PPF - Public Provident Fund: - is one of the most popular savings schemes prevalent in India. As this scheme is offered by the Central Government, the money invested in this scheme and the returns are safe and guaranteed.
PPF was launched along with other
savings schemes like Jyestha Nagrik Suraksha Yojana (SCSS), Sukanya Samriddhi
Yojana and National Savings Certificate (NSC) etc. With the main objective of
benefiting the small investors. Investment in these schemes can be started with
a minimum of Rs 500. PPF is specially designed for people who are looking for a
safe and secure savings plan with guaranteed returns.
PPF also offers tax benefits, as it
belongs to the Exempt-Exempt-Exempt (EEE) category. This means that in the
first year, the year in which the investment is made in PPF, that person will
get tax exemption (under section 80C). Also, no tax will be levied on the
interest earned on PPF deposits along with the investment amount.
The interest rate of PPF is determined
by the government every quarter. For the first quarter of 2022-23 i.e. April 1
to June 30, 2022, the PPF interest rate has been fixed at 7.1 percent.
Features of PPF
- Lock-up period: PPF is a long-term investment with a
lock-up period of 15 years. This means that the amount deposited in the PPF
account can be withdrawn only after the expiry of 15 years. After this period
is over, it can be extended for another 5 years. Early evacuation is permitted,
but only in emergency situations.
- Interest on PPF: Interest on PPF balance is calculated every month and this amount of interest is credited to the PPF account at the end of each financial year. The government announces interest rates every quarter. After 5th of every month, interest amount is calculated on the lowest PPF balance till the last day of the month. Therefore, PPF investors are encouraged to contribute to their PPF account before the 5th of every month.
- Minimum and Maximum Investment: Individuals should invest a minimum of Rs 500 per year. And a maximum of Rs 1.5 lakh can be invested in a PPF account in a F.Y.
- Tax: PPF also offers the best tax benefits as it is in the exempt-exempt (EEE) category. This means that the principal amount, maturity amount and interest earned will not be taxed.
- Loan against PPF: A PPF account holder can avail loan against his PPF balance. However, this loan can be used from the beginning of the third year till the end of the sixth year from the date of opening of the Account. The maximum loan amount is limited to 25 Percentage of the PPF balance (at the end of the second year or at the end of the year in which the loan is applied).
Eligibility conditions
- Indian residents can open 1 PPF account.
- NRIs are not eligible to open PPF account. However, a Resident Indian who becomes a Non-Resident Indian after opening the account can continue with the account till its expiry.
- Parents can also open PPF account for their minor children.
- Joint account and you cannot open more than one account.
- Documents required for opening PPF account
- Here is the list of documents required while opening PPF account:
- PPF Account Opening Form - Form A (This form can be obtained from any bank authorized to open PPF account)
KYC documents - for identity verification
- Aadhar card,
- Voting license
- Driver's license
- Address verification
- Pan Card
- Passport size photograph
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