PPF or Public Provident Fund is one of the most popular saving schemes among Indian households. Since it’s managed by the Central Government, the money in the PPF account and the returns it generates are guaranteed. The interest rate for Q2 (July-September) FY 2022-23 has been fixed at 7.1% and the interest rate for Q1 (April to June 2022) was also the same.
Public Provident Fund (PPF) has certain limits for deposits, withdrawals, applicability, and loans. In the following article, we take you through the PPF limits.
PPF Deposit Limits
You have to contribute to the Public Provident Fund (PPF) account each year to keep it active.
- The minimum contribution amount is Rs 500 and the maximum PPF limit is Rs 1.5 lakh
- You can contribute at any time in the year and in any amount (subject to the overall minimum and maximum). However, you can make a maximum of 12 contributions per year
For example, you can contribute Rs 20,000 in June, Rs 40,000 in November and Rs 32,000 in January. The total amount you have contributed is Rs 92,000 (less than Rs 1.5 lakhs) and hence, valid.
PPF Withdrawal Limits
The PPF has a lock-in of 15 years.
- Partial withdrawals can be made from the expiry of the 6th financial year after the year in which the account is opened. For example, if the account was opened on Jan 1, 2012, withdrawal can be made from the financial year 2019-20 onwards
- Only one partial withdrawal is allowed per financial year
However, it is suggested that one should check with the respective website of the bank to determine when the partial withdrawal is allowed. Some banks, such as ICICI and Axis, allow withdrawals after 5 years and some after 7 years (SBI and HDFC).
The maximum amount that can be withdrawn per financial year is the lower of the following:
- 50% of the account balance as at the end of the financial year, preceding the current year, or
- 50% of the account balance as at the end of the 4th financial year, preceding the current year
Documents Required at the time of Withdrawal:
- Form C is required to be submitted to withdraw the partial amount from the PPF account
- Details such as account number, amount of money to be withdrawn, etc. have to be mentioned in the form
- A declaration stating that no other amounts were withdrawn during the same financial year is also to be submitted
- In case, the account is in the name of a minor, you have to sign an additional declaration stating that the amount is required for the use of a minor child who is still a minor and is alive
- If you have a PPF passbook, you should submit the same along with the form
PPF Loan Limits
- The facility to avail loan against the PPF account is available from the 3rd financial year till the end of the 6th financial year from the date of account opening. For example, if the PF account is opened on Jan 1, 2012 (FY 2011-12), the end of the financial year in which the account was opened is Mar 31, 2012. The loan can be taken from 1st April 2013 (FY 2013 – 14) onward
- Five years from the end of the financial year in which account was opened on March 31, 2018 (FY 2017 – 18). Thus, the loan can be obtained from Mar 31, 2013, to Mar 31, 2018
- The maximum tenure of such a loan is 36 months
Form D is required to be submitted to avail loan against the PPF account. The form requires details such as account number, the amount being borrowed, etc along with the undertaking that the amount will be repaid with interest within three years.
- The maximum PPF limit for loans is 25% of the balance at the end of the 2nd financial year preceding the year in which the loan was applied for
- In the above example, if the investor wants to take the loan in April 2013, the maximum loan that can be availed is 25% of the balance as on Mar 31, 2012
- The interest rate payable on loans taken against the PPF account is 2% higher than the prevailing interest rate on the PPF account. For example, if the prevailing interest rate of PPF account is 8%, then interest payable on loan taken on such account would be 10%
- The interest on a PPF loan is not paid with the principal amount, as is the case with typical loan EMIs
- Once the principal amount is fully repaid, the interest has to be repaid within 2 months
- In case the loan is not repaid within 36 months, interest at 6% more than the prevailing interest rate of the PPF account is charged
- A second loan can be obtained only after the closure of the first loan
PPF Limits for Age
Any person of any age can open a PPF account. Parents/Legal guardians can open PPF accounts for minors.
- However, one parent can only open one PPF account for one minor. In such a case, the PPF maximum contribution limit of Rs 1.5 lakh applies to the combined deposits in both accounts. For example, if you have contributed to Rs 70,000 to your own account, you can only contribute up to Rs 80,000 for an account opened for your minor son
- However, if you have a daughter as well, your spouse can open an account in her name. In such a case the Rs 1.5 lakh maximum deposit limit will apply to your spouse and daughter combined
PPF Applicability Limit
Only resident Indians can open PPF accounts. NRIs can continue to contribute to PPF accounts opened when they were resident Indians. However, they cannot open fresh PPF accounts or extend the PPF account after the initial maturity period of 15 years.