and minor’s PPF account collectively is Rs 1 lac. One cannot (should not) contribute above 1 lac collective in both the accounts.
Point# 26-> “26) The ceiling on deposits as provided for by Central Government from time to time, which is Rs.1,00,000/- in a financial year at present, is both for individual self account and account(s) opened on behalf of minor(s) of whom he is the guardian, taken together.”
I have self PPF account as well as minor’s PPF account for my daughter. Can I invest 1lac in my account and 1Lac in minor’s account? OR I can invest total 1 Lac only collectively in both the accounts? Your article says 2 Lacs (1 lac in each account, 70 k limit is raised to 1 lac since Dec 2011). Please see the excerpts from the PPF opening form:- “I also declare that I shall adhere to the ceiling on deposits as provided for by Central Government from time to time
which is Rs.70,000/- in a financial year at present in each of the following types of Public Provident Fund Account.
a) Individual Self Account and Account(s) on behalf of minor(s) of whom I am the guardian
b) Hindi Undivided Family Account
c) Association of Persons account as applicable in the State of Goa and Union Territories of Dadra and Nagar Haveli
and Daman and Diu.”
Need clarification for a). Thanks
Hi sir,
I have opened a PPF account in SBI in DEC2010, When the Interest rate was 8% PA. But as per the new rule by Govt. of India the interest rate on PPF account got changed to 8.6% per annum wef DEC2011, So please let me know whether I will be eligiblle to be covered under this new interest rate.
Regards
Girish
Sir,
if DTC Comes into act,what may be the exemption limit of sec 80c?
It is not for nothing that people raise queries here. PPF Act / Rules have been amended a number of times.Even now, there are doubts in the minds of many. Some may have already suffered losses just because they have not been able to get proper advice at the right time. There is also the element of Sec80 C benefit that people have availed. Imagine yourself to be told one day that your a/c was closed long back or you were not eligible to extend the a/c beyond 15 + 5 years or you should not have opened the second a/c etc etc. Someone above said “It is so simple. Look up the Rules. You get the answers “. Sorry. To get an authentic copy of PPF Act / Rules with the latest amendment is itself a big task. Even people who are handling this desk in SBI / Post Office dont have such an amended copy. If you do get a copy,then there is the question of interpretations of the wordings(quite normal in Govt Rules / Regulations). That is why you have so many amendments. There are differences of opinion even among people who are handling this subject exclusively, on some of these issues–particularly regarding extension. Even an article (Page 14 )in BUSINESSLINE d/d 8 jan 2012 does not UNAMBIGUIOUSLY say that PPF a/c can be extended beyond 15+5 years.(I have raised a query on it ). . I am not an expert in this area ,but I have gone thro’ these hazzles. One Mgr said it can’t be extended after 15+5 years,while the next Mgr did it .But each time I was advised that extension is not automatic-but has to be on an application, within a prescribed time, in Form H which should be approved by Mgr. Under these circmstances, no wonder there are so many queries. Taxguru would be doing a great service to hapless PPF investors, if one more comprehensive and authentic article is generated from a knowledgeable source (from the horse’s mouth,as it were) and publish here. May be a Question /Answer platform ,if this is more useful. This can start with the Questions already in print here. Looking forward to a favourable response at the earliest. H G Dattatreya
Kudos on such a perfect article…
I want to know if the amount obtained after maturity of PPF account, or on premature withdrawal, taxable under the current prevailing law, and if this law changes will it affect the previous account holders….
Please reply…
Thanks in advance..
Manu
Can a spouse deposit money in her husband’s PPF account and avail exemption in tax under relevant section.
Sir, I have opened PPF account in the year Aug 2010 and deposited Rs 500/- initially and deposited Rs 65,000/- in Dec 2010. In Apr 2011, I have got interest of Rs 1,413/- only. Can you please clarify?
It seems we need to deposit PPF amount at the begining of the year (i.e. 1st April of every year ) to get the full interest?)
Sir,
kya 8 sal bad PPF a/c ko saving a/c ki tarah use kiya ja sakta hai.
Sir,
Joint PPF A/c hone par kay dono ko tax mai dudaction milegi. jab ki deposti es hi kar rha hai.
nhi to joint PPF a/c ka profit kya hota hai.
