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FAQs on Public Provident Fund (PPF)

What is PPF

FAQs on Public Provident Fund (PPF)

Many people have various doubts and questions regarding PPF account before going to open it.

In this article, I have tried my best to clarify the most common frequently asked question regarding PPF account. Below are the some of the frequently asked questions on Public Provident Fund (PPF).

What is a PPF account?

PPF (Public Provident Fund) account is a popular and one of the best long-term investment tool for salaried as well as the self-employed class of individuals in India. It was introduced by the Ministry of Finance in the year 1968. It offers risk-free and guaranteed returns with attractive interest rate and interest earned on deposits are exempted from Tax. The deposits made in PPF account can be claimed as tax deductions. This makes the PPF account one of the most attractive tax-efficient instruments.

Who can open a PPF account?

PPF account can be opened by any Indian Residing Individuals (18 years or above) and individuals on behalf of minors (below the age of 18 years).

Who can not open a PPF account?

NRIs cannot open a PPF account in India. PPF account holders who obtain NRI status after opening a PPF account can continue to maintain their accounts until it matures. Hindu Undivided Family (HUF) is also not eligible to open a PPF account.

How to open a PPF account?

You can open it at any nationalized, authorized bank and select post offices across India. PPF account can also be opened at specific private banks as well. PPF account in most of the banks can now be operated online. These accounts can be opened by simply filling a form, submitting the required documents and depositing the minimum pay-in at authorized branches.

Can I open a PPF account online?

No! You cannot open a PPF account online but yes you can easily operate your PPF account online. You have to fill up an account opening hard copy form and submit it along with the necessary documents to the bank.

What are the documents required for opening a PPF account?

Following documents are usually required for opening a PPF account:
  • Account opening form
  • Photograph (Passport size)
  • Identity proof 
  • Residence proof
When does a PPF account mature?

A PPF account gets matured on completion of 15 years from the end of the year in which the account was opened.

What is the minimum and maximum amount that can be deposited?

An individual can open a PPF account with a Rs. 100 but has to compulsorily deposit the minimum of Rs. 500 in a financial year and maximum of Rs. 1.5 Lacs.

How many deposits are permitted in a year?

You can make it in a single lump sum or in 12 installments during a financial year as per your conviniency.

What is the rate of interest for PPF account?

It doesn't remain same. The government of India decides the rate of interest for PPF account every quarter. The current rate of interest effective from 1 July 2017 on PPF account is fixed at 7.8% per annum. Interest earned on amounts held in PPF accounts is tax-free.

Can I maintain more than one PPF account?

No, you can't! You are allowed to maintain only one PPF account in your name. You can also open and maintain a PPF account in the name of a minor child.

Is nomination facility available for PPF account?

Yes, nomination facility is available for PPF account. You have to fill a nomination form at the time of opening a PPF account to avoid difficulties for the nominee later on.

What are the tax benefits from investment in PPF account?

The investments in PPF account up to Rs. 1.5 Lacs qualifys for the deduction under Section 80C of the Income Tax Act. The entire maturity entire amount including the interest is non-taxable (100% Tax Free).

Can a PPF account be transferred?

Yes! a PPF account can be transferred from one authorized bank or post office to another. The transferred PPF account will be considered as a continuing PPF account.

Can I transfer my PPF account to another person?

No!  PPF account is non-transferable from one person to another even the nominee cannot continue the account of a deceased subscriber in his/her own name.

Is partial withdrawal from PPF account allowed?

Yes! Partial withdrawals can be made from 7th year onward subject to certain conditions. Only one partial withdrawal is allowed every financial year.

Can I avail loan facility against my PPF account?

Yes! Loan facility can be availed against a PPF account, subject to certain terms and conditions. The loan can be taken only between 3rd to 6th financial years.

Is premature closure of PPF account allowed?

Yes, premature closure of PPF account would be allowed under certain circumstances such as serious ailment and higher education of children provided the account has completed five years. This shall be allowed with a penalty of 1% reduction in interest on the whole deposit.

How can a discontinued PPF account be revived?

To revive a discontinued PPF account, you need to pay the minimum deposit of Rs. 500 with default fee of Rs. 50 for each defaulted year.

Can I continue my PPF account after maturity?

Yes! The PPF account holder can continue his/her account after maturity. The tenure can be extended for one or more blocks of 5 years each on written request within 1 year from the date of maturity. There can be two types of extention:
  • Extention without contribution: The balance in the account will continue to earn interest at the prevailing rates till the account is closed. Also, in this case, any amount can be withdrawn without any restrictions once every financial year.
  • Extention with contribution: The account holder can make deposits as earlier. In this case, withdrawal is restricted to a maximum of 60% of the balance at the beginning of each extended period is allowed.
What will happen in the event of the death of the PPF account holder?

In the event of the death of the PPF account holder, the balance amount in the PPF account will be paid even before the completion of 15 years, to the nominee or legal heir of the deceased person. The nominee or a legal heir is not allowed to continue the PPF account by making fresh subscriptions to it.

Why should I invest in PPF account?

PPF account is the safest saving instrument available as it is backed by government of India. The amount invested and the interest earned has a sovereign guarantee and returns are tax free. The investments in PPF account up to Rs. 1.5 Lacs qualify for deduction under Section 80C of the income tax act. Now you don’t have to stand in queues for PPF investments as in most of the banks you can now operate your PPF account online.

Hope this FAQs on PPF account is helpful enough to clarify your doubts and understanding.

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