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
Sir:
Query: I have extended my PPF for a further 5 years, i.e it has completed 15 years,. I wish to withdraw 1 lac every year to pay off housing loan..is this permitted and is the withdrawal amount taxable ? (clubbed with taxable income?)
I have a question on point no. 17.
I have my mother as a dependent on me(proof available). I deposit money in her PPF account. Have I the rights to get the rebate for the same, if total amount (her+mine) less than 1 Lac?
kindly amend the law as soon as possible.
i have opened a ppf account in the name of my grandson(minor) can my son deposit 1 lac in his name and also 1 lac in the name of my grandson. i agree that he will get 80c benefit for 1 lac only. but can he deposit 1 lac in each account. also will he get interest in both the accounts.thanks
If, account holder dies after 1 or 2 year after opening of the PPF account, Is it continued till 15 years or is there any assumption.
Anjaiah
Dear sir,
I would like to know that what if i hold 2 PPF account.
Actully i am holding a PPF account in Post and SBI and both are in my name. So Would you please advise how to react on this?
Can i close 1 PPF account ?
1St account will be going to mature in 2017.
2nd will be going to mature in 2025.
BR
JP
Hello, can u please clarify if I can open a PPF A/C here and deposit money that my husband sends from abroad. Is it allowed? This is not for tax saving but as a saving. Thank u!
what happen when money not deposited in ppf a/c for contineous 4 years
please clarify does total amount invested in ppf and epf is tax free or just the interest? can i get tax deduction for mine educational loan? can i get someones total tax calculation details?
Can I make an NEFT payment to my PPF account.
https://taxguru.in/income-tax/public-provident-fund-ppf-scheme-investment-limit-income-tax-benefit-features.html
your article is not updated. ppf limit is now 100000 however your article though it dates on Nov 2012 still shows as 70000. this is very bad as many people – like me- consider your site as a guide and such misleading outdated information could land somebody in trouble.
Dear Chinmay,
The PPF deposit is Government of India Scheme offered by banks/post offices. Hence there is no difference between PPF deposits with one bank/post office to another. However, you can have only one PPF account at a time.
Would you please tell me, if there is any difference between sbi ppf and post office ppf?
hi!!
Need your help.
My mother got demised in the age of 62 and her PPF a/c has nominee quoted me (son) and my sister. Sister got married around 4 years ago and my mother forgot to remove my sister as nominee post her marriage. My sister is now in abroad and can not come until one more year where as i need to withdraw amount on prioirty (to settle some financial obligatoins). can affidavit will support her absense and enable me to get the money solely. is that possible? any other way around?
I have started a ppf account at sbi from June 2012 @ Rs.6000/month.But I can not deposit the amount for the month of August 2012. Can I deposit the due amount on the next month for due month August 2012 (Rs.6000)+ Rs.6000/ for Sept.2012 together.
I have got one extension and in 2010 was for the second extension for my PPF. I forgot to extend the same. I need advise to extend it. MY Tax planning will get haywire. Can I keep the account PPF though it is deactivated. I deposited 70000 in April 2012 and the same is being reflected in my passbook. What is the way to resolve this impasse and my PPF get activated. Thanks
I have forgotten to extend my PPF for five years. Last was extended on 2110. I am told that the account will cease and can withdraw the money. I deposited Rs 70000 in April 2012. Can I get my PPF account activated. What is the rule? Withdrawing the amount will upset my tax planning. Please advise a way out. Mitali
Can HUF invest in PPF on behalf of its members, HUF doesn’t want any tax break on the same.
Also can HUF pay LIC premium on behalf of its members
Whether interest payable in PPF account after the maturity is taxable or not ? I have opened this account with SBI three years back .
sir
regarding ppf we have deposited every year 1 lakh up to 15 years and after maturity 15 years total deposited amount & total Interest is tax free.or taxble
let me know
ravikant singh
date-06/09/2012
Whether interest payable in PPF account after the maturity is taxable or not ? I have opened this account with SBI ten years back .
Each adult member in ourfamily has individual PPF accounts. In addition, we have now opened a PPF account in name of my minor grand son (under guardianship of my son). I deposit Rs 100,000 in my PPF account.
In addition, can I deposit Rs 100,000 in my grand son’s PPF account also by cheque. I am aware that my 80C benefit is limited to Rs 100,000.
Please advise.
if by mistake open second ppf account what can i do to close second ppf account ?
You have to update the information, otherwise it is misleading
“The maximum that could be deposited is Rs. 70,000 in a financial year. The interest you will earn is 8% per annum. ”
both these statements need correction
Dear Sir,
I am planning to open a PPF .The amount which I deposit will help me in getting rebate from income tax but on maturity when i get back the money with interest,will the interest add under my income ,thereby I will have to pay income tax on that income.
Thanks
Udit Chadha
[email protected]
9311075624
I want to know the rate of interest on PPF a/c for F.Y.2011-12. Is their any changes made during F.Y.2011-12, please provide me interest details. I think my bank given me less int. upto 31.03.2012.
i have PPF account open on October 2011. I deposited Rs. 1000/- for regular 03 months. Is my account working. May I deposit irregular amounts at any point of time.
i had ppf acount since last 12 year so i want to close the account if it is possible or i want to withdraw 40% amount it is possible or not
Sir, i am 51 years old and paid rs 20,000 into a PPF account in 1992. I did not make any subsequent deposit. Can i get the money with interest back without paying the penalty on account of non deposit of yearly minimum as the account is more than 15 years old. 20 years actually.
