A PPF account can be opened by visiting the post office or branch of any nationalized bank or through online mode. (Representational image)
Interest income is completely exempt from income tax. Income tax benefits are available under section 88 of the IT Act.
Public Provident Fund (PPF) is a government-run long-term savings-cum-investment option scheme for Indian residents. It was first introduced to the public in 1968. The objective of the PPF scheme is to provide long term savings and investment options for individuals.
The National Savings Institute under the Ministry of Finance oversees this voluntary scheme. The scheme provides an investment opportunity with good returns along with income tax benefits.
The government made some changes in 2019, so now it is called Public Provident Fund Scheme, 2019.
Public Provident Fund Account: Features
- Minimum investment limit of Rs. 500 per annum subject to a maximum of Rs. 1,50,000 can be deposited under Rs.
- The basic term is 15 years. Thereafter, a customer can extend the account for one or more blocks of 5 years.
- The rate of interest is determined by the government on a quarterly basis.
- Loans and withdrawals are permitted based on the age of the account and balance as on specified dates.
- Nomination facility is available in the name of one or more persons. The shares of the nominees can also be defined by the subscriber.
- The account can be transferred to other branches / other banks or post offices and vice versa as requested by the customer.
- Individuals can open the account in their own name as well as on behalf of a minor or a person of unsound mind.
Public Provident Fund Account: Eligibility
Any resident Indian can open a PPF account, including minors. Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open PPF accounts.
tax benefits in ppf account
Interest income is completely exempt from income tax. Income tax benefits are available under section 88 of the IT Act.
The account can be maintained indefinitely after maturity with the prevailing rate of interest and without deposit. The amount in the PPF account is not subject to attachment under any court order or decree.
loan facility in ppf
Loan facility is available from 3rd financial year to 6th financial year.
The account matures on completion of fifteen financial years from the end of the year in which the account was opened.
ppf interest rate
Currently, the interest rate on PPF is 7.10 per cent per annum. Interest is compounded annually.
The customer should not deposit more than Rs.1,50,000 per year as the excess amount will neither earn any interest nor be eligible for exemption under the Income Tax Act. The amount can be deposited in lump sum or in installments.
Interest is calculated on the minimum balance (in PPF account) between 5th day and end of the month and is paid on 31st March every year.
withdrawal from ppf account
At any time after the expiry of five years from the end of the year in which the account was opened, the account holder may, by making an application in Form-2, avail the benefit of withdrawal of an amount exceeding fifty per cent of the balance in his account. of the amount standing to his credit at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is less;
Provided that the outstanding loan amount along with interest, if any, shall be paid by the account holder before availing the withdrawal facility,
Withdrawal facility can be availed only once in a year only from accounts which are not closed.
How to open PPF account?
A PPF account can be opened by visiting the post office or branch of any nationalized bank or through online mode.
HUF and NRI cannot open PPF account.
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