Urban Money

PPF - Public Provident Fund

What is a PPF (Public Provident Fund)?

Public Provident Fund (PPF) is an investment tool that has enormous investor-friendly features and tax benefits. It is a long term investment plan introduced in 1968. The main feature is that the PPF scheme offers a high but stable return on the invested amount. In other words, people who want to keep their principal savings safe and secure their post-retirement life open their accounts under the PPF scheme.

What is a PPF Account?

The Public Provident Fund (PPF) scheme is a long term investment option that provides appealing interests and returns on the invested amount. However, the returns and interest earned are not taxable under the Income Tax Act, 1961. But one has to open a PPF account under this scheme. The amount deposited annually will be claimed under Section 80C.

Quick Information of Public Provident Fund

Rate of Interest 7.1% per annum
Minimum Investment Amount Rs.500 is the minimum investment amount
Maximum Investment Amount Rs 1.5 lakh per annum is the maximum investment amount
Maximum Tenure 15 years is the maximum tenure
Profile of Risk Offers are available and offer risk-free returns
Benefit in Tax Up to Rs.1.5 lakh under Section 80C

PPF Features and Benefits 

Here are the features and benefits an individual can enjoy under the Public Provident Fund scheme. 

  • Tenure for a PPF Account: For a Public Provident Fund, the minimum tenure is 15 years. However, every investor has the facility to extend the loan duration by five years. Also, the extension of the PPF scheme does not require any investment. 
  • Eligibility for a PPF Account: All Indian citizens are eligible to open a PPF account. Non-resident Indians and Hindu Undivided Families are not eligible to open a PPF account. 
  • Number of Accounts Under One Name: Every individual can have only one PPF account. However, one can open another account as a guardian of a minor. 
  • Minimum and Maximum Investment Amount: You can open a PPF account with a minimum amount of Rs. 100. The minimum annual investment amount is Rs. 500. On the other hand, the maximum annual investment is Rs. 1,50,000. However, investments above Rs. 1,50,000 will not receive any interest.
  • Deposit Frequency: The frequency of deposits can be done either once a year or in 12 instalments (one per month). It is also mandatory to make a minimum of one deposit into the PPF account for 15 years to keep the account active. 
  • Deposit Mode: The deposit mode of the PPF scheme is online, demand draft, cheque and cash. 
  • Risks: The government of India supports the Public Provident Fund (PPF). Therefore, the risks are quite low. It is one of the most secure investment options available to individuals. 
  • Joint Account Facility: An individual can open only one PPF account in their name. It does not support a joint account facility. 
  • Nomination Facility: The investor can make anyone a nominee for their account. This facility is available at the time of opening a PPF account. 
  • Loan Availability: Investors can also avail of loans against their PPF account. But the loan against PPF is only available between the third and the fifth year. However, the loan amount cannot exceed 25% of the amount made at the end of the second financial year.

Eligibility Criteria for Public Provident Fund

The eligibility criteria for Public Provident Fund are as follows:

  • PPF accounts can only be opened by an Indian resident.
  • Non-resident Indians are not eligible to start a PPF account. However, if someone opens a PPF account before becoming an NRI, then it can continue till its maturity.
  • Parents and guardians can also open PPF accounts for their minors.
  • One account is only for one person. No joint accounts are allowed.

Document Requirement for Public Provident Fund

Given below are the documents required for opening a PPF account:

  • The PPF application form.
  • Identity proofs, like Aadhaar card, PAN card, passport, driver's license, etc.
  • Address proofs like Aadhaar card, passport, etc.
  • Signature proof.

Once the documents are submitted, the investor has to deposit the amount towards the opening account. PPF accounts can be opened online only at the bank using internet banking.

What Were the PPF Interest Rates Over the Different Financial Years? 

The interest rate of PPF schemes over different years is presented to you in a tabular form.

