PPF(Public Provident Fund) is a government-backed investment plan floated in the interest of the public. PPF is a very good retirement plan as it helps individuals in building a corpus for their retired life while earning good returns along with tax benefits. The maximum investment that can be made under the PPF scheme is Rs. 1.50 lakhs. A tax benefit is provided under Section 80C of the Income Tax Act 1961 for the investment of up to Rs. 1.50 lakhs under the scheme.
PPF account is a government-backed savings scheme introduced with an intention to inculcate the habit of small savings. This long-term savings scheme that matures after a period of 15 years enables individuals to build a huge corpus that comes in handy after retirement. The three major factors i.e., safety, tax benefit as well as attractive returns have made the scheme the most sought after scheme, especially by the small savers.
Yet another attractive feature of the scheme is the exemption of tax on the investment, maturity proceeds and the interest earned. It is classified as EEE under the category for tax implication.
The details of the PPF account are as given below.
|Rate period||PPF interest rate|
|January 2017 to March 2017||8%|
|April 2017 to June 2017||7.90%|
|July 2017 to September 2017||7.80%|
|October 2017 to December 2017||7.80%|
|January 2018 to March 2018||7.60%|
|April 2018 to June 2018||7.60%|
|July 2018 to September 2018||7.60%|
|October 2018 to December 2018||8%|
|January 2019 to March 2019||8%|
|April 2019 to June 2019||8%|
|July 2019 to September 2019||7.90%|
|October 2019 to December 2019||7.90%|
|January 2020 to March 2020||7.90%|
|April 2020 to June 2020||7.10%|
|July 2020 to September 2020||7.10%|
|October 2020 to December 2020||7.10%|
|January 2021 to March 2021||7.10%|
|April 2021 to June 2021||7.10%|
|July 2021 to September 2021||7.10%|
Also check, Best short-term investment plan with high returns in India.
The features of a PPF Account are as given below:
The PPF account can be opened in the name of minors but the operations in the account should be by the parent.
You can open a PPF Account either in a post office or in any of the nationalised banks. At present some of the private banks like Axis Bank, HDFC Bank, ICICI Bank, and SBI PPF Account are designated to open the account.
A PPF account can be opened only by resident Indians. Even a minor is eligible to open the account provided the account is operated by the parent. The account opened by a Non-Resident Indian before the change of the resident status can continue till maturity. However, the account should mandatorily be closed on maturity as further extensions are the privilege extended to resident Indians only.
The account can be opened by submitting a duly filled application prescribed for the purpose along with the following KYC documents.
Residence Proof: Aadhar Card, Voters’ ID Card, Passport, Driving Licence (Any One)
Photo ID Proof: PAN Card, Passport, Aadhar Card, Voter’s ID Card, Driving Licence (Any One)
Signature Proof: PAN Card, Passport. Driving Licence (Any One)
The account can be activated by making an initial deposit. The account can be activated with a deposit of Rs. 100/-
Note: Also check EPF Loan is a premature withdrawal of funds in epf account.
The authority determining the PPF interest rate is the Finance Ministry. The PPF interest rate is revised every quarter and the determining authority is the Finance Ministry.
The interest rate for the existing quarter i..e, July 1st, 2021 to September 30th, 2021 is 7.10%. Interest applied on the PPF investment will be compounded yearly.
The interest will be paid on the 31st March of every Financial Year.
The base amount for interest calculation will be the lowest balance between the 5th and the last day of the month.
Returns on the investment in the PPF account can be calculated using the PPF calculator available online before making the investment.
Individuals who comply with the following criteria qualify to invest in PPF.
The investment made in the PPF account will have a lock-in period of 15 years. As per the PPF withdrawal rules, withdrawals can be made in the account only after the completion of 15 years i..e, on maturity. Individuals who intend to continue the account beyond 15 years can opt for extension in blocks of 5 years either with further deposits or without further deposits.
In case of a dire need of funds, partial withdrawals are permitted in the account only after the completion of 5 years. The maximum amount that is allowed for partial withdrawal is 50% of the balance in the account, as seen at the end of the 4th financial year or the balance as seen at the end of the preceeding financial year when the amount is withdrawn, whichever is lower. Only one withdrawal in a financial year will be permitted.
