This Govt Saving-Cum-Investment Scheme Is Only For Resident Indians; Check Interest and Tax Benefits

Public Provident Fund (PPF) is a long-term saving-cum-investment option scheme run by the government for Indian residents. It was first offered to the public in the year 1968.

The National Savings Institute, under the Ministry of Finance looks after this voluntary scheme.

The government made some changes in 2019, hence it is now called as Public Provident Fund Scheme, 2019.

Public Provident Fund Account: Features

• Investment limits a minimum of Rs.500 subject to a maximum of Rs.1,50,000 per annum may be deposited.
• Original duration is 15 years. Thereafter, a subscriber can extend the account for one or more blocks of 5 years each.
• The rate of interest is determined by the government on a quarterly basis.
• Loans and withdrawals are permitted depending upon the age of the account and balances as on the specified dates.
• Nomination facility is available in the name of one or more persons. The shares of nominees may also be defined by the subscriber.
• The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber.
• Individuals in their own name as well as on behalf of a minor or a person of unsound mind can open the account.

Tax benefits in PPF account

Interest income is totally exempt from Income Tax. Income Tax benefits are available under Sec 88 of IT Act.

Account can be retained indefinitely without further deposit after maturity with the prevailing rate of interest. The amount in the PPF account is not subject to attachment under any order or decree of a court of law.

Loan facility in PPF

Loan facility is available from 3rd financial year upto 6th financial year.

Account matures on completion of fifteen complete financial years from the end of the year in which the account was opened.

Interest rate of PPF

At present the interest rate on PPF is 7.10% per annum. The interest is compounded annually.

The subscriber should not deposit more than Rs.1,50,000 per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in installments.

Interest is calculated on the minimum balance (in PPF Account) between 5th day and end of the month and is paid on March 31st every year.

Withdrawal from PPF account 

Any time after the expiry of five years from the end of the year in which the account was opened, the account holder may, avail withdrawal by applying in Form-2, from the balance to his credit, an amount not exceeding fifty per cent. 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;

-Provided that the amount of loan outstanding, if any, along with interest shall be paid by the account holder before availing the facility of withdrawal,

The facility of withdrawal may be availed only once in a year only from the accounts which have not become discontinued.

How to open PPF account?

A PPF account can be opened with either a Post Office or with any nationalised bank by visiting the branch or through online mode.

HUF and NRIs cannot open PPF accounts.

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