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  1. Want to open a PPF account? Here are 10 important things to know

Want to open a PPF account? Here are 10 important things to know

Public Provident Fund (PPF) is one of the most popular tax-saving instruments. The objective of PPF is to give an option to salaried individuals, who are not covered under Employees Provident Fund (EPF), to save money for retirement. If someone who is self-employed, then also one can open a PPF account for long-term savings.

By: | Published: March 29, 2017 4:42 PM
An individual can open only one PPF account in their own name. Shifting of an account can easily be done from one location to another.

Public Provident Fund (PPF) is one of the most popular tax-saving instruments. The objective of PPF is to give an option to salaried individuals, who are not covered under Employees Provident Fund (EPF), to save money for retirement. If someone who is self-employed, then also one can open a PPF account for long-term savings.

Here are 10 things to know about Public Provident Fund (PPF):

1. Opening and holding of PPF account

A PPF account can be opened with any registered bank or a post office. An individual can open only one PPF account in their own name. Shifting of an account can easily be done from one location to another.

2. Who CANNOT open a PPF account

NRIs and HUFs are not allowed to open PPF accounts. However, if a resident becomes an NRI during the prescribed term, then in such a case the NRI may continue his account till its maturity on a non-repatriation basis. Moreover, one cannot open a joint account.

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3. Minimum and Maximum deposits

The minimum deposit one can make in a PPF account is Rs 500. The maximum amount that one can deposit in a particular financial year is Rs 1.5 lakh. Subscription of minimum deposit can be increased in a multiple of Rs 5 thereafter. However, maximum 12 installments of deposits can be made in a particular financial year.

4. How to do investments in a month

Firstly, one should know that the interest is calculated on the lowest balance prevailing from the 5th day till the last day of the month. Make sure that you are making deposits in the first four days of the month to maximize your profit earnings. The interest in compounded annually and is not paid out.

5. Returns from PPF are guaranteed

PPF is one of the debt instruments which offers guaranteed returns, although the rate keept changing from quarter to quarter in FY 2016-17 because the 10- year government bond yield dropped to a certain level.

6. Maturity proceedings

The account matures after the expiry period of 15 years. One withdrawal is allowed every year from the 7th financial year. However, one can also withdraw a maximum of 50% of the balance at the end of the 4th year or the immediate preceding year, whichever is lower.

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7. PPF account extension availability

A PPF account is opened for 15 years. However, one can continue one’s account for a further block of 5 years with or without doing any additional contribution. One should also know that if one has not made any contribution within the one year of the time period in the extended tenure, then one will not be allowed to change the term option.

8. Amount payable under mishappening

Suppose the account holder has not assigned any nomination against the account and all of a sudden something happens to the account holder during the term of the scheme. In such a case the balance will be paid to the legal heir. However, one should make the nomination while opening a PPF account.

9. EEE tax benefit

The contribution made in the PPF account has an exempt- exempt- exempt (EEE) status. This means you can get tax exemption on the contribution made up to Rs 1.5 lakh under section 80C of I-T Act, besides getting tax exemption on accumulated returns added to your PPF account during its tenure and also tax exemption on withdrawal made on maturity, making everything tax free in the hands of an investor.

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10. Court cannot seizure PPF account
The money invested in a PPF account is totally safe in the hands of an investor as the account can’t be seized by a court order. This means that a court cannot give an official takeover order of your account under any circumstances.

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  1. D
    Devaki srinivasan
    Jul 5, 2017 at 12:39 pm
    Can a senior citizen aged 64 years open a PPF account? Can a British citizen holding overseas citizen of India certificate, having a savings account with SBI, open a PPF Account and invest in SIP?
    Reply

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