Premature closure of the account is also permitted with end-use restrictions after the account has completed a min 5 years from the date of opening. The amount so withdrawn should be for the following purposes.
A loan to the extent of 25% of the available amount can be availed between the 3rd and the 6th year from the date of opening the account.
All requests for withdrawal should be made by submitting Form C along with a copy of the PPF passbook.
The following process has to be followed for withdrawals in the PPF account.
As per PPF withdrawal rules, any withdrawal in the PPF account can be done only on completion of the tenure i.e., 15 years. Premature closure is however permitted under the following circumstances.
Premature closure will be permitted with a penalty by way of a reduction in the rate of interest by 1%. The returns on the investment done so far will be reduced to that extent.
On completion of the tenure i.e., 15 years, you can either close the account and withdraw the amount fully or opt for an extension of the account in blocks of 5 years. If you wish to close the Public Provident Fund Account, you will have to submit a written application along with the original passbook to the bank branch or the post office where the PPF account is maintained.
Bank details for crediting the proceeds should be mentioned. Address proof, Photo ID proof a cancelled cheque of the account to which the proceeds have to be credited should also be submitted.
The bank/post office will verify the completion of the lock-in period. If the account has completed the lock-in period, the account will be closed and the proceeds credited to the bank account mentioned in the request letter.
PPF is a long-term investment with a lock-in period of 15 years. You can withdraw the PPF only after the completion of 15 years.
There is a provision to check the PPF account balance both offline as well as online.
Online checking of PPF Account Balance
You will be able to check the PPF Account Balance online only if you have the PPF account with the Bank. To check the account balance, you should keep the following points in mind.
Offline checking of PPF Account Balance
On opening a PPF Account, the bank/post office provides you with a passbook. The passbook contains details of the PPF Account like PPF Account number, the bank branch, account balance, credits and debits to the account, and total balance.
You can visit the bank branch/post office and get the passbook updated periodically. By doing so you ls will have the up to date details of the PPF Account.
There is no restriction on extending the PPF account. You can extend the account any number of times, but it should be only in blocks of 5 years. The account cannot be extended further before completing the five years block.
There is no restriction on the age of opening a PPF Account. Any citizen of India can invest in the PPF account to avail of the benefits.
To transfer funds from PPF Account to a bank account, you should either approach the bank or the post office where the PPF account is maintained and submit Form C along with a copy of the passbook. Form C will contain all details like the amount to be transferred, the PPF account number, the number of years elapsed since the opening of the account, the date of the previous transfer, details of the bank account to which the amount has to be transferred. After scrutiny, the post office or the bank will credit the amount to your bank account.
The rules governing the PPF withdrawal permit premature closure of the PPF account only on completion of 5 years from when the account was opened, i.e., only during the 6th year. Hence, you will not be able to close the PPF account before five years.
Essentially you will not be able to make any withdrawals from the PPF Account before the completion of 15 years. But in exceptional cases, partial withdrawal will be permitted after the completion of 5 years from the date of account opening. For this, you will have to submit a completed Form C that contains the details of the amount that has to be withdrawn as well as the details of the bank account to which the amount has to be credited among other details. You will have to enclose a copy of the passbook while submitting Form C to the bank/post office.
You can deposit money into a PPF account either by way of cash, cheque, DD or transfer the amount through an internet banking facility.
No. the PPF maturity amount is not taxable.
Earlier PPF account could be opened only in a post office. At present, most public sector banks and a few private banks offer to open the PPF account. You can choose to open an account based on the quality of customer service or in a bank where you have a savings bank account.
There are no restrictions for the extension of the PPF account in blocks of 5 years. It can be extended as many times but only in blocks of 5 years.
There is no due date specified for the deposit of the amount into the PPF account. But it is recommended to deposit the amount between 1st April and 5th April of every financial year to avail maximum benefit.
You will not be allowed to withdraw the amount from a PPF account before the completion of 15 years. Under special circumstances, when you are in great need of funds, you will be able to withdraw the amount but only after the completion of 5 years from the date of account opening. You will have to submit a duly filled Form C along with a copy of the passbook to the bank or the post office to withdraw the amount from the PPF account before maturity. Such withdrawals are allowed only once in a financial year.