Every month we have a certain amount of income left out. Everyone follows some or the investment option to save the balance amount. Apart from keeping it as cash or depositing in the savings account, others prefer investing in a manner that provides them returns to increase their wealth. There are avenues such as fixed deposit, mutual fund, etc. Another such investment option is Public Provident Fund.
What is Public Provident Fund?
It is a tax saving instrument launched by the Indian government. The Public Provident Fund Act of 1968 governs the PPF scheme. Any deposit made on PPF can be claimed as a deduction and the interest on these are tax-free. The objectives of PPF schemes are to cultivate saving habit be it small or big. It also aims to secure the future of the individual post-retirement by saving a lump sum amount.
You can open a PPF account at the post office or public/private sector banks. Some benefits of holding a PPF account is:
1) There is no major fluctuation in interest rate
2) Investment, interest earned, and maturity proceeds are non-taxable
3) You can make pre-mature withdrawals after 7 years. In case of emergencies, banks allow pre-mature withdrawals before the 7-year period
Who can hold a PPF account?
1) Anyone who is a resident of India can have a PPF account
2) You can be a salaried, self-employed or belong to any other category to own a PPF account
3) For minors, either of the parent’s can open a PPF account
4) PPF account to Hindu Undivided Families has been stopped since 2005
5) NRIs are not entitled to a PPF account as they do not reside in India
6) A person can manage only one account. Holding multiple accounts is prohibited. Also, opening joint PPF account is not allowed.
7) Grandparents cannot open a PPF account for their minor grandchild. Similarly, both parents cannot open different accounts under the name of the same minor.
What documents are required to create a PPF account?
1) PPF account form that can be obtained from the bank branch or online
2) ID proofs such as PAN card, Aadhaar, passport, Voter’s ID, etc.
3) Address proof such as ration card, etc.
4) Your photograph
5) Nomination form
How to apply for a PPF account?
You can create a PPF account by either visiting the post office or online. Let’s understand it in detail:
1) Post office: Carry the application form along with other supporting documents to open a PPF account. An initial deposit of INR 100 has to be made to the account.
2) Online: You can visit the banks' website and open an account. You can save time and effort by opening a PPF account online. It comes with additional benefits such as checking statements, transacting funds and linking other savings accounts.
What are the features of a PPF account?
1) The PPF investment account is a 15-year product and comes with lock-in period of 16 years.
2) You must hold investment of minimum INR 500 per annum. However, the maximum investment limit is INR 1.5 lakh. The deposit can be made monthly or annually.
3) Earlier, the government had a fixed rate of interest for the tenure of the account. Now, the RBI guidelines say new interest rates will be announced quarterly.
4) You can also apply for a loan against PPF during the 3rd and 6th year. However, these loans can be availed on 25 per cent of the balance in your account.
5) As mentioned, it is necessary to invest INR 500 every year. If you fail to do so, your account will be discontinued. Also, you will have to pay a penalty of INR 50 and subscription outstanding of INR 500 annually to regularise your account.
What is Public Provident Fund?
It is a tax saving instrument launched by the Indian government. The Public Provident Fund Act of 1968 governs the PPF scheme. Any deposit made on PPF can be claimed as a deduction and the interest on these are tax-free. The objectives of PPF schemes are to cultivate saving habit be it small or big. It also aims to secure the future of the individual post-retirement by saving a lump sum amount.
You can open a PPF account at the post office or public/private sector banks. Some benefits of holding a PPF account is:
1) There is no major fluctuation in interest rate
2) Investment, interest earned, and maturity proceeds are non-taxable
3) You can make pre-mature withdrawals after 7 years. In case of emergencies, banks allow pre-mature withdrawals before the 7-year period
Who can hold a PPF account?
1) Anyone who is a resident of India can have a PPF account
2) You can be a salaried, self-employed or belong to any other category to own a PPF account
3) For minors, either of the parent’s can open a PPF account
4) PPF account to Hindu Undivided Families has been stopped since 2005
5) NRIs are not entitled to a PPF account as they do not reside in India
6) A person can manage only one account. Holding multiple accounts is prohibited. Also, opening joint PPF account is not allowed.
7) Grandparents cannot open a PPF account for their minor grandchild. Similarly, both parents cannot open different accounts under the name of the same minor.
What documents are required to create a PPF account?
1) PPF account form that can be obtained from the bank branch or online
2) ID proofs such as PAN card, Aadhaar, passport, Voter’s ID, etc.
3) Address proof such as ration card, etc.
4) Your photograph
5) Nomination form
How to apply for a PPF account?
You can create a PPF account by either visiting the post office or online. Let’s understand it in detail:
1) Post office: Carry the application form along with other supporting documents to open a PPF account. An initial deposit of INR 100 has to be made to the account.
2) Online: You can visit the banks' website and open an account. You can save time and effort by opening a PPF account online. It comes with additional benefits such as checking statements, transacting funds and linking other savings accounts.
What are the features of a PPF account?
1) The PPF investment account is a 15-year product and comes with lock-in period of 16 years.
2) You must hold investment of minimum INR 500 per annum. However, the maximum investment limit is INR 1.5 lakh. The deposit can be made monthly or annually.
3) Earlier, the government had a fixed rate of interest for the tenure of the account. Now, the RBI guidelines say new interest rates will be announced quarterly.
4) You can also apply for a loan against PPF during the 3rd and 6th year. However, these loans can be availed on 25 per cent of the balance in your account.
5) As mentioned, it is necessary to invest INR 500 every year. If you fail to do so, your account will be discontinued. Also, you will have to pay a penalty of INR 50 and subscription outstanding of INR 500 annually to regularise your account.
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