- This investment is blocked for 15 years.
- Interest rate of 8% is fully exempted from Income Tax under section 80C.
- It is a perfectly safe instrument, guaranteed by the central government and it would not be attached for any type of debt or liability.
- The Public Provident Fund scheme also offers the facility of raising loans against the PPF account or withdrawing funds of the PPF account for financial assistance at times important life events or emergencies, such as wedding, higher education, medical expenditure, property investment, etc.
- A PPF account can be opened by an individual in his/her own name or on behalf of a minor of whom he/she is the guardian.
- If the account is opened in the name of a minor and if the minor becomes an adult (i.e., is aged 18 years) before the maturity of the accounts, the ex-minor will himself/herself continue the account thereafter.
- If the account holder dies during a year, his executors cannot deposit any sum from the income of the deceased to his PPF account after his death. If they do so, the amount deposited shall neither carry interest nor shall this amount be eligible for rebate. This amount will be refunded without interest to the nominee/legal heir, as the case may be, at the time of closure of the account.
- There is no maximum age limit for a person to open a PPF account. A person of any age can open an account.
- Those having General Provident Fund or Employee’s Provident Fund account can also open a Public Provident Fund Account.
- For opening of a PPF account Form-A is to be submitted.
- For nomination of a PPF account Form-E is to submit where the account is in operation.
- The account holder will have to make deposits with challan in Form-B.
- The account holder can make deposits in more than one installment in a calendar month provided the total number of installments paid in a financial year does not exceed 12.
- Minimum investment- Rs. 500/- per annum
- Maximum investment- Rs. 1,50,000/- per annum
- Tenure- 5 years (plus the first year of investment)
- The PPF account standing in a nationalized bank can be transferred to other nationalized banks or State Bank or selected private banks or Head Post Office and vice-versa.
- Interest earned will be at the same rate as notified by the Central Government in its official gazette. Interest will be allowed for calendar month on the lowest balance at credit of the account between the close of the fifth day and the end of the month and shall be credited to the account at the end of each year. So, if the account holder is planning on investing in PPF monthly, they should ensure that their deposits are credited on or before the 5th of every month to get maximum interest benefit.
One can withdraw funds from the PPF account after completing 5 years from the year in which the original deposit was made. To withdraw, the accountholder would have to submit Form C along with the account passbook to the bank. Note that you can withdraw a maximum of 50% of the amount as present in the account at the end of the fourth year or at the end of the year preceding the withdrawal, whichever is lower. Also, if you had taken any loan against PPF, then the amount to be repaid will be deducted from the amount to be withdrawn.
The accountholder can apply for a loan against PPF between the 3rd and 6th financial year from the year in which the initial deposit was made. To apply for the loan, you would have to submit Form D, along with the account passbook to the bank. You can borrow up to 25% of the balance at the end of the 2nd year proceeding the year in which the application is submitted. Interest rate applicable on loan is 2% more than what one earns on PPF deposits. A second loan can be taken only after the first loan has been repaid in full.
Closure of account or continuation of account without deposits after maturity:
The account holder may at any time after the completion of 15 years from when the initial deposit was made, apply for withdrawal of the entire account balance via Form-C
Once the full PPF tenure of 15 years is completed, the accountholder may apply for extension of the PPF account. However, this application needs to be submitted before the completion of one year since the expiry of 15 years with the Accounts Office in Form-H. The accountholder can continue to subscribe for a further block period of 5 years according to the limits of subscription.