Different Modes of Payment for Public Provident Fund

Public Provident Fund or PPF is a low-risk fixed return investment scheme one can avail through India Post Office as well as leading public and private sector banks in India. During the initial days of the PPF account, it used to be a paper-based process, including opening an account and PPF withdrawal at maturity. Periodic investment in the scheme would also only happen through cash or cheque modes. However, investors can now use different online modes to make payments into their PPF accounts.

PPF Payment Methods

At present, one can make online PPF payments only if you have an account in a public or private sector bank. The facility is not available to those who have opened their PPF account with India Post Office. ECS Mandates, NEFT, payment through the bank’s mobile application and Standing Instructions are the various methods you can use to make PPF payments. Many leading banks such as SBI, HDFC Bank, Axis Bank, ICICI Bank and Bank of Baroda support PPF online payments.

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A. PPF Payment Through ECS Mandate

• Electronic Clearing System (ECS) mandate is a process by which a fixed amount of money can be transferred periodically from one bank account to another. This system also works for a PPF account
• To set up an ECS mandate, you will have to visit your bank to sign a document and submit it at your transaction originating bank branch
• The system is automatic and the money gets deducted from the originating account (savings/current account) and is deposited in your PPF account automatically
• The ECS system works for transfers between accounts of the same bank (intra-bank transfer) as well as between two different banks (an interbank transfer)
• ECS has now been consolidated as part of the NACH – National Automated Clearing House system

B. PPF Payment using NEFT

• NEFT or National Electronic Funds Transfer is an RBI-managed method for the transfer of funds between bank accounts maintained with banks in India
• NEFT allows you to make online transfers from your savings/current bank account to your PPF account from the convenience of your home or office
• The two prerequisites for completing a PPF online payment using NEFT include the availability of the PPF account number and the IFSC of the bank branch with which the PPF account is held. Both details are available in the PPF account passbook
• Both bank branches – originating branch and receiving branch need to be NEFT-enabled for this online transfer method to work
• NEFT transfers from savings/current account to PPF account can be intra-bank or interbank transfers
• At present RTGS, IMPS, and UPI transfers are not available in the case of PPF online transfer methods

C. PPF Payment using Standing Instruction

• Standing instruction (SI) is defined as an instruction by a bank account holder to the bank regarding debit and transfer of funds from one account to another
• A standing instruction can be registered for the transfer of funds from your savings/current account to the PPF account held with the same or different bank
• A standing instruction is a flexible online PPF deposit method as you can schedule it on a monthly basis for a period of 1 month to 12 months as well as on a daily basis for a period of 5 days to 30 days. (Applicable SI tenure may vary by bank)
• In many ways, SI is similar to a third party transfer, apart from the fact that in the case of a SI, the same transaction can be automatically repeated multiple times

D. PPF Payment Using Mobile Banking Application 

You can also make your PPF payments online using the mobile banking application of your bank. However, you will be able to make these PPF payments only if your PPF account is linked to your savings account with the concerned bank.

E. PPF Offline Payments by Cash and Cheque

In case you have opened your PPF account with a post office, you can deposit additional funds through offline methods only – cash and cheques. These offline payment methods are still accepted by PPF accounts opened by most banks too.

• To deposit money into your PPF account by cash, you have to fill out a pay-in-slip with details such as account number, PPF account branch, deposit amount, etc
• The deposit money along with the pay-in-slip needs to be submitted to the cashier. The amount gets credited to your PPF account immediately
• In case you are paying through a cheque, make sure it is made out in the correct name as per the PPF account
• You must ensure that you write the name of the PPF account holder (your name for self deposits), PPF account number, and your mobile number on the reverse of the cheque so that the bank can reach you if an issue arises
• You could deposit the cheque in a dropbox of the bank with which you have a PPF account
• Deposits made by cheque are subject to clearing norms of the bank and availability of funds in your account

PPF Payment Rules

There are a few key online PPF payment rules that you need to keep in mind if you are planning to make online payments into your PPF account. Some of these are:

• The minimum payment required for keeping your PPF account in good standing is Rs. 500 annually
• Maximum payment allowed into a PPF account is limited to Rs. 1.5 lakhs annually as a lump sum or instalments
• The maximum number of instalments that you can make into your PPF account in a year is limited to 12

The above limits and rules are applicable to all online and offline payments made into a PPF account.

Missed PPF Payments

It is not unusual to miss a PPF payment once in a while. Common causes of missed PPF payments include the following :

• In the case of online PPF payments, insufficient balance in the originating account is perhaps the most common cause. In such cases, you will be charged a penalty such as that applicable to a bounced ECS payment
• In the case of offline payments too, if you are depositing using a cheque, insufficient balance and signature mismatch are the common causes for a missed payment. In such cases too, the cheque-issuing bank is liable to charge a fine in the form of cheque bounce charges

If you miss the PPF account minimum annual deposit requirement of Rs. 500 altogether it will lead to account deactivation. In such cases, you can reactivate the account by paying a penalty of Rs. 50 plus Rs. 500 for each year you have missed the minimum PPF payment amount requirement.

FAQs

Q1. What are the minimum and maximum amounts that I can pay each year on my PPF account?

The minimum amount that you need to deposit each year on your PPF account in a financial year is Rs. 500 and the maximum is Rs. 1.50 lakh.

Q2. Do I need to make the PPF account deposits in lump-sum or in instalments?

You can make the deposits in your PPF account both in lump-sum or in instalments as per your convenience. The amount can be deposited in any number of instalments in a financial year in multiples of Rs. 50, up to a maximum of Rs. 1.50 lakh.

Q3. Do both online and offline deposits qualify for rebates in income tax?

Yes, both online and offline deposits up to a maximum of Rs. 1.50 lakh qualify for a deduction under section 80C of the Income Tax Act.