PPF is a scheme run by the Government of India, wherein you contribute every year and get specified rate of return. Since it is Govt. sponsored, it is also totally safe. You can be sure no one is going to run away with your money. You invest in it and you get a deduction on your income. Besides, the interest you earn on it is tax-free.
- The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000. The interest you will earn is 8% per annum.
- To open a PPF account you can contact the head post office, selection grade sub-post offices, State bank of India. Selected branches of nationalised banks can also open accounts.
- You will have to fill up a form. 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.
- 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.
- Joint account cannot be opened with another individual. The account can only be opened in one person’s name. However, you can 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.
- You can make maximum up to 12 deposits in one financial year.
- 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 The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account. It can be extended for a period of five years after that. During these five years, you earn the rate of interest and can also make fresh deposits. 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only limitation is that you cannot withdraw it until seven years are completed, after which 50% of your deposits can be withdrawn, if needed.
- Opening an account for a minor :-There have been certain practical hurdles in respect of opening of accounts for minor vis-à-vis some intermediary agencies. This clarification reiterates that as per the rules 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.
- One can consider opening a PPF account as you can put in as little as Rs 500 a year to keep it going. Although there are better options available in the market like NPS which can give you much higher yield. Area where PPF doesnt scores is liquidity as
Public Provident Fund (PPF) Snapshot |
Interest Paid: 8%, compounded annually |
No monthly/yearly payments |
Minimum investment: Rs 500 (required annually) |
Maximum investment: Rs 70,000 |
Duration of investment: 15 years |
Cannot be used for Mortgage and any other purpose |
Tax benefit under Section 80 ‘C’ available. |
Maximum limit: Rs 70,000 per annum |
Good long-term investment option |
Interest is fully Exempt |
Invest is not liquid |
