The Public Provident Fund Scheme is a statutory scheme of the Central Government of India for a period of 15 years. The PPF account is opened in the State Bank of India or a subsidiary of the State Bank of India or in Post Office. Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office. Account is transferable from one Bank to another bank as well as within the bank to any branch.
Non residents are not eligible to open a PPF account. Any individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund any amount not less than Rs. 500 and not more than Rs. 1, 00,000 in a year. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
Those who are contributing to GPF Fund or EDF account can also open a PPF account. No age is prescribed for opening a PPF account. Interest is not contractual but rate is notified by Ministry of Finance, Govt. of India, at the end of each year.
The facility of first withdrawal can be done in the 7th year of the account, subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter one withdrawal is permissible every year. Pre-mature closure of a PPF can be done only in case of death. The account holder has an option to extend the PPF account for any period in a block of 5 years on each time.
The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed. Deposits in PPF qualify for rebate under section 80-C of Income Tax Act. The interest on deposits is totally tax free. Deposits are exempt from wealth tax also. The balance amount in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
How do I open a PPF account?A PPF Account can be opened in any Head Post-Office, GPO, any Selection Grade Post Office, any branch of the State Bank of India, and selected branches of other nationalized banks.
What is the duration of a PPF scheme?The duration of a PPF account is 15 years, i.e., 15 complete financial years. The PPF Account can be extended for duration of five years at a time.
If one wishes to continue a PPF account after the completion of 15 years tenure, is it better to go for extension in blocks of five years or should one start a fresh account after closing the previous one?If you close the account and open another fresh PPF account, you have access to 100% of your account balance, while extending the same account for a block of five years give you access to only 60% of your account balance at that time. This means that a large amount of money gets blocked for five years. Starting a fresh account gives you the opportunity to decide the amount you want to invest with the entire maturity amount at your disposal. This is an important factor keeping in mind the recent interest rate cut.
What is the mode of holding of a PPF account?A PPF Account passbook is issued to the depositor by the bank where the account is held, which can be updated from time to time.
How can the nominee claim dues from the PPF account?The nominee can claim dues on demand. However, the balance, if not withdrawn, continues to earn interest. Where there is no nomination in force, the balance will be paid to the legal heirs on production of succession certificate/probate.
How assured can I be of getting my full investment back?Your principal is assured. The PPF Scheme has the backing of the GOI, and is considered completely risk-free.
Can I open an account in the name of a minor?Certainly, Under the Public Provident Fund Scheme, an individual may open one Public Provident Fund account on behalf of a minor child of whom he is the guardian. It may be reiterated that only one account may be opened in one name. Thus, if a guardian opens an account on behalf of a minor child, another guardian cannot open an account on behalf of the same minor child.
Can a PPF account be sold in the secondary market?No, a PPF account cannot be traded in the secondary market.
To what extent does a PPF account protect me against inflation?A PPF account does not provide protection against high inflation. In certain years when the inflation rate is high, the real rate of return on your PPF may be marginal. This depends on the prevailing rate of interest on your PPF at any given time.
Can I borrow against my PPF account?Yes, loans can be availed through PPF account
