Public Provident Fund (PPF) India, Interest, Benefit, Withdrawals, Deposit Etc

Public Provident Fund (PPF)

Public Provident Fund is simply defined as Exempt, Exempt and Exempt (EEE) as it offers exceptional tax benefits to its subscribers under Section 80C. This popular long-term investment scheme was launched by the Government of India offering financial security with reasonable interest rate and returns that are fully exempt from tax.

Under the PPF scheme, the subscriber is assured a guaranteed return every year on the amount deposited by them. Earlier, the interest rate was revised every year. However, now, to keep in line with the market, it is set every quarter offering a chance to yield high returns.

Tip: If you are planning to open a PPF account, ensure to deposit before 5th of every month. The catch here is that the interest on PPF deposits is calculated between the fifth and at the end of the month. Therefore, if you deposit the amount before 5th, you will get the maximum amount of interest on your investment.

How to Open a PPF Account?

• Aadhaar Card
• PAN Card
• Driving License
• Passport
• Voter ID

• Aadhaar Card
• Telephone Bill
• Ration Card
• Electricity Bill

Important Note: All the documents have to be self-attested, and originals must be taken along while opening the account.

Eligibility Criteria to Open a PPF Account

• Only an Indian citizen can open a PPF account.
• Every person is allowed to open only one PPF account in their name.
• PPF account for minors can be opened by submitting legal age proof.
• Individuals who had opened a PPF account while they were resident of India can continue the account for 15 years with no option for extension.
• Hindu United Families cannot open PPF account after 13th May 2005. However, all PPF account before this date can be successfully operated until the maturity period of 15 years (no extensions).

What is the interest rate in a PPF?

The interest rate set by the Central Government is mentioned below:

List of Banks where You can Open a PPF Account

PPF is a government savings scheme offered by banks and post offices. Some banks do not offer PPF accounts. You can find a list of banks which offer PPF accounts below.

A) Private Sector Banks

• Axis Bank
• ICICI Bank
• HDFC Bank

B) Public Sector Banks

• State Bank of India
• PNB
• Canara Bank
• Indian Bank
• UCO Bank
• Bank of India
• Bank of Baroda
• Allahabad Bank
• Central Bank of India
• Union Bank of India
• Andhra Bank
• Corporation Bank
• Dena Bank
• Indian Overseas Bank
• Syndicate Bank
• UCO Bank
• United Bank of India
• Vijaya Bank
• IDBI Bank

How to Revive an Inactive PPF Account?

Revival of inactive account means reactivation. If your PPF account has been deactivated then in that case you can revive you PPF account by submitting a written application where the account is opened. Alongwith application, you are required to pay a penalty of Rs. 50/- for each year of default, Rs. 500/- for each year as arrear payment.

What is Attachment Immunity?

The amount available in PPF account of any person is not liable for attachment by any court in India. In case you are facing any non compliance on financial commitment like failure of repayment of loan etc, in that case the court may order to freeze your assets but balance available in PPF account cannot be attached by the court. This was a positive move taken by the government to encourage investment in PPF account.

Benefits of a PPF Account

Investments are usually made with the purpose to grow capital on finance or to acquire tax benefits. Mentioned below are some of the benefits a PPF scheme offers:

PPF account is a real lifesaver when it comes to small investments. It has a minimum limit of Rs 100 per transaction and allows up to 12 transactions per year. You can also add a lump sum amount at any time in a financial year, provided it is in the limits of your account. Also, it gives you a reasonable rate of interest of 8% compounded annually. Also, it gives you a reasonable rate of interest. For the FY 2019-20 the interest rate for Q1 i.e. April to June is 8% and for Q2 & Q3 i.e.(July to December) the interest rate is 7.9%.

With a PPF account you get the flexibility of investment. You can invest with as little as Rs 500 to up to Rs 1,50,000 in a year. Not only in investment, but it also allows you flexibility on maturity. Once the account has matured after 15 years, you can simply withdraw the amount, or you can extend it for a further five years.

PPF account allows you to take a loan after two years. You can withdraw up to 25% of the previous year’s balance from 3rd year onwards. A secure credit is available from 3rd year to 6th year. Once the loan is taken, it can be repaid within 24 months, and the rate of interest is 2% more than the PPF rate of interest persisting then.

The best thing about earnings from the PPF account is that it is completely tax-free. All the deposits you make in your PPF account is eligible for tax deductions under Section 80C. So, you can save up to Rs 1,50,000 per year. Not only the interest that is earned yearly but also the total amount on maturity is completely tax-free. So, it’s an overall win-win game.

If you are looking for risk-free, government-backed investment plans, PPF is your answer. The money you invest is completely secure, and it also fetches you a reasonable rate of interest compounded annually. It has a facility of partial withdrawals and loans. It is one of the most recommended options and trusted by people for many years.