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Public Provident Fund (PPF) : All About PPF Investment Scheme In India

Today most of us like to keep our investments safe rather than investing the same in markets. For that we always look for an alternatives where our money remain safe and offers us good returns. Public provident fund (PPF), is one of the investment scheme which offers good returns without any income tax implications. Which means returns from PPF investment are fully exempted from tax in India.

It is one of the most popular investment scheme offered by central government which works as an alternative of Employee Provident Fund (EPF) for people who are either self employed or works in an unorganized sector. So people can invest in this scheme for long term to build there retirement corpus.

Some of the highlighting features of PPF investment scheme are:-

  • Safe investment – Statutory scheme of the Central Government of India.
  • Deductions on income – Benefit available u/s 88 of the I.T. Act.
  • Tax free interest – Interest totally exempt from Income Tax.

Now lets have a look at a guide which will answer all your PPF related queries:-

Where To Open A Public Provident Fund (PPF) Account?

You can open a PPF account either at :-

  • Sate Bank Of India (SBI) – Any branch of State bank of India (SBI), or its subsidiary banks like State bank of Patiala or Indore etc..
  • Nationalized Banks – Some selected branches of nationalized banks also opens PPF account.
  • Private Bank like ICICI bank (ALSO READ : How To Open Online PPF Account With ICICI Bank?)
  • Any head post office, selected grade sub-post offices, or a General Post Office (GPO).

Note : Banks like SBI & ICICI offers some additional facilities like online opening of PPF account and online submission of subsequent deposits to your PPF account. Whereas post office do not offer online facility to there customers.

ALSO READ : How To Transfer Your PPF Account From Post Office To Bank?

Eligibility To Open A PPF Account?

Individual : Any Indian individual can open a Public Provident Fund (PPF) account no matter that person is a salaried employee or non-salaried. Even if you are a part of a General Provident Fund (GPF) or Employees Provident Fund (EPF) scheme, you can subscribe to the PPF. One can also open a PPF account on behalf of a minor or his/her spouse but at any point of time an individual is allowed to maintain only one PPF account.

Minor : One can also open a PPF account in the name of a minor through guardian. Here guardian can either be father or mother of the children, if guardian is not there than a person appointed by the court. In this case no other than father or mother can act as guardian for the minor. However the PPF account opened in the name of minor will be child’s account and he/ she can continue that account after attaining majority i.e 18 years of age.

Hindu Undivided Family (HUF) : HUF’s are not allowed to open a fresh PPF account. Existing PPF accounts of HUF’s will not be renewed after expiry.

Is Non Resident Indians (NRIs) Allowed To Open A PPF Account?

NRI’s (Non-Resident Indian) are not allowed to open new PPF accounts. If you were a resident at the time of opening your PPF account but subsequently became a NRI, you will be allowed to retain your account until maturity, after which it has to be mandatorily closed. The 5 year extension offer is not available to NRI’s. An NRI can use funds in the NRE account or the NRO account to make PPF investment. The investment into PPF would be on Non Repatriable basis only.

Is Joint PPF Account Allowed?

PPF is an individual account and joint accounts are not possible. However you can have one or more nominees for the funds in your account.

Is PPF Account Transferable?

PPF account are transferable among any nationalized bank and Post offices across India. A PPF account cannot be transferred from one person to another.

How To Open A PPF Account?

To open a PPF account you need to fill up an account opening form i.e ‘Form A’, that you can either get from the bank branch or download from the bank website. Submit copy of government issued identity and address proof like Passport, Pan Card, Driving License, Voted ID or Ration Card with 2 passport size photographs. Get your papers verified from the bank officials with the originals and choose a nominee of your account and a witness signature to complete the account opening formalities. The minimum initial deposit is Rs.100 to open account.

What Is The Minimum Investment Amount Required To Open A PPF Account?

The minimum amount of investment which is mandatory to be deposited in the PPF account is Rs 500 p.a (Additional PPF investment can be in multiples of Rs 5) and maximum is Rs 100,000. Amount can be deposited either in lump sum or in convenient installments which cannot be more than 12 installments in a year or two installments in a month. Amounts can be deposited either in cash, cheque or via demand draft.

