Public Provident Fund (PPF) is a popular long-term investment scheme introduced by the Government of India. It provides you with a secure and tax-efficient way to save for your future, with attractive interest rates and certain tax benefits. PPF scheme is considered a safe investment option for individuals looking for stable returns.
High ReturnsGet Returns as high as 17%*
Zero Capital Gains taxunlike 10% in Mutual Funds
Save upto Rs 46,800in Tax under section 80 C
The full form of PPF is Public Provident Fund. It is a long-term savings and investment option offered by the National Savings Institute of the Ministry of Finance (Government of India) since 1968. This investment plan helps you to build a financial safety net for the future with the following features:
Attractive interest rates
Special tax benefits
PPF is an investment option that safeguards the principal amount as well as earns interest on your investment. At the time of opening a PPF account, you need to deposit money every month, and interest gets compounded.
|Interest Rate||7.1% p.a.|
|Minimum Investment||Rs. 500 per annum|
|Maximum Investment||Rs. 1.5 lakhs per annum|
|Opening Balance||Rs. 100|
|Mode of Deposit||Cash, cheque, demand draft (DD), or through an online fund transfer|
|Mode of Holding||Individual only|
|Tax Benefit||Interest and maturity amounts are tax-free u/s 80C and Section 10 of the Income Tax Act, 1961|
|Partial withdrawal||Available from the seventh year onwards|
NOTE: You can use the PPF calculator to calculate the returns and maturity amount of your contributions to the Public Provident Fund (PPF).
Guaranteed Returns: A PPF account offers assured and risk-free returns, as the interest rate is set by the government. The PPF interest rate earned is generally higher than regular savings accounts.
Investment Tenure: The PPF account locking-in period is of 15 years, before which you cannot withdraw your maturity returns.
Account Extension: After the initial PPF maturity period of 15 years, you can extend the PPF account in blocks of 5 years indefinitely. Your PPF amount continues to earn interest.
Minimum and Maximum deposit: You can make contribution of a minimum of Rs. 500 to up to Rs. 1.5 Lakhs per year in a Public Provident Fund Account (PPF Account).
Interest Rate: The current PPF interest rate from 01.04.2020 to 31.12.2023 is 7.1% p.a. which is compounded annually. The Government of India announces the interest rate quarterly.
Loan Against PPF Investments: PPF provides you the option to avail of a loan against the PPF funds from the 3rd to 6th financial year.
Partial withdrawal: Partial withdrawals from a PPF account are allowed from the 7th financial year onwards, subject to certain conditions and limits.
Flexible Investment Options: You can choose your contribution amount (subject to a minimum and maximum limit) and make deposits either as a lump sum or in regular installments.
Premature Exit: Premature closure of the account is allowed after the 5th financial year in certain situations, such as for higher education, medical expenses, or specific emergencies.
Nomination Facility: A PPF account allows you to nominate a beneficiary. It ensures a smooth transfer of funds in the event of your unfortunate demise.
Transferability: PPF accounts can be transferred from one authorized bank or post office to another. This makes it convenient for you in case of relocation.
Tax Benefits: Contributions to a PPF account, the interest earned, and the final withdrawal amount are all tax-exempt. Therefore, PPF is known as Exempt-Exempt-Exempt (EEE) category investment. You can avail of several PPF tax benefits under Section 80C and Section 10 of the Income Tax Act.
You can open a Public Provident Fund Account (PPF Account) if you meet the following eligibility criteria:
Citizenship Criteria: You must be a resident Indian citizen
Limitations for NRIs (Non-Resident Indians) and Hindu Undivided Families (HUFs):
NRIs and HUFs are not allowed to open a new PPF account
An existing PPF account of an NRI and HUF remains in force
However, you cannot extend it for 5 years after maturity period, unlike Indian citizens
PPF accounts are open to individuals of all ages.
Parents or legal guardians can open an account for minors.
Number of Accounts: Each person can hold only one PPF account in their name.
You require the following documents to open a PPF Account with a recognised bank branch or Post Office:
KYC documents verifying identity (choose one):
Residential Address Proof
Form for Nominee Declaration
To open a PPF account online, you must fulfil the following conditions:
You should have a savings account with the authorised bank you are applying
Your net banking facility must be activated
Your Aadhaar number must also be linked to your savings account
Follow the steps mentioned below to open a PPF account online:
Step 1: Visit the official website of the bank and log in to your net banking account.
