Your work Invest in a 15 year PPF account scheme and get maximum interest rate

Public Provident Fund (PPF) was introduced in India in 1968 with the objective to mobilise small savings in the form of investment, coupled with a return on it. It can also be called a savings-cum-tax savings investment vehicle that enables one to build a retirement corpus while saving on annual taxes. Anyone looking for a safe investment option to save taxes and earn guaranteed returns should open a PPF account.

PPF Account or Public Provident Fund Scheme is one of the most popular long-term savings-cum-investment products, mainly because of its combination of safety, returns and tax savings.


Contents

  • What is a PPF account?
  • Also read this
  • Why is PPF so popular?
  • Features of PPF Account
  • How much can you invest in PPF?
  • What is the tenure of PPF account?
  • Who is eligible for PPF account?
  • Closing PPF Account
  • PPF Interest
  • PPF Loan  
  • PPF Withdrawal
  • Death of PPF Account Holder
  • Important links


What is a PPF account?

PPF was first offered to the public in the year 1968 by the National Savings Institute of the Ministry of Finance. Since then it has emerged as a powerful tool for investors to build long-term wealth.


Investors use PPF as a tool to build a corpus for their retirement, by regularly putting money aside over a long period of time (PPF has a 15-year maturity, and tenure extension facility). With its attractive interest rates and tax benefits, PPF is a big favorite with small savings.

Public Provident Fund (PPF) scheme is a long-term investment option that offers an attractive rate of interest and returns on the amount invested. The interest earned and the returns are not taxable under Income Tax. One has to open a PPF account under this scheme and the amount deposited during a year will be claimed under section 80C deductions.






Why is PPF so popular?

PPF is popular because it is one of the safest investment products. That is, the Government of India guarantees your investment in the fund. The interest rate is fixed every quarter by the government. PPF scores over many other investment options as your investment is tax exempt under Section 80C of the Income Tax Act (ITA) and returns from PPF are also non-taxable.



Features of PPF Account
How much can you invest in PPF?

Below are the essential features of PPF

  • Tenure: The PPF has a minimum tenure of 15 years, which can be extended in blocks of 5 years as per your wish.
  • Investment Limits: PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in a lump sum or in a maximum of 12 instalments.
  • Opening Balance: The account can be opened with just Rs 100 a month. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax savings.
  • Deposit Frequency: Deposits into a PPF account have to be made at least once every year for 15 years.
  • Mode of deposit: The deposit into a PPF account can be made either by way of cash, cheque, demand draft (DD) or through an online fund transfer.
  • Nomination: A PPF account holder can designate a nominee for his account either at the time of opening the account or subsequently.
  • Joint accounts: A PPF account can be held only in the name of one individual. Opening an account in joint names is not allowed.
  • Risk factor: Since PPF is backed by the Indian government, it offers guaranteed, risk-free returns as well as complete capital protection. The element of risk involved in holding a PPF account is minimal. As the returns from PPF accounts are fixed, they are used as a diversification tool for the investor’s portfolio. 
  • Tax Benefit: The PPF interest and maturity amount are tax-free under section 80C of the Income Tax Act, 1961.
  • Partial withdrawal: PPF amount can be withdrawn partially from the seventh financial year onwards.



What is the tenure of PPF account?

The tenure of PPF is at least 15 years. You can increase it in blocks of 5 years if you wish.


Who is eligible for PPF account?

Any Indian citizen can open a PPF account. You can take loan on your PPF account between 3rd and 5th year and partial withdrawal after 7th year only for emergencies. You only get Rs. 500 can open a PPF account. With any approved you can make monthly or lump sum deposits through cash, cheque, DD or online transfer. PPF accounts cannot be held jointly, although you can make a nomination. You must make a minimum deposit of Rs. 500 will be payable every year .

(a) Who can open: – :-
(i) A single adult who is a citizen of India.
(ii) Guardian on behalf of minor/person of unsound mind
.
Note:- Only one account can be opened in any post office or any bank across the country.


How to open a PPF account?

A PPF account can be opened with either a Post Office or with any nationalised bank like the State Bank of India or Punjab National Bank, etc. These days, even certain private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility.
 

You need to submit the below-mentioned documents:

  • Duly filled account opening application form
  • KYC documents such as Aadhaar, Voters ID, Driving license, etc.
  • Residential address proof
  • Nominee declaration form
  • Passport size photograph


Process to open a PPF account online:

Step 1: Log into your bank account on the internet banking or mobile banking platform.