Thanks,
Kapil Advani
SANDIPAN, REF your 16 june 2012 posting. Extn is NOT automatic. You have to apply for it in Form H, within prescribed time limit, specifying whether it is with or without subscription. Pl. check with your Bank manager,understand the implications, and act accordingly. Keep an approved copy of this safely for future reference.
Dear Sir,
I wish to open a PPF account in the name of my grand guardian as guardian. Her father is alive. My request has been denied by PNB Gopi Nath Bazar with plea to open her PPF a/c through father. Please comment
With regards,
AK Bhalla
Is the extension after 15 years automatic or is there a requirement to file a form?
Sir I have taken the agency of PPF where should I have send the format for application and what condition whould . Kindlt suggest me so that I have applied for that.
under the public provident fund scheme, the maximum contribution is Rs.1,00,000/-(Rs.70000 prior to December 1,2011)
please let me know that on line we can deposite ppf fund or not in varanasi.
Dinesh gupta
Hi,
I have a PPF a/c with PNB at my home town but I stay in other city. My PPF a/c does not have online transfer facility. I hardly visit my hometown once in a year and find it very difficult to deposit money in PPF because of tight schedule during my visit to hometown and long line of depositors in PNB. My source of income is through ICICI bank. In view of this is it advisable to open an a/c with ICICI on my minor son’s name and deposite most of the annual contribution deposited in that a/c. I hope I can get tax benifin on total of 1 lac only. But can I get interest income on diposits of both a/c upto the limit of 2 lacs altogether. Also I am sick of that PNB a/c because it does not allow online trasfer of funds. Can you suggest me better options. Also kindly confirm if my understanding about whatever I have written here is correct. Thanks and regards.
Mahender
after 13/5/05 if you open minor & huf a/c in ppf then interest is not payable. there is a circular for this. pls clarity
hi
suppose if i deposit Rs 100000=00 per year in my PPF account , then how much amount , i can get after the maturity and will it be tax free?
dear sir i open a ppf account in sbi but due to poor services of bank i cant maintain it even not a single transiction made by me in this account,now icici bank offer a ppf account.can i open a ppf account in icici bank? i not maintain my sbi ppf a/c can this affect my running maintained account
IT IS BETTER, INCREASE ITS LIMIT RS. 100000.00
it is a good opstion for saving and tax benifit.
I am having saving account with PNB. Can I open a PPF account in PNB with linking my saving a/c?
I OPEND MY PPF ACCOUNT IN AUGUST 1997. 15 YEARS TO BE COMPLETING IN AUGUST 2012. IF I DEPOSITED RS. 70000.00 IN THE MONTH OF JUNE 2012, MAY I ELIGIBLE TO GET IT BENFIT UNDER 80CCC? SECONDLY AFTER COMPLETION OF 15 YEARS, IF I CLOSE THE ACCOUNT, MAY I GET IT BENEFIT FOR THIS FINANCIAL YEAR 2012-13.
IF POSSIBLE PLEASE REPLY TO MY MAIL ID ( hero_lic @rediffmail.com)
If my deposit of Rs. 30,000/- in PPF a/c exhausts the limit of 100,000 under 80C but I deposit 100,000/- in PPF, will the interest earned on the entire sum be tax free ? Is 50% withdrawl after 7th year tax free? Suppose I need some money at the end of 10th year of PPF and I keep on depositing more than 30,000/- ( it will suffice to use the limit of 100,000/-) till the end of 10th year, and then make premature withdrawl, will it not save tax on interset ? Your early response will be appreciated.
I opened PPF account with ICICI Bank on 04 Feb 2012 with deposit of Rs.30000/-. I was expecting credit of 2 months’ interest on 31 March 2012. But the bank office said that interest is payable only after completion of 6 months from the date of opening the account and that the interest credited on 31 March 2013 shall include the ainterest payable for Feb & March 2012. Please advise me whether this is true. I did not find answer at http://www.indiapost.gov.in/POSBActs/PPFRules1968.pdf
I am having PF Account, whether i am allowed to open PPF in post office
My wife has a PPF A/c and she is also a guardian for our two kid’s PPF A/c. I have been told by many people that she can deposit a maximum of Rs 1,00,000/- in all the three PPF A/c’s and not Rs 1,00,000/- in each account. Please clarify. I am sure many of us have this doubt. Please clarify. Thanks & Regards
To my understanding, as per the latest guidelines(effective IFY 2011-12) upto 1 lakh rupees an individual can deposit in PPF during a financial year and get complete exemption, if he/she does not have any other savings. As rightly pointed out by you, I strongly recommend this savings to every individual in India and certainly for those who are under tax bracket.
Thank you.
Suresh
An online Hindi tutor
[email protected]
91 0 9840643690
Hello,
I am an NRI, Can i open a PPF account on my childs name(minor) where I will be the guardian and pay the annual subscription from my local savings account (not NRE or NRO account)
Hi,
I deposited money to my PPF account using online money transfer from my Father-In-Law’s account. The same is updated in my PPF account passbook, the photocopy of which I submitted to my company for claiming deductions under 80C.
My office accounts department have returned back my claim saying that since money was transferred from Father-in-law’s account, it cannot be claimed by me, as he might have claimed for the same.
Pls advise, if deduction under 80C for PPF can be claimed only for self, spouse or child this means that Father-in-Law cannot claim for the deposited amount. In this case should my company not allow me tax benefit i.e. deduction under 80C ? Is there any rule from Income Tax Department which clarifies who all can claim tax benefit for PPF ? Also has Income Tax department specified any rules/guidelines regarding online payment to PPF accounts ?