PPF or public provident fund is one of the popular small savings scheme. Currently, it offers an interest rate of 7.8 per cent. From April last year, interest rate on small savings schemes, including PPF, is being reset every quarter, as compared to the earlier yearly mode. PPF enjoys EEE or exempt, exempt, exempt status - contribution, interest and maturity proceeds all are tax free. PPF accounts also offers partial withdrawal and loan facility. PPF account can be opened in post offices and designated bank branches. Some private lenders like ICICI Bank offer PPF account facilities.
PPF Account - 10 Things To Know
1) The minimum amount needed for PPF account opening is Rs 100, according to India Post. And account can be opened by cash/ cheque and In case of cheque, the date of realisation of cheque account shall be date of opening of account.
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2) The minimum deposit in a PPF account in a financial year is Rs 500 and maximum is Rs 1.5 lakh.
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3) A penalty of Rs. 50 is levied per year for default, if the customer does not deposit the minimum amount of Rs. 500 in a financial year.
4) Only one PPF account can be maintained by an individual. But the PPF subscriber can open more accounts on behalf of a minor but subject to maximum yearly contribution limit of Rs 1.5 lakh in all the accounts.
6) The maturity period of PPF account is 15 years but can be extended within one year of maturity for further 5 years and so on.
7) Loan facility in a PPF account is available from 3rd financial year of account opening. Rate of Interest for loan will be 2 per cent above the rate of interest on PPF. The facility of loan against the PPF deposits is available from 3rd to 6th year of deposit to the extent of 25 per cent of the amount deposited as at the end of the last financial year. The loan is repayable in 36 months.
8) Partial withdrawal is permissible from the seventh financial year from the year of opening account. The maximum amount that can be withdrawn pre-maturely is 50 per cent of the amount in the account at the end of 4th year, or the amount at end of the preceding year - whichever is lower.
9) Subscribers of the Public Provident Fund (PPF) can prematurely close the deposit scheme after completing five years for reasons such as higher education or expenditure towards medical treatment, according to an amendment in 2016. "A subscriber shall be allowed premature closure of his account or account of a minor of whom he is the guardian on ground that amount is required for treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children on production of supporting documents from competent medical authority," the Finance Ministry said in a notification.
10) Account can be transferred from one authorised bank or post office to another. In such case, the PPF account will be considered as a continuing account. (With Agency Inputs)