My PPF A/C got matured in Mar 2010, & subsequently I renewed it for further period of 5 yrs. Now I need money ,Can I close my A/c? Please inform.
Hi,
My case is very typical.
I opened one PPF account in Dehradoon in Mar’2005. I deposited around 8000.00 Rs at the time of opening of PPF account. After this I never tracked this account and I never deposited any ammount in this acct. Then I moved to Noida.
I was not aware of the Rule that an an individual cannot maintain more than one PPF account.
I opened one more PPF account in Noida in Jan’2010 and now am regularly depositing amount in this new account and earning interest also.(Tootal deposited amount is around 1.5 Lakh as on date in new PPF acct).
Now can you suggest me what shall I do?
As per rule if it comes to PPF knowledge that I have 2 PPF accounts they will forciblily closed my second account and they will revert all ineters.
1. Can I apply transfer of my old PPF account to my new PPF acount.
2. If not then what is best possible soln.
Thanks in advance for your advice.
Hi,
Can I make an online payment for PPF? Pls revert ASAP
Sir, I have a PPF account but not able to utilize it to get tax exemption since already have LIC and PF which is exceeding 1 LAKH cut off. Now I want to transfer PPF account to my wife’s name so that atleast she can take tax exemption benefit. Is It Possible if yes what is the procedure?
Sir, I have a running PPF account in post office for last 6 yrs and I am unable to make payments at post office which is why i put only small amount to have it running. Need your help in knowing if I can have my PPF account from Post office migrated to SBI. If yes then please let me know how should I proceed.
Rgds,
Respected Sir, I have deposited Rs. 60000+40000-Total+100000 in PPF,Financial year 2005-2006 now today 23.12.2011, letter received from post office that you withdraw the Rs. 30000, which excess & irregular money and not to entitled interest theron. My question is whether I get inerest or what to do for interest for the period of 2005 to 2011.
Hi, i have a question with me that one of my co employee said that if we maintain continuous 10 years PF, after our retairement age we will get pension. Please some one clarify my question that what is the possibilites of my question.
can HUF claim deduction for ppf subscription in the name of karta
Hello,
I would like to now which month we should invest in PPF to get the maximum interest ?
For ex : If I want to pay 50000 per anum in ppf . Shall I deposit that amount in month of April [ which is the start of financial year ] to get the maximum interest?
Dear sir,
I have self(my name) PPF account and I am depositing Rs 70000/= PA. Now i am opening my wife’s(dependent on me and HOUSE WIFE) new PPF account and want to deposit Approx 30000/= to 40000/= PA.
I want to know can i get income Tax rebate of Rs 100000/=(as per govt rule) to showing both PPF Amount sum(Self Account sum and Wife’s Account Sum == 100000) under sec 80C. As i am not interested to invest amount on Insurance policies.
Please tell me clear can i get Tax benefit in Sum amount of Both PPF Accounts.
Sachin
hello sir,
i will pay ppf 2k per month,can i withdraw every year,as i had to pay other policies yearly.
hey.i want to know the interest rate?
Hi All,
If I invest 10000 p.a, than what should be the total amt I would be recieving after 15 years.
And if I invest 70000 p.a, than what should be the the total amt I would be recieving after 15 years.
Guys please help.
Tax guru;
I have ppf account in name of my self. Can I deposit maximum limit( supposed to be 1 lakh from dec 2011) to account ?
Sir,
I am aged 58, have my PPF a/c with SBI for 25 years which I would like to withdraw in April 2011 to augment my son’s educational needs.
I will be continued to be gainfully employed for couple of more years. Can I open a PPF a/c in my son’s name who is a major and student ?
If opened, can I avail tax benefit in my name…?
hello sir,
can i deposit the money in my ppf account through net banking?request please reply.
Please confirm what is the PPF Deposit Limit for the financial year 2011 2012
I am having a PPF account since 2004. However, I could not deposit any money in my PPF account for the last 2 years. As I read, I understand I have to deposit a minimum of Rs 500. Now, is my PPF discontinued? Am I still earning the interest on my balance in the PPF? What do I need to do to restore the account?