Public Provident Funds

Public Provident Fund (PPF) is a savings-cum-tax-saving instrument in India. It also serves as a retirement-planning tool for many of those who do not have any structured pension plan covering them.

The account can be opened in designated post offices, State Bank of India branches and branches of some nationalised banks. ICICI Bank was the first private sector bank which was authorized to open PPF accounts.

Who can open a Public Provident Funds account:

  • An individual :
    • in his own name,
    • on behalf of a minor of whom he is a guardian,
    • a Hindu Undivided Family.

Where to open a PPF account

  • at designated post offices throughout the country and
  • at designated branches of Public Sector Banks throughout the country.

Maturity period

  • The account matures for closure after 15 years.
  • Account can be continued with or without subscriptions after maturity for block periods
    of five years.

Nomination

  • Nomination facility is available under Public Provident Funds accounts.

Deposit limits

  • Minimum deposit required is Rs. 500 in a financial year.
  • Maximum deposit limit is Rs. 70,000 in a financial year.
  • Maximum number of deposits is twelve in a financial year.

Loans against Public Provident Fund Account

  • Loans from the amount at credit in PPF account can be taken after completion of one year from the end of the financial year of opening of the account and before completion of the 5th year. The amount of withdrawal cannot exceed 40% of the amount that stood to credit at the end of fourth year preceding the year of withdrawal or at the end of preceding year  whichever is lower.

Withdrawals from PPF account

Pre-mature withdrawals are allowed from the end of the 4th financial year from when the PPF commenced. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of the fourth financial year.

Transferability

  • Account can be transferred from one post office to another post office in India,
  • from a bank to another bank; and
  • from a bank to post office and vice-versa.

PPF Pass Book

Depositor is provided with a pass book with entries of the deposited amounts, interest
credited every year and other particulars duly stamped by the post Office.

Interest

  • Interest at the rate, notified by the Central Government from time to time, is calculated and credited to the accounts at the end of each financial year.
  • Present rate of interest is 8.80% p.a since: 01/04/2012.
  • Historical interest rates for PPF are as follows:
    • 01.12.2011 to 31.03.2012………………………… 8.6%
    • 01.03.2003 to 30.11.2011………………………… 8%
    • 01.03.2002 to 28.02.2003 ……………………….. 9%
    • 01.03.2001 to 28.02.2002 ………………………. 9.5%
    • 15.01.2000 to 28.02.2001……………………….. 11%
    • 01.04.1986 to 14.01.2000………………………… 12%

Income Tax relief for Public Provident Fund account holders

  • Income Tax rebate is available ‘on the deposits made’, under Section 88 of Income
    tax Act, as amended from time to time.
  • Interest credited every year is tax-free.

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