Public Provident Fund (PPF​)

Introduction: The Public Provident Fund was introduced by he National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns along with income tax benefits. The latest amendment in PPF is the Public Provident Fund Amendment Scheme, 2017.

Eligibility: Public Provident Fund (PPF) account can be opened by resident Indian Individuals above the age of 18 years and individuals on behalf of minors.

• Joint account cannot be opened.
• Only one PPF account can be maintained by an Individual, except an account that is opened on behalf of a minor.

Maturity Period: 15 years. But the same can be extended within one year of maturity for further 5 years and so on.

Investment Limits: An individual can open account with INR 100/– but has to deposit minimum of INR 500/- in a financial year and maximum INR 1,50,000/- . Investments can be made in lump sum or in a maximum of 12 installments per year. 

Minimum investment: Rs 500/year

Maximum investment: Rs. 1,50,000/year

Deposit Frequency: Deposit into a PPF account has to be made at least once every year for 15 years but a maximum of 12 investment is allowed each year.

PPF Withdrawal: One can close a PPF account only upon maturity i.e. after completion of 15 years. However the scheme permits partial withdrawals from year 7 i.e. on completing 6 years. 

Rule for partial Withdrawal: Customer can make one withdrawal every year, from the 7th financial year, of an amount that does not exceed 50% of the balance of the customer credit at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower.

But Note: Premature closure is not allowed before 15 years. Only Premature withdrawal is allowed from 7th year.

Interest Rate: Check the latest Interest Rate here

Important One Liners:

• Deposits qualify for deduction from income under Sec. 80C of IT Act.
• Interest is completely tax-free.
• Loan facility available from 3rd financial year. (Customers can avail of the loan facility between third financial year to sixth financial year ie. from third financial year upto end of fifth financial year.)
• Nomination facility is available.
• It is fully backed by Central Government.
• The interest is paid on 31st March every year

 

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