Step 2: Go to the 'Investments' section and click on 'Public Provident Fund'.
Step 3: Enter your personal details, such as your name, date of birth, and address.
Step 4: Select your nominee and provide their details.
Step 5: Choose the amount you want to deposit as your initial contribution (minimum of Rs. 500).
Step 6: Review the details and submit the application.
Step 7: You will receive an OTP on your mobile number. Enter the OTP to confirm the account opening.
To open a Public Provident Fund account in a Post Office through the offline method, you need to follow the steps mentioned below:
Step 1: Visit your nearest post office branch.
Step 2: Fill out a PPF account opening form. You can get the form from the post office or download it online from the India Post website.
Step 3: Submit the form along with the required documents (such as identity proof, address proof, and photographs).
Step 4: Deposit the minimum amount (Rs. 100) to activate the account.
Step 5: Once the account is opened, you will receive a passbook and a PPF account number to record all transactions related to your PPF account.
PPF offers you several tax benefits, such a follows:
Tax Deduction: Contributions made towards a PPF account are eligible for deductions from the taxable income under Section 80C of the Income Tax Act, subject to a maximum limit of Rs. 1.5 lakh per financial year.
Tax-free Interest: The interest earned on the PPF account is tax-free under Section 10 of Income Tax Act. This ensures that the returns are not reduced due tax liabilities.
Tax Exemption at Maturity: The maturity amount, including the principal and the accumulated interest, is entirely tax-free.
PPF allows you to make partial withdrawals as per the following conditions:
Partial withdrawals can be made from the 7th financial year onwards
The withdrawals are subjected to the following conditions:
A maximum limit of 50% of the balance at the end of the 4th preceding year, OR
The 50% of the balance at the end of the preceding year, whichever is lower.
You can avail of loans against your PPF balance. The loan can be taken from the 3rd financial year to the 6th year of opening the account.
Loan amount cannot be more than 25% of the 2nd financial year immediately preceding the loan application year.
The loan must be repaid within 36 months in equal monthly instalments.
If the first loan is fully paid back, you can get a second loan after the 6th financial year.
A PPF calculator is a financial tool that helps you calculate the maturity amount of your Public Provident Fund (PPF) investment. It takes into account the following factors to estimate the maturity amount:
Your invested amount
PPF interest rate
Tenure of your investment
A PPF calculator can be a helpful tool when you are planning your PPF investment, for example:
Determine how much you need to invest each month or year to reach your desired maturity amount
Compare different investment options and find the one that best suits your needs
To withdraw money from your PPF account, follow these steps:
Fill out Form C, which is the withdrawal form, available at the bank or post office where the PPF account is held.
Specify the withdrawal amount and the mode of payment (cheque or direct credit to a linked bank account).
Submit the form along with the passbook to the bank or post office.
The withdrawal amount will be credited to your specified account or handed over as per your request.
Form C is also known as the Partial Withdrawal Form or Form 3. It is a form that PPF you need to fill out to withdraw money from your PPF account before maturity.
The Form C has the following three sections:
|Section||Details to Enter|
A PPF account can be closed only upon completion of the maturity period, which is at the end of 15 financial years.
Here are the steps to close a PPF account:
Step 1: Get a PPF account closure form from the bank or post office or download it online from the website of your bank or the India Post website.
Step 2: Fill out the PPF account closure form. You will need to provide the following information:
Your PPF account number
Your name and address
The name and address of your nominee
The reason for closing your account (optional)
Step 3: Attach your PPF passbook to the form.
Step 4: Submit the form and passbook to your bank or post office.
Step 5: Once your request for closure is processed, your PPF account will be closed and the balance will be credited to your bank account or post office savings account.
To check your PPF account balance online, follow the steps mentioned below:
Log in to the official website of the bank or post office which holds PPF accounts.
Navigate to the PPF account section and enter your login credentials.
Once logged in, you will be able to view your PPF account balance and transaction history.
You can the follow these steps to check your PPF account balance offline:
Obtain your PPF passbook from the bank.
