In this article, I will give you complete information about PPF(Public Provident Fund).
The Public Provident Fund(PPF) was introduced in 1968 in which people can invest money considering retirement corpus with saving taxes. It is a safe investment option that gives a guaranteed return.The Public Provident Fund is a long-term investment of 15 years. The principal amount and returns are not taxable under income tax. If someone opens and PPF account and deposited money, it is claimed under section 80C.
People can open an account in Post office and Nationalised banks such as the State bank of India, Bank of Maharashtra, Punjab National Bank, etc… People also open PPF account in the private bank such as ICICI Bank, Axis Bank, and HDFC Bank.
If Someone wants to open a PPF account, then he needs to submit KYC documents such as Identity proof, address proof, and signatures to the bank. Deposit a prescribed amount in the PPF account monthly and start earning interest.
The interest rates are different for each quarter and it is compounded annually. The interest rates are decided by the Finance Ministry and it is paid on the 31st of March every year. The interest is calculated on the lower balance between the close of the fifth day or the last day of every month.
PPF account has a tenure of 15 years which you can extend in the block of 5 years any number of times. The minimum investment amount per year for the PPF account is 500 Rs. and the maximum amount is 1.5 Lakh.
You can deposit an amount in a lump sum or on a monthly basis. You can make a maximum of 12 transactions in the financial year. You can open an account only by depositing 100 Rs. You have to deposit money at least once a financial year. You can deposit money in the PPF account in lots of ways such as by check, by cash, and by online fund transfers.
The nomination facility is also available in the Public provident fund account. You can open a PPF account in name of an individual only, you can’t open in Joint names.
Since this deposit is handled by the government, there is no risk for this investment.
Indian citizens are allowed to open a PPF account. HUF’s and NRI’s are not allowed to open a PPF account.
You can take the loan against the PPF account between the 3rd and 5th years. You can also take a loan after the 6th year if the first loan is paid successfully.
PPF account can be closed only upon completion of 15 years i.e. on maturity. The entire Principle amount and interest can be paid on the account holder's savings account.
If you want to withdraw some money before 15 years, then you can partially withdraw money after the completion of 6 years. Withdrawal can be made only once in the financial year.
If you want to withdraw partial money from the PPF account, you need to submit FORM C which contains a declaration section, office use section, and bank detail section. Fill in all the information correctly and submit it where you opened a PPF account i.e. bank or post office.
If two accounts in the same name can be opened by mistake then the second account is treated as irregular and not earn any interest.
The account on behalf of a minor can be opened either by a father or mother. Both parents cannot open a separate account for the same minor.
PPF accounts cannot be transferred from one name to another name.
In case of death of PPF account holders, the amount is credited to the nominee of that account even before the expiry of 15 years.
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