PUBLIC PROVIDENT FUND

Salient Features

• The rate of interest is 8.60% 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 lumpsum 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.


• Those who are contributing to GPF Fund or EDF account can also open a PPF account.


• 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.