A-Z guide for Public Provident Fund(PPF)?

#LittleSavings

Please also read my previous post about 360 view on Sukanya Samruddhi Yojana

Let's know about the Public Provident Fund.

Who can open Public Provident Fund account?

Any individual who are Indian Residents and a minor account under the guardian of parents can open PPF account.

Whether NRI's can open a Public Provident Fund account?

No.

What if an individual opened a PPF account and moved to another country?

The account will be active but cannot made any deposits to PPF account.

What is the tenure of Public Provident Fund account?

15 years

Can extend in 5 year blocks after the tenure has completed.

Means one can extend to 5 years after 15 years completion and further 5 more years, if the existing 5 year block has also completed.

There is no limit how long to extend.

What is the age limit to open Public Provident Fund account?

No age limit to open PPF account. Anyone can open PPF account at any age.

How many PPF accounts are allowed for an individual?

Only one account is eligible to open PPF account.

And for minor account, one can only be a guardian.

Quick Video:

Is there any limit for PPF accounts in a family?

Unlike SSY, there is no limit for the number of accounts in a family.

But Joint or Multiple accounts are not allowed.

What is the min and max limits for the Public Provident Fund account?

The minimum amount is Rs. 500

And maximum amount is Rs. 1,50,000

What happens if I don't invest any amount in a Financial year?

Your account will treat as Default and need to pay a penalty of Rs. 50 for reactivate the account.

Shall I invest more than 1.5L in a financial year?

Yes, but it cannot claim any interest and tax.

If I opened two accounts, one for myself and one for my kid, shall I invest 1.5L in each account?

You can invest in both the accounts, but can claim tax for only 1.5L.

How many times I can deposit into PPF account?

You can only deposit for 12 times in a financial year.

Where can I open a Public Provident Fund account?

In any banks and post offices.

What are the forms to be filled for opening a Public Provident Fund account?

Form A to be filled for opening an account along with Form E for the nominee declaration.

Shall I open one account in post office and another in bank?

No at any point of time, you should open only one PPF account.

What happens if you open two PPF accounts?

There are possibilities of two PPF accounts, but the one account will not accrued any interest.

Shall I open PPF account online?

Yes. Now all the banks supporting PPF account online ensuring you have already an account with the bank.

How to check the balance and make a deposit for PPF account?

Through online you can check the balance and also transfer funds to the PPF account.

What is the charge for PPF account opening?

There is no charge for account opening.

You can deposit initial amount of min Rs. 500 while opening a Public Provident Fund account.

What is the interest rate for PPF account?

Previously it is 7.9%, but after Covid, the interest rate reduced and now it is 7.1% only.

Whether the interest rates for Public Provident Fund is same for the whole tenure?

No, the interest rates will decide by government and changes every quarter.

What is the best time to open Public Provident Fund account?

You should open the account between the March 31st and April 5th of a Financial Year.

Is it safe to invest in Public Provident Fund account?

Public Provident Fund is also safe tool like Sukanya Samrudhi Yojana(SSY) which invests in the Low risk funds like Government Bonds, CD's etc.,

How to get maximum benefit from Public Provident Fund account?
You can maximize your returns by investing the amount in Public Provident Fund(PPF) before 5th of every month as the interest was calculated after the 5th of the month to the end of the month, based on the lowest amount.

If you invest later the date of 5th of every month, the amount will not be taken for the interest calculation.

You can also invest in lumpsum before 5th April of every year after the financial year ends (31st Mar).

Shall I do partial withdrawals from Public Provident Fund account?

Yes. You can withdraw upto 50% after completing the 5 years of account opening.

How much amount I can get if I partially withdrawn after 5 years?

50% of amount can withdraw in single time based on the preceding year available balance.

How to withdraw the 50% of amount from PPF account?

You need to submit Form C to withdraw 50% of amount from PPF account.

Shall I take a loan based on the amount in PPF account?

Between the 3rd and 6th financial year of account opening, one can avail a loan based on the amount accumulated in Public Provident Fund account.

If you open a PPF account before 31st Mar, that is the your first financial year.

How much loan one can avail on PPF account?

You can avail only 25% or less of the amount in PPF account.

How to avail loan on PPF account?

By submitting the Form D to the bank or post office, one can avail loan on PPF account.

Banks are offering to take loan through online now.

What is the interest rate for the loan taken from PPF account?

The interest rate is 2% more than the interest rate of PPF account.

That means, the present interest rate is 7.1% for PPF. If you take loan from PPF, the interest rate of loan amount is 9.1%.

Shall I take another loan with existing PPF loan?

No. First, you need to clear the initial loan.

What is the max tenure to clear the loan?

36 months.

Shall I close the PPF account?

No premature closure for PPF within 5 years.

After 5 years, you can close the PPF account.

How to close the PPF account after 5 years?

One can show the medical certificates of spouse, children or own to withdraw the PPF amount after 5 years of account opening.

One can submit the College admission sheet of own or his/her child to withdraw the PPF amount.

What are the pre-closure charges for PPF account?

1% interest rate will be deducted if closing the PPF account after 5 years.

I didn't make any deposits for 3 years into PPF account, what is penalty to be paid for activating the account?

Penalty of Rs. 50 to be paid for each financial year. So the total penalty is Rs. 150.

Can I set standing Instructions to make my PPF account always active?

Yes. In banks, the Standing Instructions is available.

I forgot to withdraw the PPF money after 15 years, what happens to my account?

The PPF account will extend to 5 years with default instructions.

Default instructions - Cannot make any contributions to the PPF account but continue to earn interest.

What I need to do to extend my tenure of PPF account?

Submit the Form H to extend to 5 years and continue to contribute or you can also extend it in online for banks.

Shall I withdraw money after extending my PPF account to 5 years?

Yes. 60% of amount is withdrawable.

I already have a EPF account, am I eligible to open PPF account?

Yes, you can open both EPF and PPF.

Is it best to invest in PPF or SSY account?

PPF account is designed for retirement and SSY account is designed for children education or marriage.

Based on your needs, invest in corresponding investment.

What are the tax benefits for the PPF account?

You can avail 1.5 L in a Financial Year under 80C.

What are the taxes to be paid for investing or interest or withdrawals?

PPF is considered as a Small Savings Scheme and avail no taxes anywhere.

Tax exempted at all three stages (EEE).

No tax while investing amount.

No tax on the interest earned.

No tax while withdrawal after maturity.

If I invest PPF and SSY with 1.5 lakhs each, shall I claim tax individcually?

No, you can avail only 1.5 lakhs.

Please do post your questions if anything you need to know about public provident fund.