Anyone can open a PPF Account either through a post office or through a authorized bank. Visit any authorized bank or post office and submit a opening form with relevant documents.
There are banks like SBI
and ICICI which also offers online facility for having a PPF account with them. Through this facility you can transfer money from a saving bank account to your public provident fund A/c online. For more information you can visit nearest SBI or ICICI Bank office.
Even though opening a PPF Account is easy, we tried to address certain frequently asked questions on public provident fund scheme or PPF account. We urge you to send your feedbacks and suggestions by writing comments in below given form.
How to invest in public provident fund scheme or PPF
To start investing in a Public Provident Fund scheme, you are required to open your PPF account either with a designated bank or post office.
All most all banks are authorised to open a PPF Account.
Private and leading public sector banks are providing online PPF account facility where you can keep track of your account online instead of physically visiting to update your passbook.
To open your PPF Account you are required following documents;
- PAN Card copy
- Government issued Address Proof
- Two passport size photograph
- Signed Application form
You have to deposit a minimum amount of 500 rupees every year up to a maximum amount of Rs. 1, 50,000.
What are the tax benefit under section 80C
Amount invested in a public provident fund scheme can be claimed as income tax deduction along with other eligible investments under section 80C of income tax act.
Deduction under section 80C can be claimed up to a maximum limit of Rs. 1,50,000.
Not only your contribution to public provident fund scheme, but also contribution to your child’s and spouse’s PPF account is also eligible for tax deduction under section 80C.
Please remember, you cannot open PPF account for your child or spouse but you can invest into it after they opened up in their name.
Interest accrued on your investments to public provident fund, is not liable to tax.
Is PPF a Secured long term investment
Public provident fund account is managed by central government even though the accounts are opened up in banks or post offices.
For this reason, it’s a secured investment which will give a predefined interest rate every year for the entire duration till maturity.
At the end of 15 years, you can also apply for extension of another 5 years. Tax benefits and other benefits will be extended for another 5 years.
What is the minimum and maximum ceiling limit of PPF
Unlike in fixed deposit or recurring deposit, in public provident fund investments you are not required to contribute a fixed amount every year.
A minimum of Rs. 500 and up to a maximum amount of Rs. 1,50,000 per PPF account can be deposited.
You are not required to contribute every month or quarter. The best part is, you can deposit it in one transaction or in more than one up to a maximum of 12 transactions in a year.
If you don’t make yearly payments, then with a penalty of 50 rupees per year of default, you can continue your PPF account.
Can Investments be done in the name of minor
If you have a minor son or daughter then PPF account can be opened in his or her name by having you as a guardian.
You can start investing in his or her name to get a lump sum either for marriage or higher education.
As discussed above, you can also claim income tax deduction on the contribution to your minor son or daughter’s PPF Account.
PPF account for minor child can be opened by a guardian. A guardian can be the child’s biological father or mother or any other legal person i.e. in case parents are not alive then uncle, ant, grandfather, grandmother etc can open PPF account for minor.
If parents are living but are incapable, then legal guardians can open public provident fund account for minor child.
Can I open PPF account for minor child after having one PPF account on my own name?
A resident individual can open one PPF account in his or her name. When you as a guardian open a PPF account in your minor child’s name, you maintain it under the guardianship as a parent.
So there is no restriction that you can not open PPF account for your minor child if you already have one in your name. The answer to this question is YES, you can.
But either the mother or father can open PPF account for the minor child. Both can not maintain two accounts for their minor child.
Can guardian take tax benefits for the amount invested in PPF
The guardian will be eligible for tax deduction for the amount invested in both account i.e. his own and minor child’s PPF account.
As per section 80C, tax deduction limit for investing in own and minor child’s PPF account should not exceed the maximum amount of Rs. 1,50,000 along with other investments listed there in.
What are the drawbacks of Public provident fund scheme
Like every investment plans public provident fund scheme has it’s own drawbacks.
Public provident fund investment is for a minimum period of 15 years. You can not withdraw the full money if you require it in urgent. Partial withdrawal is only allowed after a period of 5 years.
Loan can be claimed on your invested amount of PPF account. But, the problem is you cannot claim on the whole invested amount.
Lock in period
In many cases we found peoples are not keeping surplus money in hand to use for their urgent requirements and end up in looking for an alternative to withdraw money from PPF account.
Those who can afford to keep their surplus money invested for a period of 15 years should invest in public provident fund scheme.
A non resident Indian cannot open a public provident fund account in India but if they have already opened while being here, then they can continue investing in it till maturity.
With all these merits and demerits we feel that PPF scheme is a very good investment option for those who are looking for a long term investment plan.
