PPF (Public Provident Fund)
PPF (Public Provident Fund) is a tax-saving means introduced by the Finance Ministry’s National Savings Institute (NSI). It serves the purpose of mobilizing the saving by offering reasonable interest along with tax benefits. It allows an individual to build a retirement plan while saving on taxes.
What is a PPF Account?
Public Provident Fund account is a long term investment product with a minimum tenure of 15 years and an option to extend the account in a group of five years. An individual can invest a minimum amount of ₹ 500 and a maximum of ₹ 1,50,000 in a financial year. The attractive interest rate combined with safety and tax benefits makes it a viable product to bank on.
How to open a PPF Account?
People can start a Public Provident Fund account at:
- Post Offices
- Nationalized Banks
- Private Banks
In a few banks, customers are also provided with an option to access the public provident fund online using net banking.
Documents required for PPF Account
Documents needed for starting a Public Provident Fund account are as follows:
- PPF account opening form
- Identity Proof
- Proof of Residence
- Photograph of the account holder
- Signature Proof
Benefits of opening PPF account
The benefits of opening PPF online and offline are as follow:
- Tax Exemption: One of the most prominent benefits of the Public Provident Fund is that it falls under exempt-exempt-exempt tax status. Exempt-exempt-exempt here implies that the amount invested up to ₹ 1,50,000 is deductible under Section 80 of the Income Tax Act. The interest earned is non-taxable, and the amount one gets after maturity is also exempted from tax. Thus, it becomes an investment vehicle like no other.
- Small Savings and Reasonable Return: PPF allows an individual with a lot of flexibility with investment options. An individual can make a public provident fund investment of a minimum of ₹ 500 and a maximum of ₹ 1,50,000 annually. It offers an interest rate of 7.10% compounded annually.
- Safety of Funds: The PPF investment is governed by the Government Savings Banks Act, 1873. The amount invested in the PPF is credited to the National Small Savings Fund, maintained and utilized by the Government of India. The government also pays the interest on the Public Provident Fund. Thus it becomes a risk-free and safe instrument.
- PPF Loans and Partial Withdrawal: The Public Provident Fund allows individuals to use the idle funds in the account by allowing them to take a loan. Further, it also allows the option of partial withdrawals from the 7th financial year, i.e. on completing six years.
- The flexibility of Tenure: PPF enables an individual to either withdraw the entire amount after 15 years or further extend the tenure in a group of 5 years. This flexibility allows individuals to choose the tenure according to their desires.
Eligibility for PPF
- Indian residents above the age of 18 years can open a PPF account.
- The residents above 18 years can open public provident fund accounts on behalf of the minor.
- Non-Resident Indians (NRIs) who had opened a PPF account when they were Indians residents can operate the account until 15 years without the extension option.
PPF Login and Registration Process
You can follow the following process for the login and registration process:
- You should be an existing customer willing to open the Public Provident Fund account.
- Sign-in using the Netbanking Portal.
- Select the ‘Open a PPF Account’ icon.
- Click on the ‘self account’ option if you want to start a public provident fund account or select the ‘minor account’ option if you open it on behalf of a minor.
- Submit relevant information, such as bank details, nominee details, etc.
- Check details like your PAN that is visible on the screen.
- After verifying the details, enter the total amount that you wish to deposit.
- You will be given a choice to set up standing instructions that allow the bank to subtract the sum at fixed intervals or in a lump sum.
- Then, you will receive an OTP on your registered mobile number.
- After the completion of the verification process, your Public Provident Fund account will get started.
Public Provident Fund Balance Check
Anyone can open a Public Provident Fund. It is a safe investment option for long term benefits with a decent return. However, to take the maximum benefit possible from the account, you should keep a close eye on the account balance and the next investment amount you should make. The various ways by which individuals can check their PPF amount are as follow:
Public Provident Fund Balance Online
Individuals can check the PPF balance and other relevant information by login into internet banking credentials. This is a simple process, and one can access it 24*7.
