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Business
09 Apr 2019

#FinancialBytes: All about Public Provident Fund, its features, tax benefits

Everything about government's Public Provident Fund (PPF) scheme

In India, the Public Provident Fund (PPF) is one of the most preferred long term tax-saving investment options for both salaried as well as non-salaried individuals.

The scheme offered by the government not only offers decent returns but also provides tax-saving benefits for the subscribers.

From its features to tax benefits, here's all you need to know about the PPF scheme.

In context

Everything about government's Public Provident Fund (PPF) scheme
PPF scheme has a 15-year lock-in period

About

PPF scheme has a 15-year lock-in period

Public Provident Fund is a savings-cum-tax-saving scheme offered by the central government.

It was introduced by the National Savings Institute of the Finance Ministry in 1968. It is fully guaranteed by the government, so, it's one of the safest instruments.

The PPF scheme has a 15-year lock-in period and the deposits made towards the same can be claimed as tax deductions.

PPF account

How to open a PPF account?

Those interested in opening a PPF account can go to their nearest designated bank branch and obtain the PPF account opening form.

Next, they must fill up the form, providing the required personal details and financial information and submit the form along with the required documents.

Also, some banks allow PPF account opening online via net banking while others offer partial account opening online.

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How much can subscribers invest in the PPF scheme?

Investment

How much can subscribers invest in the PPF scheme?

Subscribers can invest any amount between Rs. 500 (minimum) and Rs. 1.5 lakh (maximum) in the PPF scheme in a financial year.

The amount can be deposited in lump sum or up to 12 installments. The minimum opening balance is Rs. 100.

The account has a 15-year maturity period, but it can be extended, each time for five years. However, premature closure isn't allowed.

Features

PPF accountholders can also avail loan facility

Subscribers can also make premature withdrawals from the 7th financial year of their PPF account.

The maximum partial withdrawal amount is 50% of the PPF balance at the 4th financial year-end or 50% of the balance at the previous financial year-end, whichever is lower.

Accountholders can also take a loan on their PPF. This facility is available between the 3rd and 6th financial years.

Current interest rate and tax benefits available under PPF

Tax benefits

Current interest rate and tax benefits available under PPF

The interest rate offered under PPF is 8% for the first quarter of FY 2019-20.

Also, investments in PPF are eligible for claiming tax benefits of up to Rs. 1.5 lakh per annum under Section 80C of the Income Tax Act.

Both the amount received by subscribers upon maturity of the account and the interest earned by them is also exempted from income tax.

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Most asked questions

Can a minor open PPF account?

What are the documents required for opening PPF account?

Which banks offer PPF account facility?

What are the eligibility rules for PPF?

More questions

Can a minor open PPF account?

Asked 2019-04-09 22:20:17 by Charvi Mehta

Answered by NewsBytes

A PPF account for a minor can be opened by their father or mother, or any guardian under the law (grandfather, grandmother, uncle, aunt, etc.) in case the parents aren't alive or if the surviving parents are not capable of acting.

What are the documents required for opening PPF account?

Asked 2019-04-09 22:20:17 by Vishal Vyas

Answered by NewsBytes

The documents required include a valid proof of identity (PAN card, Driving License, Voter ID, or Passport), and the recent passport-size photographs.

Which banks offer PPF account facility?

Asked 2019-04-09 22:20:17 by Divya Mehta

Answered by NewsBytes

Many major Indian banks such as SBI, ICICI Bank, Axis Bank, HDFC, PNB, Central Bank of India, and Bank of India among others, offer the PPF account opening facility, at their designated branches and subsidiaries.

What are the eligibility rules for PPF?

Asked 2019-04-09 22:20:17 by Ajay Mukopadhyay

Answered by NewsBytes

Here are the rules for eligibility: 1) All Indian residents can open a PPF account. 2) A person is allowed to open only one PPF account. 3) Minors can also get a PPF account opened, upon furnishing a legal age proof.

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