PPF – Public Provident Fund – Popular Tax Saving Scheme

A number of money saving instruments has been floated in the market, which people may get confused as to what instrument they should buy. The safest among them are the government floated schemed instrument. One of them is Public Provident Fund. This is not only a savings instrument but they also give the opportunity to save tax as one can deduction under section 80 C. There are various question related to this which are answered in a systematic way below:

Who can open PPF account?

The subscription is open to every individual who is a resident in India. So whether the individual is a salaried personality or a self employed person, irrespective of his working status he can open an account. In case an individual subsequently becomes an NRI after opening a PPF account he is still eligible to maintain the account till maturity. NRI’s can also now open PPF account with certain limitation put down by the government.

Where to open PPF account? 

Since PPF is a government-run scheme the money is safe and the account can be opened at selected post offices or any branches of State Bank of India located in India or few nationalized banks across India as permitted by the government with the relevant documents mentioned in the form which is available at SBI banks websites easily.

Subscription of PPF 

As of now, the limit of deduction u/s 80 has also increased up to Rs. 1,50,000. You can get deduction up to Rs.1,50,000 also if you invested the amount in a year. Every saving scheme has a minimum investment limit which is Rs 500 in this scheme and the one could go on investing subject to a limit a Rs. 1,50,000. The amount can be paid in one time or through installments as per the convenience of the investor but the maximum installment cannot exceed 12.

  • From F.Y. 2014-15 Onwards – Deduction PPF = 1,50,000
  • F.Y.2013-14 – Deduction PPF = 1,00,000

Check good article on PPF by NDTV

PPF Interest

The rate of interest at which the scheme is currently running is 8.7%. So now gets more interest on his or her investment compared to earlier investments. Go to PPF calculator created by personalfn.com to know the investment return for the years.

Nomination of PPF

Like other investment scheme there is a scope of nomination in case the PPF account holder expires. The amount accumulated in his account till the date of account holders expiry is given to the nominee. But there is no nomination facility available in case of account is opened on for a minor. Legal inheritor of the account holder is also eligible to the amount standing to the credit of the account holder but only in case there is no nominee.

PPF Maturity

The maturity period in this scheme is 15 years so this is a type of long term investment you would make. The facility of pre-mature withdrawal is available here but with certain limits such as the one cannot withdraw any money until the expiry of 6 years subject to a ceiling limit which is lower of the two given below:

  • 50% of the amount standing to his/her credit at the end of the 4th year or,
  •  50% of the amount standing to his/her credit available in the year immediately preceding the 4th year.

One can also continue the investment for a close to 5 years as may be prescribed by the authority.

PPF Loan

There is also a scope of getting loan on the basis of this scheme but the loan can only be taken after a lock in period of 3 years from the date of opening this account. The quantum of loan is 25% of the amount standing to his/her credit at the end of the 2 year. The rate of interest charged on such loan should be 2 %( earlier 1% which would continue for loans already taken before revision of rate) with a maximum installment of 36.

Download PPF ACT

Download PPF Rules

This is a good tax plus saving investment scheme where you can get good return. So choose wisely as it is a long term investment.

2 Comments

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  1. BHARAT KUMAR BANKA

    I am running PPF a/c since 19 yrs. It earns good Intt. I want to continue it but shortage of fund.
    Can I draw 1.5 lac each year and deposit 1.5 lac in the same PPF account.
    1. Will I get tax benefit from my PPF deposit?
    2. Will my PPF account will not be forcefully closed by my bank SBI? I don’t need money invested and don’t need to close it.
    Kindly help me to decide. If this is right, okay, otherwise I will decide something else.
    Bharat Banka

  2. HOW CAN NRI INVEST IN PPF WITH LIMTATION LAID DOWN BT GOVERNMENT ?WHAT ARE THE limitations ?

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