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PUBLIC PROVIDENT FUND
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Salient Features
- The rate of interest is 8.60% p.a. compounded annually.
- The minimum deposit is 500/- p.a
- The maximum is Rs. 1,00,000/- p.a
- Interest is totally tax free.
- Tax saving instrument under section 80C.
- Loan facility available from third year.
- The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
- The Scheme is for 15 years.
- One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
- The deposit can be in lumpsum or in convenient installments, not more than 12 installments in a year or two installments in a month, subject to total deposit of Rs.1,00,000/-.
- It is not necessary to make a deposit in every month of the year.
- The amount of deposit can be varied to suit the convenience of the account holders.
- The account in which deposits are not made for any reason is treated as discontinued, account and such an account cannot be closed before maturity.
- The discontinued account can be activated by payment of the minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
- The account can be opened by an individual or a minor through the guardian.
- Joint account is not permissible.
- Those who are contributing to GPF Fund or EDF account can also open a PPF account.
- A Power of Attorney holder can neither open nor operate a PPF account.
- The grand father/mother cannot open a PPF on behalf of his/her minor grand son/daughter.
- The deposits shall be in multiples of Rs.5/- subject to minimum of Rs.500/-.
- The deposit in a minor account is clubbed with the deposit of the account of the guardian for the limit of Rs. 1,00,000/-.
- No age is prescribed for opening a PPF account.
- Interest is not contractual but the rate is notified by the Ministry of Finance, Govt. of India, at the end of each year.
- The facility of first withdrawal in the 7th year of the account subject, to a limit of 50% of the amount at credit preceding three year balance.
- Thereafter one withdrawal in every year is permissible.
- Premature closure of a PPF Account is not permissible except in case of death.
- Nominee/legal heir of PPF Account holder on death of the account holder cannot continue the account.
- The account has to be closed in such case.
- The account holder has an option to extend the PPF account for any period in a block of 5 years at each time.
- The account holder can retain the account after maturity for any period without making any further deposits.
- The balance in the account will continue to earn interest at normal rate as admissible till the account is closed.
- One withdrawal in each financial year is also admissible in such account.
- A PPF account can be opened either in a Post Office or in a Nationalsed Banks.
- The Account is transferable from one Post Office to another and from Post Office to Bank or from a Bank to a Post office.
- Account is transferable from one Bank to another bank as well as within the bank to any branch.
- Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
- The interest on deposits is totally tax free.
- Deposits are exempt from wealth tax.
- The balance amount in the PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
- Nomination facility is available.
- The Best option for long term investment.
- Loans can be taken from PPF account at the rate of 2.00% per year.
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