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Public Provident Fund (PPF)

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The Public Provident Fund is savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits.We at Myfirstcrore would recommend an investment in PPF (Public Provident Fund) as one of the means to build long-term corpus .PPF investments are eligible for deduction under Section 80C of the Income-Tax Act. Here's the lowdown on guidelines and process on opening a PPF account with a bank or post office.


Public Provident Fund Features:
• The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
• The Scheme is for 15 years.
• Public Provident Fund Interest Rate is fixed by the Ministry of Finance, Government of India, annually, and at present is 8.7% compounded annually (as of April 1st 2014 – March 31st 2015).
• The minimum deposit is 500/- and maximum is Rs. 1,50,000/- in a financial year.
• 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.1,50,000/- per FY.
• It is not mandatory 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 reasons is treated as discontinued account and such account can not be closed before maturity.
• The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
• 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 CPF/PF account can also open a PPF account.
• A Power of attorney holder can neither open or operate a PPF account.
• The grand father/mother cannot open a PPF account on behalf of their minor grand son/daughter.
• The deposits shall be in multiple of Rs.100/- subject to minimum amount 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.1,50,000/-.
• No age is prescribed for opening a PPF account.
• According to Public Provident Fund Scheme 1968, the facility of loan against the PPF deposits is available from 4th to 6th year of deposit to the extent of 25 % of the amount deposited as at the end of the last financial year. The loan is repayable in 36 months. There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period. However, pre-mature withdrawals can be made from the end of the sixth financial year from when the commenced. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.
• Public Provident Fund Withdrawal or Pre-mature 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 can not continue the account, but account has to be closed.
• The account holder has an option to extend the PPF account for any period in a block of 5 years on 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 on PPF account till the account is closed.
• One withdrawal in each financial year is also admissible in such account held beyond 15 years subject to a ceiling of 60% of the balance at the end of the 15 year term.
• The PPF scheme is operated through Post Office and Nationalized banks through its authorized branches as per GOI notification.{ Presently Bank of India is having 275+1250(new approved on 1.8.2014) branches }
• Account is transferable from one Post office to another and from Post office to Bank and from Bank to 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.
• Deposits are exempt from wealth tax.
• The balance amount in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability
• More than one person nomination facility available.
• Best for long term investment.
• Bank of India is one of the best Bank where deposits are accepted intersol and since it provides better flexibility like standing instructions through net Banking.
• The forms are available on Bank’s website under Download( please see it on the bottom of your web page)


Documents Required for PPF Account:
Documents for the PPF account are similar to the any other account in banks.
• A recent passport size photograph.
• Identity Proof copy with original to verify( Even PAN Card may be accepted as all tax payers are having it)
• Address Proof copy with original to verify
• Account opening form for PPF( available on Bank’s website)
• Paying in slip for PPF a/c ( available on Bank’s website)
• Nomination form for PPF ( available on Bank’s website)
• Account number of the saving account in respective bank( if you are having you’re a/c with the Bank)


Online investments:
With almost every investment option, be it stocks, mutual funds, fixed deposits or bonds, available at the click of the mouse, can PPF investments be made online too? Well, you cannot if you have an account with the post-office.

But some banks permit online transfers. For example, if you have your PPF account with SBI and your salary/savings account with ICICI Bank, you can log into net banking and add the SBI PPF account as a payee/beneficiary for transfer from your ICICI account. Similarly, money from your Citibank savings account can be transferred to your State Bank of Mysore PPF account.

Moreover, if you have a savings account and the PPF account with the same bank, these two can be linked. In this case, you need not add the PPF account as a third-party beneficiary. You can directly transfer money. Also, you can view the credits to the PPF account online just like how you see your bank statements.