What Is The Maturity Period Of A PPF Scheme?

The duration of a PPF account maturity is 15 years which can be extended for more blocks of 5 years. But the contribution to be made is for 16 years instead of 15, as calculation of 15 year period starts from the financial year following the date on which the account is opened. Therefore a PPF account matures on the first day of the 17th year. So the amount invested during this tenure cannot be withdrawn before completion of 15 years (except for certain cases).

What Is The Current Rate Of Interest On A PPF Account?

The current rate of interest on a PPF account is 8.8% per annum (w.e.f Apr 2012), compounded annually. The interest for the month is calculated on the minimum available balance from 5th to the last date of the month. The interest on PPF account is paid at the end of each financial year.

ALSO READ : How Public Provident Fund (PPF) Account Interest Is Calculated? – With Examples

What Are The Options On Payment Default in PPF Account?

If the PPF account holder fails to deposit the minimum Rs 500 in a given financial year, the account is considered as discontinued but the interest will continue to accrue and be paid at the end of the term. Loans and withdrawals are not allowed. This account can be revived on payment of a fee of Rs 100 for each year of default, along with the arrears of subscription of Rs 500 for each such year.

Is Premature Closure/Encashment Allowed In A PPF Account?

Premature closure or encashment of a PPF Account is not allowed except in the case of death of the account holder.

PPF Investment

Is Loan Facility Available On A PPF Account?

Yes, loan facility is available on a PPF account, you can apply for PPF loan by submitting Form D. But this facility is available in the third financial year from the financial year in which your PPF account opened (excluding the year of deposit). The allowed loan limit is 25% of the total amount deposited in the PPF account at the end of second year immediately preceding the year in which loan is applied for.

You can repay the amount of loan either in lump sum or in convenient installments. Interest on loan is charged at a rate of 1% if it is repaid within 3 years else the interest at the rate of 6% is charged on the outstanding loan balance.

You can apply for another loan before the end of 6th financial year only if the first loan amount is fully repaid.

When One Can Withdraw From His/Her PPF Account?

Although the entire balance can be withdrawn only on maturity i.e.after 15 years but from 7th year onwards one withdrawal per year is allowed. This withdrawal is conditional as this withdrawal can be made only once in a financial year and the amount of withdrawal should not exceed the limit of 50% of the balance at the end of the immediately preceding year or 50% of the balance at the end of the 4th immediately preceding year (whichever is lower) less the amount of loan, if any which remains to be repaid. Account holder can use Form C for the withdrawal from his/ her PPF account.

The account extended beyond 15 years; partial withdrawal allowed up to 60% of the balance to the credit at the commencement of the extended period.

What Are The Tax Benefits Available To A PPF Account Holder?

Annual contribution in PPF account qualify for tax rebate under Income tax act. The entire maturity amount including the interest is non-taxable. Not only is the interest earned tax free, PPF deposits are exempt from wealth tax too.

What Is The Difference Between National Savings Certificate (NSC) & Public Provident Fund (PPF)?

National Saving Certificate (NSC)

Public Provident Fund (PPF)

Medium Term Investment Option Long Term Investment Option
Maturity Period : 6 years Maturity Period : 15 years
Minimum Investment is Rs 100Maximum Investment : No Limit Minimum Investment is Rs 500 (annual)Maximum Investment limit is Rs 100,000
8.4% interest paid, compounded half yearly 8.6% interest paid, compounded annually
Interest Is Fully Taxable Interest Is Fully Tax Free
Tax benefit: Maximum limit is Rs 100,000 Tax benefit : Maximum limit is Rs 100,000
Can be used as a security for mortgage and other purposes Cannot be used for such purposes

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About the Author: Praveen Unnikrishnan


  1. is account of ppf. in state bank of patila have any difference with account of ppf. in state bank of india

  2. I have opened a PPF account recently. Can my wife open one in her name and I deposit money into it. She is a house wife. Do not have any income.

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