Public Provident Fund (PPF) investment limit: There seems to be a confusion among several subscribers about the maximum amount they can invest to enjoy full benefits of PPF accounts.
Public Provident Fund (PPF) investment limit: There seems to be a confusion among several subscribers about the maximum amount they can invest to enjoy full benefits of PPF account. Take the case of Ragini Singh (name changed) who has a PPF account in her name for the last 12 years. She has been investing Rs 1.5 lakh in PPF since opening the account. Happy with expected better returns and sovereign guarantee on PPF, Ragini also opened two more PPF accounts in the name of her two minor daughters four years ago, hoping to encash around 8 per cent interest offered by PPF on maturity of these account. She has been investing Rs 1.5 lakh each in all three accounts for last four years.
PPF offers tax benefit under Section 80C of the Income Tax Act, which provides maximum deduction up to Rs 1.5 lakh on investments in various instruments including PPF, and Life Insurance Premium. Ragini is aware of this limit. She has also purchased Life Insurance, which accounts for Section 80C benefits for her. But in an e-mail to FE Online, Ragini said she is worried about what will happen to Rs 4.5 lakh she is investing in three PPF accounts every year?
The maximum deposit limit for benefits under PPF scheme is Rs 1.5 lakh/year. Even if a person has opened accounts in the name of his/her children, the combined deposit in all accounts shouldn’t be more than Rs 1.5 lakh/year. Section 3 of Public Provident Fund Scheme 1968 on “Limit of subscription”, clearly says: “Any individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (thereafter referred to as the Fund) any amount not less than Rs. 500 and not more than Rs. 1,50,000 in a year.”
It is clear from PPF rules that Ragini will not earn interest on the invested amount above the Rs 1.5 lakh ceiling. She can contact her account office for details and to get the excess amount back.
Any individual can subscribe to PPF by opening the account in his name. He/she can also open a PPF account in the name of a minor of whom he/she is the guardian. As per PPF rules, there should be only one PPF account in the name of one individual.
Watch Video: How to withdraw PF online
Partial withdrawal from a minor account is allowed from the seventh year, but the guardian has to declare that the money will be used for minor. Either mother or father can be guardian in case of minor account.