How to Invest in Public Provident Fund Scheme

Public Provident Fund or PPF scheme is a safe long term investment option for an individual in India with attractive returns.

Income from PPF account is fully tax exempted and yearly investments are eligible for tax deduction under section 80C of Income Tax Act, 1961.

Both salary individuals as well as self employed persons can invest into a public provident fund scheme to avail tax deductions and exemptions.

Any individual can invest in public provident fund scheme and take benefit of high interest rate and tax deductions compare to other saving schemes of government or non-government agencies.

Public Provident Fund or PPF Account can be opened in a post office or in an authorized nationalized or private banks (all most all banks are authorized to open a PPF account) with an initial subscription of Rs.100.

You can visit any authorized bank or post office and submit an account opening application form along with other relevant documents to start investing.

There are banks like SBI and ICICI which also offers online facility to manage customer’s public provident fund account with facility like online transfer and tracking.

You can transfer money from your saving bank account to public provident fund or PPF account online by using net banking facility of your bank. For more information you can visit nearest SBI or ICICI Bank office.

Also read: How to open a PPF Account in SBI

How to invest in a public provident fundIf your saving account and Public Provident Fund or PPF account are in the same bank then you can link these two and start making payments online from your saving account to PPF Account.

The Public Provident Fund account can be transferred from post office or one bank to another where you maintain your saving account. This will be beneficial as you can transfer money easily from a saving account to PPF Account.

To open a public provident fund or PPF account in a bank or post office you will be asked for following documents;

  • Application Form -A
  • Initial Subscription amount to PPF account in cash or cheque
  • Passport Size Photo of applicant
  • Copy Of PAN Card – both front and back side
  • Resident Proof like Voter ID, Passport or Electricity Bill

If you are going to open a Public Provident Fund account for a minor then a copy of his or her birth certificate supporting the date of birth may also be needed.

Every year you can invest a minimum amount of Rs 500 up to a maximum amount of 150000 rupees.

You can do this either by depositing a lump sum amount in your account or through a maximum number of 12 annual transactions.

Investment in Public Provident Fund (PPF) scheme gives you tax deduction up to a maximum amount of Rs 1, 50, 000. Don’t forget to take that tax deduction while filling your income tax return. This limit has been increased in budget 2014 from earlier tax deduction limit of Rs. 100000 to Rs. 150000.

From assessment year 2015-2016 onwards, this new tax deduction limit will be applicable by which an individual can claim higher tax deduction up to Rs. 150000 by investing in eligible investment schemes which includes investment in public provident fund scheme.

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Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.