Public Provident Fund passbook is a passbook provided by the banks to individuals while opening an account. It contains information like PPF account number, account balance, transactions in your Public Provident Fund accounts and other relevant details. An individual can check the balance and the transactions by updating their passbook offline for the public provident fund at the bank.
Post Office PPF Balance Offline
Individuals who opened a post office Public Provident Fund account are also provided with this option to check their balance and other relevant information. They will have to visit the post office itself to get access to it.
Registered Banks where you can open a PPF Account
The list of banks providing the Public Provident Fund account opening facility are:
- Central Bank of India
- Axis Bank
- State Bank of India
- HDFC Bank
- Private Bank
- Bank of India
- Bank of Baroda
- IDBI Bank
- Indian Overseas Bank
- Punjab National Bank
- Punjab and Sind Bank
- Bank of Maharashtra
- Canara Bank
- Indian Bank
- Union Bank of India
- UCO Bank
Minimum and Maximum Contribution under the PPF Scheme
Individuals have to contribute to Public Provident Fund each year so that the account remains active. Under the PPF Scheme, an individual has to deposit a minimum amount of ₹ 500, and the maximum Public Provident Fund deposit must not exceed ₹ 1,50,000 annually.
PPF Interest Rate
The interest rate earned on public provident funds is fixed by the government every quarter. The interest in Public Provident Fund is calculated on the minimum balance between the 5th to the final day of every month. Currently, the interest rate offered is 7.10% per annum, last updated on 04 January 2021.
PPF Tax Benefits
Public Provident Fund contributions up to ₹ 1,50,000 are eligible for tax exemptions under Section 80C of the Income Tax Act, 1961. Earlier, the tax exemption limit was set at ₹ 1 Lakh, but now there is no tax on the maturity amount.
Premature Closure of a PPF
Individuals are allowed for early disclosure only after the completion of 5 financial years. They can withdraw up to half of the balance in the public provident fund scheme after the fulfilment of 5 years at the end of the year in which the initial amount was made. Single partial withdrawal is allowed in each fiscal.
Individuals can still opt for premature closure if the account holder, his/her partner, or offspring are suffering from a serious ailment or for a child’s higher education. Premature closure comes with an interest rate penalty of 1%.
Attachment of a PPF Account
The Central Government fully guarantees the amount under the Public Provident Fund scheme. The Public Provident Fund account amount is not subject to attachment under any order or decree of the court. However, Income Tax & other Government authorities are authorized to attach the account for recovering tax dues.
Latest News on PNB PPF Account
- Get High Returns on PNB Public Provident Fund Account
- Punjab National Bank has started the facility to open a PPF account at all its branches with a minimum deposit of ₹ 500. Investors can deposit up to Rs. 1.5 Lakhs in a financial year. The plan has a lock-in duration of 15 years. Individuals can further prolong their tenure in a combination of 5 years. As per the prevailing rates, the interest rate on PPF is 7.10%.
To know more about the Public Provident Fund and its features and benefits, visit Dialabank.
✅ What is a PPF account and what are its benefits?
A public provident fund is a tax saving scheme provided by the government of India. It is tax-exempt, offers a reasonable interest rate, and is risk-free.
✅ Which bank is best for the PPF account?
Most banks are equally good as they provide smooth account opening, online fund transfer and other facilities, for example, BOB or SBI Public Provident Fund. You can consider the bank in which you already have a savings account.
✅ What is the current interest rate of SBI PPF?
The current interest rate on the SBI Public Provident Fund account is 7.10%.
✅ Can PPF be withdrawn?
Yes, the Public Provident Fund can be withdrawn fully after the end of the lock-in period of 15 years. An individual can also withdraw prematurely, up to a maximum of 50% of the amount that is in the account at the end of the 4th year.
✅ Is the PPF Scheme better than LIC?
It differs on an individual’s requirement. Few major differences are LIC is insurance, and PPF Scheme is an investment. LIC offers flexible tenure, whereas there is no such tenure in Public Provident Fund. It is tax-exempt, whereas LIC is eligible for tax deductions.