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PPF (Public Provident Fund) Features, Interest Rate, Loan Facility, Partial Closure And More

In a PPF account, a subscriber can deposit any amount between Rs 500 Rs 1,50,000 in a financial year.

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PPF (Public Provident Fund) Features, Interest Rate, Loan Facility, Partial Closure And More

Deposit in a PPF account qualifies for deduction under Section 80 C of Income Tax Act.

Public Provident Fund (PPF), a retirement planning-focused instrument, comes under "exempt, exempt, exempt" (EEE) tax status. This means that the returns, the maturity amount and the interest income are exempt from income tax. The scheme was introduced by the National Savings Organization in 1968 to mobilize small savings. Individuals in their own name as well as on behalf of a minor can open the PPF account at designated bank and post office branches. In such an account, a subscriber can deposit any amount between Rs 500 and Rs 1,50,000 in a financial year.
Here are 10 things to know about Public Provident Fund (PPF):
  1. PPF account can be opened by cash or cheque. In case of cheque, the date of realization of cheque in government account is date of opening of account.
  2. The interest rate is determined by central government on quarterly basis. At present it is 8.0 per cent per annum. Interest is calculated on the minimum balance (in PPF account) between fifth day and end of the month and is paid on March 31 every year.
  3. PPF account matures on completion of fifteen financial years from the end of the year in which the account was opened.
  4. After maturity, account can be extended for any number of a block of five years with further deposits.
  5. The amount in the PPF account is not subject to attachment under any order or decree of a court of law.
  6. Account can be retained indefinitely without further deposits after maturity with the prevailing rate of interest.
  7. One withdrawal is permissible every year from seventh financial year.
  8. The loan facility is available from third financial year up to sixth financial year.
  9. Deposit in a PPF account qualifies for deduction under Section 80 C of Income Tax Act.
  10. A subscriber is allowed the premature closure of this account or the account of a minor of whom he/she is the guardian, on a written application, to the accounts office on any of the following grounds: a) that the amount is required for treatment of serious ailments of life threatening diseases of the account holder, spouse or dependent children or parents, on production of supporting documents from competent medical authority b) that the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills on confirmation of admission in a recognised institute of higher education in India or abroad.




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