Public Provident Fund is one of the most sought after tax saving investments that benefits anyone who holds this account. Besides being a tax-free mode of investment, you can also earn interest on the savings you park in this account. The scheme, instituted by the Government of India, is one of the best ways to park away your savings for retirement, while also being the safest. One can open a PPF account in almost all Indian nationalized banks like SBI, Bank of India, and Central Bank of India as well as private sector banks like HDFC Bank, ICICI Bank and Axis Bank. Here’s a list of things you must know about opening this income-tax saving account.
Who can and cannot open this account?
Indian citizens; self-employed, salaried or unemployed can open a PPF account, whereas Hindu Undivided Families and NRI cannot open this account. However, if an individual opens a PPF account, but later becomes an NRI, he can continue to park his savings in this account.
How much are you allowed to invest?
Resident Indian account holders can invest up-to ₹150,000 annually; in 12 instalments or a single deposit. NRI account holders can invest ₹70,000 annually. You must deposit money into this account, at least once a year, for 15 years.
How many accounts can you have in your name?
You are allowed to hold only one PPF account in your name. In case you’ve opened a second account in a different bank, the bank is obliged to close your account and return only your principal amount, not your interest.
Can you hold a joint account with another individual?
Since these accounts are not like traditional savings accounts, one cannot open joint accounts when it comes to PPF. However, you can nominate more than one individual as a nominee, but the nominee cannot continue to park his savings in the account. If a nominee is not registered, the bank hands over the money to the account holder’s legal heirs.
What is the minimum deposit amount and how much interest do you earn on your savings?
As per the PPF scheme, an investor must deposit a minimum of ₹500 in a financial year to continue earning interest. Failure to do so can lead to your account being discontinued. The account can be regularized by paying the necessary default fees with subscription arrears. Investors can earn an annual interest rate of 7.60% as of 01.01.2018. This is applicable to all your savings and is compounded annually.
What is the maturity period and when can I start withdrawing?
A PPF account ideally comes with a maturity period of 15 years. However, you can start making partial withdrawals from the account after completing 7 years. After the completion of 7 years, you can withdraw 50% of your deposits. You can also choose to withdraw the entire amount at maturity and close the account or extend it for a block of 5 years each time.
Who can and cannot open this account?
Indian citizens; self-employed, salaried or unemployed can open a PPF account, whereas Hindu Undivided Families and NRI cannot open this account. However, if an individual opens a PPF account, but later becomes an NRI, he can continue to park his savings in this account.
How much are you allowed to invest?
Resident Indian account holders can invest up-to ₹150,000 annually; in 12 instalments or a single deposit. NRI account holders can invest ₹70,000 annually. You must deposit money into this account, at least once a year, for 15 years.
How many accounts can you have in your name?
You are allowed to hold only one PPF account in your name. In case you’ve opened a second account in a different bank, the bank is obliged to close your account and return only your principal amount, not your interest.
Can you hold a joint account with another individual?
Since these accounts are not like traditional savings accounts, one cannot open joint accounts when it comes to PPF. However, you can nominate more than one individual as a nominee, but the nominee cannot continue to park his savings in the account. If a nominee is not registered, the bank hands over the money to the account holder’s legal heirs.
What is the minimum deposit amount and how much interest do you earn on your savings?
As per the PPF scheme, an investor must deposit a minimum of ₹500 in a financial year to continue earning interest. Failure to do so can lead to your account being discontinued. The account can be regularized by paying the necessary default fees with subscription arrears. Investors can earn an annual interest rate of 7.60% as of 01.01.2018. This is applicable to all your savings and is compounded annually.
What is the maturity period and when can I start withdrawing?
A PPF account ideally comes with a maturity period of 15 years. However, you can start making partial withdrawals from the account after completing 7 years. After the completion of 7 years, you can withdraw 50% of your deposits. You can also choose to withdraw the entire amount at maturity and close the account or extend it for a block of 5 years each time.
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