Public Provident Fund

Salient Features

  • The rate of interest is 8.80% p.a. compounded annually.
  • The minimum deposit is 500/- p.a
  • The maximum is Rs. 1,00,000/- p.a
  • Interest is totally tax free.
  • Tax saving instrument under section 80C.
  • Loan facility available from third year.
  • The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
  • The Scheme is for 15 years.
  • One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
  • The deposit can be in lump sum or in convenient installments, not more than 12 installments in a year or two installments in a month, subject to total deposit of Rs.1,00,000/-.
  • It is not necessary to make a deposit in every month of the year.
  • The amount of deposit can be varied to suit the convenience of the account holders.
  • The account in which deposits are not made for any reason is treated as discontinued, account and such an account cannot be closed before maturity.
  • The discontinued account can be activated by payment of the minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
  • The account can be opened by an individual or a minor through the guardian.
  • Joint account is not permissible.
  • A Power of Attorney holder can neither open nor operate a PPF account.
  • The grand father/mother cannot open a PPF on behalf of his/her minor grand son/daughter.
  • The deposits shall be in multiples of Rs.5/- subject to minimum of Rs.500/-.
  • The deposit in a minor account is clubbed with the deposit of the account of the guardian for the limit of Rs. 1,00,000/-.
  • No age is prescribed for opening a PPF account.
  • Interest is not contractual but the rate is notified by the Ministry of Finance, Govt. of India, at the end of each year.
  • The facility of first withdrawal in the 7th year of the account subject, to a limit of 50% of the amount at credit preceding three year balance.
  • Thereafter one withdrawal in every year is permissible.
  • Premature closure of a PPF Account is not permissible except in case of death.
  • Nominee/legal heir of PPF Account holder on death of the account holder cannot continue the account.
  • The account has to be closed in such case.
  • The account holder has an option to extend the PPF account for any period in a block of 5 years at each time.
  • The account holder can retain the account after maturity for any period without making any further deposits.
  • The balance in the account will continue to earn interest at normal rate as admissible till the account is closed.
  • One withdrawal in each financial year is also admissible in such account.
  • A PPF account can be opened either in a Post Office or in a Nationalsed Banks.
  • The Account is transferable from one Post Office to another and from Post Office to Bank or from a Bank to a Post office.
  • Account is transferable from one Bank to another bank as well as within the bank to any branch.
  • Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
  • The interest on deposits is totally tax free.
  • Deposits are exempt from wealth tax.
  • The balance amount in the PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
  • Nomination facility is available.
  • The Best option for long term investment.
  • Loans can be taken from PPF account at the rate of 2.00% per year.