Introduction

Are you familiar with the term “PPF”? Public Provident Fund or PPF is an immensely popular investment option in India and for a good reason. PPF is considered one of the safest investment products and is backed by the government of India (GOI).

Moreover, the government sets the interest rate every quarter, making it a reliable choice for many. One of the key advantages of PPF is that your investment is tax-exempt under section 80C of the Income Tax Act (ITA), and the returns from PPF are also not taxable, up to Rs 1.5 lakhs under the act. This makes PPF a smart and tax-efficient way to grow your wealth for the future.

What is a Public Provident Fund (PPF) account?

The Public Provident Fund (PPF) scheme is a long-term investment option provided by the Indian government. It offers an appealing interest rate along with tax-free returns on the invested amount. Since the interest earned and the returns are exempt from Income Tax, it has become a favoured choice for those aiming to save for the long term.

Opening a PPF account under this scheme is straightforward. It is accepted and remitted from selected bank branches and post offices, and thus reaches the maximum gentry of this nation. Interest accrued and returns are not liable to be tax under the Income Tax Act of India and hence prove a very popular instrument of long-term saving.

The PPF scheme provides with one major advantage in which the amount deposited during a year can be claimed for deduction under Section 80C of the Income Tax Act for a maximum of Rs 1.5 lakhs per annum, hence easy and beneficial investment option for those who are desirous to save on taxes and thus, increase their savings, thereby presenting your financial insight.

Features and benefits of a PPF account

Some important features and benefits that a PPF account offers in India are as below.

1. The latest interest rate in the fiscal year 2024 offered to a person having a PPF account in India is 7.1% per annum. The interest rate is subject to quarterly updates as per the decision of the Indian government.
2. This is an interest rate that is higher than the interest rate provided by a bank’s savings account in India.
3. The minimum investment that one can make to a PPF account in India starts at Rs 500 a year. The maximum amount one can invest is Rs 1.5 lakhs per annum.
4. An investment avenue with a long-term perspective. In a PPF account, there is a lock-in period of 15 years, after which no sum could be withdrawn from a PPF account in India. After the completion of 15 years, the lock-in period could be further extended to more five years.
5. The PPF scheme provides a guaranteed and risk-free return in India, making it a reliable source of investment in India, as it’s backed by the Government of India (GOI).
6. The returns and interest earned from a PPF account are tax-free in India up to Rs 1.5 lakhs per annum under section 80 C of the Income Tax Act, 1961, India. Thus, helping to save tax on the income earned annually in India.
7. The amount deposited in a PPF account can be withdrawn partially from the fifth financial year onwards.
8. A joint account for a PPF scheme is not allowed in India. An account holder is individually accountable for a PPF account in India.
9. At the time of opening a PPF account or maybe later the account holder can assign a nominee for the account.
10. You can also take the loan again PPF account after the completion of a year. The loan amount should be an utmost 25% of the total available amount.

How to open or invest in a PPF Account in India?

You can open the PPF account by using the Post-office service, or with a Nationalised bank or even with a private Indian bank. The list of the documents required to be submitted in the list for opening a PPF account in India are – passport size photograph, residential address proof, duly filled account opening form for application, nominee declaration form, know your client document like an Aadhar card, a PAN card, driving license, etc.

A PPF account can opened both online or physically through a post office or a bank.

Opening the PPF Account online via your Bank

The process for initiating an online PPF account

1. Sign in to your internet or mobile banking account.

2. Choose the ‘Open a PPF Account’ option.

3. If you are opening the account for yourself, select the ‘Self Account’ option. If you are opening an account for a minor, choose the ‘Minor Account’ option.

4. In the application form the required details, need to be filled in.

5. Input the total amount you wish to deposit in the account per financial year.

6. A one-time password or OTP will be sent to your registered mobile number. Kindly input it in the relevant field.

7. Your PPF account will be created instantly! Your PPF account number will be shown on the screen. An email containing all the details for confirming the same will also be sent to your registered email address.

Opening a PPF account physically through a post office

The procedure for initiating a PPF account at a post office is as follows:

1. Obtain an application form from the nearest post office or online.
2. Complete the form and furnish the necessary KYC documents and a passport-size photograph.
3. Make the initial deposit to activate a post office PPF account. The deposit amount can vary from Rs.500 to Rs.1.5 lakh per financial year.
4. Upon the completion of processing your application, you will be provided with a passbook for your newly opened PPF account.

Frequently Asked Questions (FAQs)

Can a PPF account be obtained in the minor’s name?

Yes, a PPF account can be opened in a minor’s name.

When are you supposed to deposit funds into your PPF account?

There’s no specific date for depositing money into your PPF account.

Can money from a PPF account be withdrawn before the completion of 5 years?

No, it can’t be withdrawn before the completion of 5 years.

From where can you find the PPF account number?

The PPF account number can be found in the passbook provided by your bank or post office.

Can the guardians or the parents of the Minor/s, withdraw money from the existing minor’s PPF account?

Yes, the money can be withdrawn for the minor’s education purpose, on a minor’s medical illness. For the benefit of the minor such amount can be withdrawn.

When does the PPF account become inactive?

A PPF account becomes inactive, if the account holder fails to pay the PPF amount for a year.

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