Can I maintain more than one public provident fund or PPF account under my name?
No, an individual can maintain only one public provident fund (PPF) account in his or her name, except an account that can be opened on behalf of a minor.
What is the eligibility for investing under PPF Scheme, 1968?
A PPF account can be opened in a post office or in any authorized bank like SBI
or ICICI by a resident Indian Individuals. You can also open a PPF account on behalf of a minor.
In case of minor, either the father or mother can open the account. As joint holders are not allowed under this scheme both mother and father jointly can not open an account on behalf of a minor.
Non-Resident Indians are not eligible for investment in PPF account. However, if the Non resident Indian opened up his PPF account while being a resident in India and later on became a non-resident then he can continue investing in his Public Provident Fund Account and take all the benefits of this account.
What are the documents required to open a PPF Account?
The bank or post office will be asking you for following documents for opening up a public provident fund account;
Can a Public Provident Fund or PPF Account be opened in the Name of Minor Son or Daughter?
- Application in Form – A
- Passport Size Photo
- Copy Of PAN Card
- Resident Proof like Voter ID, Passport or Electricity Bill
Yes, a public provident fund account can be opened up either by mother or father on behalf of their minor Son or daughter;
however the mother or father jointly can not open public provident fund (PPF) accounts on behalf of the minor.
In case of death of both mother and father, grand parents can open a public provident fund (PPF)
account as guardians of the Grand-child.
How many Public Provident Fund or PPF Accounts can be opened ?
One person can maintain only one PPF Account either in a Post Office or in any authorized bank. In case, any one maintains two PPF accounts then the second PPF account will be closed and the amount in that provident fund account will be refunded without interest.
But a person can open another PPF account on behalf of a minor and operate that account in addition to his own account.
What is the minimum and maximum amount that can be invested under the PPF Scheme, 1968, in a financial year?
The minimum deposit amount is Rs. 500 per annum and the maximum ceiling limit is Rs. 1, 50,000 per annum. Budget 2014 has introduced a new maximum limit of Rs.150000.
What will happen if I don’t pay subscription for a year?
A subscriber who fails to subscribe in any year according to the limits specified, may approach the Accounts Office for condonation of the default, on payment, for each year of default, a fee of Rs 50 along with arrears subscription of Rs 500 for each year.
What is the Interest earned in Public Provident Fund (PPF) account?
The current compound annual interest rate on Public Provident Fund (PPF) is 8.7%.
When does a Public Provident Fund (PPF) account mature?
Your Public Provident Fund (PPF) account gets matured after the expiry of 15 years from the end of the year in which your account was opened.
Is there any flexibility of extending my public provident fund (PPF) account beyond maturity?
Yes, you can extend the tenure of your Public Provident Fund (PPF) account for a block period of 5 years beyond the maturity period.
Can I withdraw funds from my Public Provident Fund (PPF) Account?
Any time after the expiry of 5 years from the end of the year in which the initial subscription was made , you may, if he so desires, apply in Form C
or as near thereto as possible, together with your pass book to the bank or post office withdrawing from the balance to his credit, an amount not exceeding 50% of the amount that stood to your credit at the end of the forth year immediately preceding the year of withdrawal or at the end of preceding year, whichever is lower, less the amount of loan, if any, drawn by him which remains to be repaid.
More than one withdrawal shall be permissible during any one year.
Also Read: How to withdraw from your PPF Account
Can I close my Public Provident Fund (PPF) account before maturity?
No, except in the case of your death, your nominee /legal heir can close the account by submitting the required documents.
Also Read: How to get paid from your PPF Account on death of subscriber
Can I avail of Loan facility on my Public Provident Fund (PPF) investment?
Yes, as per the terms and conditions of such public provident fund for details Please read our article to know the procedure of getting loan from PPF Account
I lost my passbook; can the bank or post office issue me a duplicate passbook?
In the event of loss or destruction of a pass book issued by a bank or Accounts Office of a post office, the bank or Accounts Office may, on an application made to it in this behalf, and on payment of required fee by the subscriber, issue a duplicate thereof to him.
How interest on Public provident fund or PPF is calculated?
Interest at the rate, notified by the Central Government in official gazette from time to time, shall be allowed for calendar month on the lowest balance at credit of an account between the close of the fifth day and the end of the month and shall be credited to the account at the end of each year.
Provided that where the interest to be credited contains a part of a rupee then, if such part is fifty paisa or more, it shall be increased to one complete rupee, and if such part is less than fifty paisa, it shall be ignored.
We have tried to answer all the frequently asked questions on public provident fund scheme. If you still have any questions then please let us know. We will try to answer that in our next update.