Quarterly Months and Financial Years Interest Rate (p.a.)
1 July 2021 - 30 September 2021 7.10%
1 April, 2021 - July 2021 7.10%
1 January, 2021 - 31 March, 2021 7.10%
1 October, 2020 – 31 December, 2020 7.10%
1 July, 2020 - 30 September, 2020 7.10%
1 April, 2020 - 30 June, 2020 7.10%
1 January, 2020 - 31 March, 2020 7.90%
1 October, 2019 - 31 December, 2019 7.90%
1 July, 2019 - 30 September, 2019 7.90%
1 April, 2019 - 30 June, 2019 8.00%
1 January, 2019 - 31 March, 2019 8.00%
1 October, 2018 - 31 December, 2018 8.00%
1 July, 2018 - 30 September, 2018 7.60%
1 April, 2018 - 30 June, 2018 7.60%
1 January, 2018 - 31 March, 2018 7.60%
01 October 2017 - 26 December 2017 7.80%
01 July 2017 - 30 September 2017 7.80%
01 April 2017 - 30 June 2017 7.90%
01 January 2017 - 31 March 2017 8.00%
01 October 2016 - 31 December 2016 8.00%
01 July 2016 - 30 September 2016 8.10%
01 April 2016 - 30 June 2016 8.10%
01 April 2015 - 31 March 2016 8.70%

Tax Benefits of Public Provident Fund Investment 

PPF is an investment scheme that falls under the tax exemption category. In simple words, the PPF interest is exempted under section 80C as mentioned under the Income Tax Act, 1961. Also, PPF cannot be more than Rs. 1.5 lakh in the single fiscal year. The calculated interest and amount are also exempted from the tax when the applicant withdraws it.

Another noticeable fact is that the PPF account cannot be closed before its maturity. However, a PPF account can be transferred from one designation to another. The nominee can file for closure of the account after the PPF account owner's demise.

Loan Against Public Provident Fund Scheme

  • Any PPF account holder can take a loan against their PPF amount between the third and sixth year.
  • The maximum loan tenure is only three years.
  • The loan amount is given to the PPF account holder as the loan is a maximum of 25% of the total available amount.
  • If the account holder wants a second loan, they can take it before the sixth year if the first loan is repaid completely.

How to Withdraw Money From the PPF Account?

Follow the below easy two-step procedure to withdraw money from the PPF account.

Step 1: Fill out the application form using Form C with appropriate information.

Step 2: Submit the application to the bank branch where you have your PPF account.

What is Form C and its Sections?

As mentioned in the previous section, Form C is used to withdraw money from a PPF account before its maturity. 

Form C comprises three sections in total:

Section 1: The first section is a declaration section. Here you have to give your PPF account number and the amount of money you want to withdraw. You also have to mention how many years have passed since the account was opened. 

Section 2: The second section is an office-use section which includes the following details:

  • Date when the PPF account was opened.
  • Total balance available in the PPF account.
  • Date when the last withdrawal took place.
  • Total withdrawal amount currently available in the account.
  • A sum of the amount sanctioned for withdrawal.
  • Date and signature of the authorised person (service manager).

Section 3: The third section is all about entering the bank details where the money will be directly credited. It is also important to enclose a copy of the passbook of the PPF and its application.

How to Open a Public Provident Fund Account Online?

You can follow the below written steps to open a public provident fund account online. 

Step 1: Use your credentials and log in to your bank account mobile banking platform. 

Step 2: Select the option of Open a PPF Account. 

Step 3: If the account is for self, you have to select the option of Self Account. But, if the account is opened on behalf of a minor, select the option of Minor Account. 

Step 4: You have to enter the mandatory details in the application form. 

Step 5: Enter the total amount you want to deposit in a financial year. 

Step 6: Submit the application. You will get an OTP on your registered mobile number immediately after. Verify it. 

Step 7: In a few seconds, your PPF account will be created. Now, you will be able to see your PPF account number on the screen. You will also receive an email at your registered email address regarding the same.

How Can One Open a PPF Account in a Post Office?

To open a PPF account via a post office, you have to follow the below written steps:

  • Get the PPF application form from your nearest post office.
  • Enter the required information in the form and submit it with all the KYC documents and two passport size photos.
  • You have to make a minimum deposit required to open a post office account.
  • After your application is processed further, a passbook will be provided to you.