Visit the bank branch where you opened your PPF account.
Update your passbook at the bank during operating hours.
Your passbook will show all credit/debit transactions and the outstanding balance.
If you have a PPF account through the Post Office, update your passbook there.
You can revive a PPF account if it becomes inactive due to non-deposit of the minimum required amount, which is Rs.500 in a financial year, by following these steps:
To reactivate your account, you must submit a written request at either the post office or the bank branch where your account is located.
You will be required to pay a fine of Rs. 50 for each year that your account has been inactive.
You must settle any outstanding amount of at least INR 500 for all the years that your account has remained inactive.
There are several banks in India that offer the facility to open a PPF (Public Provident Fund) account for their customers. Here are some of the participating banks where you can open a PPF account:
State Bank of India (SBI)
Punjab National Bank (PNB)
Central Bank of India
Bank of Baroda
Union Bank of India
Bank of India
Indian Overseas Bank
Kotak Mahindra Bank
Oriental Bank of Commerce
Bank of Maharashtra
A Public Provident Fund (PPF) is suitable for individuals who have a low-risk appetite. The scheme is backed by the Indian Government, which offers guaranteed returns to ensure the financial security and stability of you and your family in future. The funds invested in the PPF scheme are not market-linked.
Here are a few reasons why a PPF account is important:
Long-term savings: PPF encourages you to save for the long term, typically over a period of 15 years. This disciplined approach helps you to build a substantial corpus over time.
Tax benefits: Contributions made towards a PPF account are eligible for tax deductions under Section 80C of the Income Tax Act, up to a specified limit. The interest earned and the maturity amount are also tax-free.
Retirement planning: PPF can be an effective tool for retirement planning. By investing consistently over the years, individuals can accumulate a significant corpus that can provide financial security during their retirement years.
The major drawbacks of a Public Provident Fund (PPF Scheme) are as follows:
Extended Lock-in Period: PPF has a 15-year lock-in period, longer than some other tax-saving options. This makes it less flexible in case of any emergency situation.
Moderate Interest Rate: PPF offers relatively lower interest rates compared to other long-term investments, like ULIP, Capital Guarantee Plans, and ELSS. These best investment plans can yield higher returns.
No Joint Holding: PPF accounts cannot be held jointly, which limits you from sharing the investments with family members.
Investment Limit: Annual investment is capped at Rs. 1.5 lakhs in a PPF account, unlike some other tax-saving options like ULIP and Pension Plans, which do not have such limits.
NRI Restrictions: NRIs cannot open new PPF account. The existing PPF accounts can receive deposits but cannot be initiated by NRIs.
Benefits of a PPF account:
PPF accounts offer guaranteed returns
Investments in PPF accounts are eligible for tax deductions under Section 80C of the Income Tax Act, 1961
the interest earned on PPF accounts is also tax-free
You can make a minimum investment of Rs. 500 and a maximum investment of Rs. 1.5 lakh per financial year
You can withdraw your entire balance at maturity, or you can choose to extend your account in blocks of 5 years
Eligibility Criteria for PPF: Any Indian citizen can open a PPF account either in his own name or on behalf of a minor. But, you can't open a joint account or one for a Hindu Undivided Family (HUF) and a Non-Resident Indian (NRI). Also, an individual can have only one account in his name.
The interest rate on PPF is set by the government every quarter. The current interest rate on PPF is 7.1% per annum.
Interest is calculated on the lowest balance between the 5th and the end of the month.
Interest is compounded annually, which means that the interest earned on your investment is also reinvested and earns interest.
PPF currently offers an interest rate of 7.1% per annum
PPF contributions are tax-deductible up to Rs. 1.5 lakh per year under Section 80C
Interest earned on PPF is also tax-free, and the maturity amount is also tax-free
PPF is a government-backed scheme, so the returns on your investment are guaranteed
PPF offers a lot of flexibility in terms of deposits and withdrawals
PPF is a safe and secure investment option as the government guarantees the returns on PPF
Visit the official website of the authorised bank that offers PPF services.
Look for the option to link Aadhaar with PPF.
Enter PPF account details and 12-digit Aadhaar number.
Submit the form and verify through OTP.
Receive confirmation of successful linking.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
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