Public provident fund scheme is popular mainly from the point of view of saving taxes and attractive returns as compared to other options available in the similar segment.
FAQs – Public Provident Fund (PPF) Scheme
PPF is a scheme floated by central government under the PPF Act 1968. PPF is a scheme for people looking for fully secure, government backed and tax beneficial investment. Salient features of PPF Scheme are as under:
1. Interest Rate on PPF
From 1.4.2013, i.e. in respect of Financial Years 2013-14, 2014-15 and 2015-16, the interest rate on PPF is 8.70% per annum (compounded yearly). It may be noted that Interest is calculated on the lowest balance between the close of 5th day and the last day of every month.
2. Amount of Investment in PPF
Minimum INR. 500/- Maximum INR. 1,50,000/- in a financial year. Deposits can be made in lump-sum or in 12 installments. 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/-
3. Joint Account or Multiple Accounts of PPF
Joint account under PPF Scheme cannot be opened. However, the subscriber can open another account in the name of spouse and minors but subject to maximum investment limit by adding balance in all accounts.
4. Account Opening and Nomination under PPF Scheme
PPF Account can be opened by cash / cheque. In the case of PPF Account opening by cheque, date of opening of PPF account shall be the date of realization of cheque in Govt. account. Nomination facility is available at the time of opening of PPF account and even thereafter also anytime. The PPF account can be transferred from one post office to another at the request of the PPF account holder.
5. Maturity of PPF Account and Extension
Maturity period of PPF account is 15 years but the same can be extended within one year before maturity for a further period of 5 years and so on. Maturity value can be retained in PPF account even without extension and without further deposits also, however no interest shall be payable. It may be noted that premature closure of PPF account is not allowed before completion of 15 years.
6. Tax Benefits of Investment in PPF
The amount of deposits in PPF qualify for deduction from income under Sec. 80C of IT Act. The income from interest on PPF is completely tax-free.
7. Withdrawal and Loans against PPF Deposits
Withdrawal from PPF Scheme is permissible only from 7th financial year of opening PPF account, once every year. However, loan facility against PPF deposits is available from 3rd financial year of opening PPF account.
8. Safety of PPF Deposits
No attachment of deposits of PPF Scheme under decree order issued by the Courts.
9. PPF Interest Rates in Past
1 Apr 1986 to 14 Jan 2000 – 12%
15 Jan 2000 to 28 Feb 2001 – 11%
1 Mar 2001 to 28 Feb 2002 – 9.50%
1 Mar 2002 to 28 Feb 2003 – 9%
1 Mar 2003 to 30 Nov 2011 – 8%
1 Dec 2011 to 31 Mar 2012 – 8.60%
1 Apr 2012 to 31 Mar 2013 – 8.80%
1 Apr 2013 to 31 Mar 2014 – 8.70%
1 Apr 2014 to 31 Mar 2015 – 8.70%
1 Apr 2015 to 31 Mar 2016 – 8.70%