The Public Provident Fund Account (PPF) balance enjoys a special benefit when it comes to legal proceedings against the PPF account holder. An order or a decree of a court could be issued for attaching property or assets, in respect of any debt or liability incurred by the individual who could also be a PPF account holder. However, such a court order does not have any impact on the PPF account of the individual. As per the rules, the PPF account is protected and the account balance cannot be attached even by the court order.
The attachment of the PPF balance was always protected from court attachments and even the Public Provident Fund Scheme 2019 continues to provide that advantage to the PPF subscriber.
As per the rules, PPF enjoys the protection of credit balance from attachment – “Amount standing to the credit of any account holder shall not be liable to attachment under any order or decree of any the court in respect of any debt or liability incurred by the account holder.”
The advantage that PPF account has is only in the case of court orders. The PPF account is still liable to be attached under any order of the income tax authorities, in respect of any debt or liability incurred by the PPF subscriber.
The concern was raised that whether the attachment of credit balance in Public Provident Fund Account under orders of Income Tax authorities in respect of any debt or liability incurred by the subscriber can be met. As per the clarification, it was made clear that this law applies only to attachment under a decree or order of a Court of Law and not to attachment by the Income Tax Authorities.
In view of this clarification, the amount standing to the credit of the subscriber in PPF Account shall be liable to attachment under any order of income tax authorities in respect of debt or liability incurred by the subscriber.
PPF is a 15-year scheme and thereafter the account can be extended in a block of five years. If one invests Rs 1.5 lakh each year in PPF for 15 years, the maturity amount at an assumed growth rate of 7.9 per cent is approximately Rs 44 lakh. If one keeps investing, the maturity amount is approximately Rs 73.25 lakh in 20 years while after 23 years, the PPF corpus may become approximately Rs 1 crore.
Importantly, the tax-free nature of the scheme and the highest safety of money that it has owing to the backing of government guarantee makes it a popular investment option.