The Public Provident Fund (PPF) is highly popular as a fixed income product because of its long-term guaranteed earnings and tax benefits. By contributing small amounts on a regular basis, the PPF scheme enables you to start saving and build a fund that aligns with your financial objectives.
Who can open an account under PPF?
Any resident individual can open an account for himself/herself and on behalf of a Minor or a person of unsound mind as a Guardian.
According to the SBI website, “A Public Provident Fund (PPF) account can be opened by resident Indian Individuals and individuals on behalf of Minors or a person of unsound mind. Only one Public Provident Fund (PPF) account can be maintained by an Individual, except an account that is opened on behalf of a Minor / a person of unsound mind. A Public Provident Fund (PPF) account can be opened either by the Mother or Father on behalf of their Minor Son or Daughter. However, the Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same Minor.”
PPF offers interest rate of 7.1 % that is fully exempt from tax under Section 80C. This interest rate is for the July-September 2024 quarter.
What if the PPF account holder becomes NRI?
A resident who subsequently becomes NRI during the currency of maturity period prescribed under the Public Provident Fund Scheme, may continue to subscribe to the fund till its maturity on a non-repatriation basis. However, these accounts cannot be extended further.
Minimum and maximum
The minimum investment is Rs.500/- in every financial year and the maximum investment is Rs.1,50,000/- in every Financial Year. A minimum deposit of Rs 500 is required to be deposited in PPF Account every year. If this is not done, the PPF account will become inoperative.
Transfer of PPF account
PPF accounts can be transferred from other banks or post offices, and vice versa. In this instance, the PPF account will be considered as a continuous account. The process is outlined below:
To transfer a PPF account, the customer must file a request to the bank/post office where the account is held. The old bank/post office will deliver the relevant documentation, including a cheque/DD for the outstanding balance, to the customer’s new branch address.
Loan against PPF account
If the loan is not repaid, or is repaid only partially, within thirty-six months, interest on the amount of loan outstanding will be charged at six percent per annum rather than one percent per annum, beginning on the first day of the month following the month in which the loan was obtained and ending on the last day of the month in which the loan is finally repaid.
PPF account can be continued after maturity without making any further deposits. The balance will continue to earn interest at the notified rates. The subscriber can make one withdrawal of any amount within the balance available in each financial year.