Step 2: Select the ‘Open a PPF Account’ option.

Step 3: If the account is for self, click on the ‘Self Account’ option. If you are opening the account on behalf of a minor, select the ‘Minor Account’ option.

Step 4: Enter the relevant details in the application form.

Step 5: Key in the total amount you want to deposit in the account per financial year.

Step 6: Submit the application. An OTP will be sent to the registered mobile number. Enter it in the relevant field.

Step 7: Your PPF account will get created in an instant! Your PPF account number will be displayed on the screen. An email will be sent to your registered email address with all the details confirming the same.



Process to open a PPF account in a post office

Step 1: Get an application form from your nearest post office or online.

Step 2: Fill up the form and submit it with the required KYC documents and a passport-size photograph.

Step 3: Make the initial deposit required to open a post office PPF account. The amount can range from Rs.500 up to Rs.1.5 lakh per financial year.

Step 4: Once your application is processed, a passbook will be given to you for the PPF account opened.


Closing PPF  Account

  •  If in any financial year Rs. 500/- are not deposited, the said PPF account will be closed.
  •  Loan / withdrawal facility not available on closed accounts.
  • Depositor before maturity of account (i.e. Rs. 500) + Rs. 50/- minimum subscription maturing in the account. The account can be revived by making a deposit for each elapsed year.
  •  Total deposits in a year should include deposits in respect of years of default in previous financial years.



PPF  Interest

  • Interest will be reported quarterly by the Ministry of Finance.
  •  Interest shall be calculated on the lowest balance in the account between the end of the fifth day and the end of the month for the calendar month.
  •  Interest will be credited to the account at the end of each financial year.
  •  Interest shall be credited to the account at the end of each financial year where the account stands at the end of the financial year. (i.e. in case of account transfer from bank to post office or vice versa)
  •  Interest earned is exempt from tax under Income Tax Act.



PPF Loan 

  • The loan can be availed after the expiry of one year from the end of the financial year of initial subscription. (i.e. Loans can be availed in the year 2012-13 for accounts opened during 2010-11).
  • The loan can be availed before the completion of 5 years after the expiry of one year from the end of the financial year of initial subscription.
  • Up to 25% of the outstanding loan amount prior to the year in which the loan is availed can be availed. (ie if the loan was taken during 2012-13, 25% of the outstanding loan as on 31.03.2011
  •  Only one loan can be taken in a financial year.
  •  No second loan shall be granted until the first loan is repaid.
  •  If the loan taken is repaid within 36 months, the loan interest rate @ 1% pa will be applicable.
  •  If the loan taken is repaid after 36 months, the interest rate of the loan will be applicable @ 6% per annul from the date of disbursement of the loan.


PPF Withdrawal Form

An individual must file Form 3/Form C for the withdrawal of the PPF amount. This form has 3 sections:
 

Section 1: Declaration section where you must give your PPF account number and the amount of money you propose to withdraw. Along with that, you also need to mention how many years have actually passed since the account was first opened.
 

Section 2: Office use section which comprises details like:

  • Date when the PPF account was opened
  • Total balance standing in the PPF account
  • Date on which the previously requested withdrawal was allowed
  • Total withdrawal amount available in the account.
  • The amount of money sanctioned for withdrawal.
  • Date and signature of the person in charge – usually the service manager.

Section 3: Bank details section asks for the details of the bank where the money is to be credited directly or the bank in whose favor the cheque or the demand draft is to be issued. It is also mandatory to enclose a copy of the PPF passbook along with this application.



Participating Banks Offering PPF account

You can open a PPF account either at the Post Office branch nearest to you or at a participating bank branch based on your convenience. The participating banks that offer a PPF account are given below.

  • Bank of Baroda
  • HDFC Bank
  • ICICI Bank
  • Axis Bank
  • Kotak Mahindra Bank
  • State Bank of India
  • Bank of India
  • Union Bank of India
  • Oriental Bank of Commerce
  • IDBI Bank
  • Punjab National Bank
  • Central Bank of India
  • Bank of Maharashtra
  • Dena Bank

Death of PPF Account Holder 

  • In case of death of the account holder the account shall be closed and the nominee or legal heir shall not be permitted to continue the account.
  •  For a PPF account closed due to death, the PPF interest rate shall be paid up to the end of the previous month in which the account was closed.

Important links


Important note : This article is written for your information only, check the official website for more information





#15 Years PPF Account Scheme  #PPF