Public Provident Fund (PPF) is the most popular investment option in India when you talk about income tax saving or planning for retirement. Although this is the best debt investment option where you can save max up to Rs 1.5 lakh income tax, but this is not only the attracting feature of opening a PPF account. PPF account itself has some awesome benefits which simply suits the need of a person who is looking to build wealth in long term without taking much risk.
In this article I will share the complete details of PPF account and various other factors & benefits of this account. The best part I found is that you can earn compounded interest and the maturity is tax free.
FAQs on Public Provident Fund (PPF)
Who can open PPF account in India?
Anyone can open this PPF account. Many people think PPF & EPF is same think and one having the EPF account can’t open PPF account. Which is completely baseless. PPF account is a different & separate account which one can open for self or minor in bank or post offices.
What is the income tax benefit for opening PPF account?
The investment in PPF account is EEE, means the deposit, interest earned & maturity is tax free.
Where can I open PPF account in India?
This account is like a bank account only and one can open in all reputed banks in India and also earn a decent interest rate. That means this is one of the most secured investment product in India.
Maturity & partial-withdrawal rules of PPF
The maturity if PPF account is 15 years. But one can withdraw money form PPF account only after completion of first 6 years. That means there is a lock-in period of 6 years.
The partial withdrawal facility is available as per rules below.
One can extend PPF account after completion of 15 year on installment of 5 years extension & enjoy all benefits of PPF. Just provide a letter to extend your PPF account for next 5 year and its done.
What is the minimum & maximum deposit limit for PPF account?
One can open account with Rs 100 min balance and annually Rs 500 min. If the minimum amount is not maintained then a penalty of Rs 50 will be applied. Yearly 12 times & monthly max 2 times deposit is possible as per t he rules.
Can I open PPF account online?
One can also open PPF account online these days. This facility is only available on specific banks, not in post office yet. You can check with your bank for the same. List of banks providing online money transfer to PPF account.
Can I transfer PPF account to other Bank?
One can easily transfer PPF account from one bank to another bank to enjoy online transfer and other facility. In fact one can also transfer PPF account from post office to Bank. Visit your nearest post office and ask for the process to follow.
Can I open PPF account in Joint or Against HUF?
There is no concept of joint account in PPF or one can’t open on behalf of HUF. All the previous accounts opened for HUF will continue to get benefit, but the new account opening is not allowed.
Can NRI open PPF account in India?
NRI can’t open as per latest rules. Previously it was possible and their will continue to get benefits of PPF.
Can grant parent open PPF account for their grant child?
One can open PPF account for minor if the minor is direct dependent. That means grant parents can’t PPF account for their grand child. Only father & mother can open. In that case the deposit under the minor’s PPF account will be considered as deposit of both father & minor and considered as 3 lakh max. But income tax benefit will only get up to Rs 1.5 lakh, combine benefit is not possible.
What will happen if I deposit more than Rs 1.5 lakh in PPF account?
One can’t deposit more than 1.5 lakh in PPF account. First of all it will not allow you to deposit online, even of you deposit by cash mistakenly, then extra amount will not be considered for interest benefit. So no need to be extra smart.
What is the current interest rate of PPF account?
The current interest rate of PPF account is 8.1%. The interest rate of PPF is reviewed in every quarter and accordingly decisions taken for changing interest rates, As per historical data, interest rate of PPF account has been reduced significantly in past few years. Whatever is the latest interest rate, it will be applied on the entire corpus including interest rate on your PPF account.
What are the mode of deposit in PPF account?
One can deposit amount in PPF account as deposit cash, cheque, DD, online transfer, ECS / standing instruction. I am having PPF account in SBI and every month I am depositing a fixed amount by creating a standing instruction automatically.
When Should I open PPF account?
One should open PPF account as early as possible. The best time to deposit money in your PPF account is in the month of April to avoid delay and also get good interest within 5th of every month of the beginning of every financial year. Another good part about this account is that the maturity is tax free. So if you can open PPF account as early as possible, your account will be mature fast and you will get withdrawal option at the right time.
E.g. you can open PPF account for your kids, even if you are not going to get tax benefit. By the time they will grow, you can use that money for their education or marriage or even allow them to continue for future also. Another advantage is that the entire corpus and interest earned will be tax free. So, do you think PPF account is the best investment to create wealth for long run? You can also share your query or doubts or any question which is not covered here by commenting here. I will try my level best to answer them as per my knowledge. Share this article on Facebook to spread more about the benefit of PPF account.