How to Transfer a PPF Account?

To transfer your PPF account to a different branch or post office, you must follow the steps written below:

  • Go to the bank or post office branch where you have opened your PPF account.
  • Request for the application form that is used to transfer the PPF account.
  • Fill in all the relevant information as asked.
  • The branch officer will process your application and forward it further.
  • You have to give certified copies of documents, such as nomination form, account opening application, signature, cheque or DD for the outstanding balance to transfer it to the new account.
  • When the new branch receives your application, they will ask you to send a new PPF account opening form with the old account passbook.
  • If you want, you can change the nominee of your PPF account.
  • Once your new application processes, your PPF account will successfully transfer to the new branch.

Steps to Check PPF Account Balance Online

  • Log in to your internet banking PPF account.
  • In the next step, you have to open the PPF account details. In these details, you have to check the latest PPF balance and recent transaction details.

PPF Customer Care and Helpline Number

  • PPF Customer Care and Helpline Number: 1800118005.
  • Email Address for Employee: employeefeedback@epfindia.gov.in
  • Email Address for Employer: employerfeedback@epfindia.gov.in

Frequently Asked Questions (FAQs)

PPF interest is exempted under which section of Income Tax Act?

PPF interest is exempted under section 80C of Income Tax Act, 1961.

How much will I get after 15 years in PPF?

To understand how much you will receive after 15 years of having a PPF account, let’s start with an example. Suppose you make an annual payment of Rs. 1,00,000 in your PPF investment for 15 years. At the end of 15 years, the total amount you will receive will be Rs. 31,17,276 at the interest rate of 7.1%.

Is PPF investment good?

Yes, PPF is a good investment option as it is secure, stable and devoid of any risks.

Can I pay PPF monthly?

The maximum payment one can pay Rs. 1.5 lakh annually. And the maximum number of instalments one can make in a year is 12.

Is PPF interest transferred monthly or yearly?

A PPF interest is transferred annually. It is calculated on a monthly basis considering the minimum balance in the account between the 5th and end of every month. Therefore, it is mandatory to contribute before the 5th of every month if you are contributing on a monthly basis.

Can I have 2 PPF accounts?

One person can have multiple PPF accounts under their name as per the PPF rules 2019.

What if I deposit more than Rs. 1.5 lakh in PPF?

If you deposit Rs 1.50 lakh in your account in any fiscal year, the excess amount will not have any interest income for you.

What is the right time to invest in PPF?

It will be beneficial for you to deposit money between April 1 and April 5 of a financial year.

What is the PPF interest rate?

7.1 % per annum is the latest PPF interest rate.

Do we get a passbook for PPF accounts?

Yes, every bank provides a passbook for newly opened PPF accounts.

Who is eligible for a PPF account?

Every Indian citizen is eligible for a PPF account under their name.

How is PPF interest calculated?

The interest is calculated between the fifth and the last day of the month. The interest will be paid to the account holder at the end of each fiscal year.

Is PPF withdrawal taxable?

As per PPF rules, any money obtained from a PPF account is exempt from tax.

Is the PPF interest rate fixed?

PPF interest rates are fixed by the government of India. A PPF is a safe and secure option which you can open at any bank or post office.

How much return does PPF give?

The return amount for the PPF account is dependent on the latest interest rate of 7.1% p.a.

Who decides the PPF interest rate?

The rate of interest is always set by the Indian government every quarter. PPF investment is so popular because tax exemption is available on the interest earned under the Income Tax Act.

How long can I extend my PPF account?

You can extend your PPF account for five years.

Is it necessary to name nominees?

Choosing a nominee completely depends on the owner of the PPF account. However, it is only allowed on behalf of minors.

Can I open a PPF account along with my wife or child?

You can open a PPF account only with your father, mother or guardian. Hence, opening a PPF account in Post Office with you as a guardian and opening another account in SBI with your wife as guardian on the same child is not allowed.