- 1 Benefits and process of investment in Public Provident Fund Account (PPF)
- 1.1 RATE OF INTEREST
- 1.2 ELIGIBILTY
- 1.3 INVESTMENT LIMITS
- 1.4 DURATION OF SCHEME
- 1.5 PPF Extension
- 1.6 LOANS FROM PPF
- 1.7 WITHDRAWALS FROM PPF
- 1.8 PREMATURE PAYMENT
- 1.9 TAX BENEFITS
- 1.10 NOMINATION
- 1.11 Payment on death of subscriber
- 1.12 TRANSFER OF ACCOUNT
- 1.13 Protection against attachment.
- 1.14 Form for PPF Subscription
- 1.15 Salient features including Tax Rebate.
- 1.16 Related Post
Benefits and process of investment in Public Provident Fund Account (PPF)
|Interest payable, Rates, Periodicity etc.||Minimum Amount for opening of account and maximum balance that can be retained|
|From 1.01.2018, interest rates are as follows:-|
|Minimum INR. 500/- Maximum INR. 1,50,000/- in a financial year.|
Deposits can be made in lump-sum or in 12 installments.
RATE OF INTEREST
The rate of interest is determined by Central Govt. on quarterly basis. At present it is 7.6% per annum with effect from 01.01.2018.
Interest is calculated for each calendar month on the minimum balance ( in PPF Account) between 5th day and end of the month and is paid on 31st March every year.
E.g Balance on 6th May is Rs 140000 and on 7th May , you deposit Rs 10000 the Balance will become Rs 150000. But Interest for the Month of May will be calculated on Rs 140000 ( Minimum Balance in that month)
Individuals in their own name as well as on behalf of a minor can open the account at Bank /Post office.
As per extant instructions, opening of PPF accounts in the name of Hindu Undivided Family is not permitted.
Non-Resident Indians (NRIs) are not eligible to open an account under the Public Provident Fund Scheme
Joint account cannot be opened.
A minimum of Rs.500.00 subject to a maximum of Rs.1,50,000 per annum may be deposited.
The amount can be deposited in multiples of Rs. 5 in lump sum or in a maximum of 12 installments per year.
A subscriber who fails to subscribe in any year according to the limits he may approach the accounts office for condonation of the default, on payment, for each year of default, a fee of Rs. 50 along with arrears subscription of Rs. 500 for each such year.
DURATION OF SCHEME
Original duration is 15 years.
Thereafter, on application by the subscriber, it can be extended for 1 or more blocks of 5 years each.
A subscriber may, on the expiry of 15 years from the end of the year in which the initial subscription was made but before the expiry of one year thereafter, exercise an option with the accounts office in Form H, or as near thereto as possible, that he would continue to subscribe for a further block period of 5 years
A subscriber may at his option (to be exercised before the expiry of the first year of every extended block period) avail of this facility for a further block of 5 years on expiry of 20 years or on expiry of 25 years and so on, from the end of the year in which the initial subscription was made.
In the event of a subscriber opting to subscribe for the aforesaid block period, he shall be eligible to make partial withdrawals not exceeding 1 every year by applying to the accounts office in Form C [Form C : PPF Withdrawal : Download /Print ], or as near thereto as possible, subject to the condition that the total of the withdrawals, during the 5 years block period, shall not exceed 60 per cent of the balance at his credit at the commencement of the said period.
LOANS FROM PPF
Loans and withdrawals are permitted depending upon the age of the account and balances as on the specified dates
- Any time after the expiry of 1 year from the end of the year in which the initial subscription was made but before the expiry of 5 years from the end of the year in which the initial subscription was made, may apply for loan consisting of a sum of whole rupees not exceeding 25% per cent of the amount that stood to his credit at the end of the second year immediately preceding the year in which the loan is applied for
- Apply in Form D [.Form D : PPF Loan Application : Download /Print ]
- subscriber shall not be entitled to get a fresh loan so long as an earlier loan has not been repaid in full together with interest thereon.
- where the subscriber is a minor, such loans shall be granted to his guardian only for the use of the minor.
Repayment of loan and interest.
The principal amount of a loan under this Scheme shall be repaid by the subscriber before the expiry of 36 months from the first day of the month following the month in which the loan is sanctioned.
The repayment may be made either in one lump sum or in two or more monthly instalments within the prescribed period of thirty-six months. The repayment will be credited to the subscriber’s account.
