PPF stands for Public Provident Fund which is a scheme initiated by the NSO (National Savings Organisations) in 1968. The PPF scheme was started in order to promote small investments and savings. This is a fixed returns scheme providing with tax benefits as well under the Section 80C.
Banks like ICICI, AXIS, HDFC, CENTRAL BANK OF PUNJAB, BOI, IDBI, CENTRAL BANK OF INDIA, PNB, INDIAN OVERSEAS BANK etc. and only SBI’s designated branches are functional at opening PPF accounts of customers along with its subsidiaries.
1. Account opening form which can be availed and filled at the bank branch and portal of Indian Post.
2. Proof of Identity which may be any of the following: Aadhar card: Driving license, PAN card, Voter Card, Passport
3. Proof of address which may be any of the following: Aadhar card, Passport, Telephone bill, Electricity bill
4. 2 latest photographs
5. A cheque of the amount you wish to transfer to your PPF account signed in the favor of bank or pay-in-slip
6. In case of a minor, the birth certificate may be required as proof of age.
1. You need to visit the bank branch you wish to open the account in and submit the necessary documents if you wish to open offline. Also, the copies of documents should be self-attested.
2. Every bank has a different procedure to open a PPF account, visit the website of the bank you wish to open the account with.
1. Risk-free: This is a fixed return scheme offering a good 8% return annually. Moreover, the central government of India backs up the scheme.
2. Power of compounding: By every March 31st, you are paid the interest earned on your investment which is compounded annually till the maturity or withdrawal.
3. Tax deduction: Investing in PPF comes with Tax rebate on up to Rs. 1.5 Lacs under section 80C.
4. Long-term investment: It is a very good option for those who wish to invest in the long term with assured returns.
5. Start small: You can start small with PPF investment from Rs. 500 and increase it up to Rs. 1,50,000 as the maximum limit annually.
6. Premature withdrawal: 7th year onwards the subscriber can avail partial withdrawal facility.
The current interest rate offered by the government for the year 2019 is 8% as applicable 1st January onwards.
In case you wish to open a PPF account for a minor that can be done by a parent on the behalf of the minor. Only one account can be opened against one minor by either of the parents.
If the parents of the child are alive, grandparents are not allowed to open a PPF account against their grandchild.
Note: As mentioned above, in case of a minor, a birth certificate would also be required.
FORM A: To open a Public Provident Fund Account.
FORM B: To make deposits and repay loans against the account.
FORM C: To make partial withdrawals.
FORM D: Applying for a loan against PPF account.
FORM E: To add a nominee to the PPF account.
FORM F: To change the nomination.
FORM G: To claim funds which is done either by legal heir or nominee
FORM H: To extend the maturity of the account
Only after 5 years are complete, the premature closure is allowed for a PPF account. It has to be a case of critical illness/ medical reasons regarding family members or higher education of the account holder only.
Note: If you wish to close the account on a premature basis, you will be charged with 1% penalty on the rate of interest i.e. if 8% is the running ROI, you will be paid as per 7% ROI on premature closure.
If you happen to be in a transferable job or for any reasons there are demographic changes happening, you can transfer your account to any other branch or bank or post office. There are no charges on account transfer.
Follow these simple steps to transfer account:
Step 1: Visit the bank/branch/PO where your PPF account is located and raise a transfer request
Step 2: The bank/PO will forward the desired documents to the new location as mentioned by the subscriber. These may include account opening form A, nomination form, specimen signature etc.
Step 3: Once the request is received by the new location, you will be contacted to produce the old account passbook and fill a new application form. At this stage, you can change/add/delete the nomination details.
Step 4: In a few days, your account will be transferred to the new location which can be checked online through internet banking id. In case you are not able to locate the changes, please contact the concerned bank/branch/PO.
Q1. Does PPF account get inactive?
Yes, if you fail to deposit a minimum of Rs. 500 per year, your account will be considered inactive.
Q2. How to reactivate an inactive PPF account?
For every inactive year, you need to pay Rs. 50 plus the minimum cumulative amount for each year.
Q3. What are the tax implications of a PPF account?
A maximum of Rs. 1.5 lacs are tax exempted. The PPF falls under EEE type tax baskets where the maturity corpus and the interest earned are tax exempted on maturity.
Q4. Can grandparents open a PPF account for their grandchild?
In case the parents of the child/minor are alive, grandparents cannot do so.