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Wednesday, June 10, 2020

PPF (Public Provident Fund) ,1968

Public Provident Fund (PPF) account is very popular investment and income tax saving tool for Middle Class. PPF account provides safety of principal as well as good interest. PPF is a most simple and effective investment and tax saving tool and can be understand by the following points:

  • PPF account can be opened in any designated Bank Branch or in Post Office
  • PPF account can be opened by ₹500/- and can be continued with minimum ₹500/- deposit per year
  • Maximum deposit is ₹150000/- per year. Maximum 12 credit entries are allowed per Financial Year in an account
  • PPF account can be opened by Husband and Wife separately in their own name
  • PPF account can be opened in the name of minor operated by his guardian but in this case total contribution of in PPF and deduction u/s 80C of IT Act cannot exceed ₹150000/- taken together the contribution made in minor’s PPF account and contribution made in guardian’s own PPF account
  • Only Individual can open PPF account. NRI and HUF and Joint accounts are not allowed
  • Duration of PPF account is 15 years (lock-in) which can be extended in the block of 5 years for unlimited time
  • From 1st April 2016 rate of interest (ROI) in PPF account is fixed quarterly by Ministry of Finance, GOI. Since it is changed 4 times a year, we are skipping the present rate of interest here. Please Click Here for latest interest rate information
  • Loan can be obtained on against PPF account and quantum of the loan depends upon the age of PPF account
  • Interest on loan will be 2% over the prevailing PPF interest rate
  • PPF can be withdrawn upto 50% after 5 year with penalty of 1% interest
  • Any contribution made in PPF account is allowed as deduction u/s 80C of Income Tax Act. Interest and maturity is also tax free
  • In case of death of the PPF account holder, balance in account is paid to nominee, Nominee cannot continue the account
  • PPF account is a portable account and can be easily transferred from one bank to other or from Post Office to Bank and vice versa
  • PPF account cannot be attached even by the court

 Refrences: Vaious PPF circulars

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