After the principal of the loan is fully repaid, the subscriber shall pay interest thereon in not more than two monthly instalments at the rate of two per cent per annum of the principal for the period commencing from the first day of the month following the month in which the loan is drawn up to the last day of the month in which the last instalment of the loan is repaid:
where the loan is not repaid or is repaid only in part within the prescribed period of 36 months, interest on the amount of loan outstanding shall be charged at 6% per annum instead of at two per cent per annum from the first day of the month following the month in which the loan was obtained to the last day of the month in which the loan is finally repaid.
The interest on the amount of loan outstanding and any portion of interest payable, but not paid, on any loan, the principal amount of which has already been repaid within the prescribed period of thirty-six months, may, on becoming due, be debited to the subscriber’s account.
WITHDRAWALS FROM PPF
- withdrawals is allowed only after the expiry of a period of 5 years from the end of the year in which he makes the initial subscription to the Fund
- Apply in Form C . Refer Form C : PPF Withdrawal : Download /Print
- only one withdrawal shall be permissible during any one year.
- Maximum Withdrawal from PPF : for withdrawing from the balance to his credit and amount not exceeding
- 50% of the amount that stood to his credit at the end of the fourth year immediately preceding the year of withdrawal or
- at the end of the preceding year, whichever is lower,
less the amount of loan, if any,and which remains unpaid:
- Subscriber shall be entitled to withdraw the entire balance standing to his credit in the Fund after the expiry of a period of 15 years from the end of the year in which he makes the initial subscription to the Fund.
- Note : an individual who, has made subscriptions to the Fund on behalf of a minor, of whom he is the guardian, shall be entitled to withdraw any amount from the Fund only for the use of the minor.
- Premature closure is not allowed before 15 years.
Premature payment is allowed only after the account or the account of the minor account holder of whom he/she is the guardian has completed 5 financial years, where:
a) The amount is required for the treatment of
- serious ailments or
- life threatening diseases of the Account holder, spouse or dependent children or parents,
on production of supporting documents from competent medical authority;
b) That the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India & abroad.
Premature closure under shall be subject to deduction of such amount which shall be equivalent to 1 %t less interest on the interest rates as applicable from time to time in the table payable on the deposits held in the account from the date of opening of the account till the date of such premature closure, calculated in accordance with the sample calculation as shown in the table :
Calculation showing the interest payable to depositor
Assumed Fresh Deposit
Rate of Interest
1% less on the applicable rate of interest
Income Tax benefits for Contribution made to PPF upto Rs 150000 per annum are available under Sec 80C of IT Act.
Interest income is totally exempt from Income Tax.
Nomination facility is available in the name of one or more persons.
Nomination facility is available at the time of opening and also after opening of account.
The shares of nominees may also be defined by the subscriber.
Payment on death of subscriber
1) If a subscriber dies and there is in force at the time of his death a nomination in favour of any person, all amounts standing to his credit in the Fund shall be payable to the nominee
2) Where there is no nomination in force at the time of the death of the subscriber, the amounts shall be payable to his legal heirs.
3) Where the nominee is a minor, the amounts shall be payable to
- any guardian of the property of the minor appointed by a competent court, or
- where no such guardian has been so appointed, to either parent of the minor, or where neither parent is alive, to any other guardian of the minor.
TRANSFER OF ACCOUNT
The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber.
The service is normally free of charges by Banks.
Protection against attachment.
The amount standing to the credit of any subscriber in the Fund shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by the subscriber.
I OPENED MY PPF ACCOUNT WHEN I WAS A RESIDENT INDIAN. NOW I AM A NON-RESIDENT INDIAN. CAN I CONTINUE MY PPF ACCOUNT IN Bank ? –
As per Ministry of Finance Notification number GSR1237(E) dated 3.10.17, PPF accounts of resident Indians who became NRIs during the currency of the maturity period , would be deemed closed from the date from which the account holder became an NRI. However, this rule has now been put in abeyance (as per Govt OM no. F/01/10/2016-NS dated 23.02.18) and NRIs can continue to hold PPF accounts as before.
Form for PPF Subscription
Make Application in Form A (Application for opening a Public Provident Fund Account under the Public Provident Fund Scheme, 1968 ) ,together with the amount of initial subscription which shall be minimum of Rs.500/ refer Form A : for Opening PPF Account : Download /Print
Subscriber shall deposit his subscription with the Accounts Office with challan in Form B, Refer Form B : PPF Deposit Challan : Download /Print
Every subscription shall be made in cash or crossed cheque or draft or pay order in favour of the Accounts Office at the place at which that office is situated
Where a deposit is made by means of an outstation cheque or instrument, collection charges at the prescribed rate shall be payable along with the deposit and the date of realisation of the amount shall be the date of deposit
Salient features including Tax Rebate.
- Maturity value can be retained without extension and without further deposits also.