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Public Provident Fund
    Salient Features

  • The rate of interest is 8.60% p.a. compounded annually.

  • The minimum deposit is 500/- p.a

  • The maximum is Rs. 1,00,000/- p.a

  • Interest is totally tax free.

  • Tax saving instrument under section 80C.

  • Loan facility available from third year.

  • The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.

  • The Scheme is for 15 years.

  • One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.

  • The deposit can be in lumpsum or in convenient installments, not more than 12 installments in a year or two installments in a month, subject to total deposit of Rs.1,00,000/-.

  • It is not necessary to make a deposit in every month of the year.

  • The amount of deposit can be varied to suit the convenience of the account holders.

  • The account in which deposits are not made for any reason is treated as discontinued, account and such an account cannot be closed before maturity.

  • The discontinued account can be activated by payment of the minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.

  • The account can be opened by an individual or a minor through the guardian.

  • Joint account is not permissible.

  • Those who are contributing to GPF Fund or EDF account can also open a PPF account.

  • A Power of Attorney holder can neither open nor operate a PPF account.

  • The grand father/mother cannot open a PPF on behalf of his/her minor grand son/daughter.

  • The deposits shall be in multiples of Rs.5/- subject to minimum of Rs.500/-.

  • The deposit in a minor account is clubbed with the deposit of the account of the guardian for the limit of Rs. 1,00,000/-.

  • No age is prescribed for opening a PPF account.

  • Interest is not contractual but the rate is notified by the Ministry of Finance, Govt. of India, at the end of each year.

  • The facility of first withdrawal in the 7th year of the account subject, to a limit of 50% of the amount at credit preceding three year balance.

  • Thereafter one withdrawal in every year is permissible.

  • Premature closure of a PPF Account is not permissible except in case of death.

  • Nominee/legal heir of PPF Account holder on death of the account holder cannot continue the account.

  • The account has to be closed in such case.

  • The account holder has an option to extend the PPF account for any period in a block of 5 years at each time.

  • The account holder can retain the account after maturity for any period without making any further deposits.

  • The balance in the account will continue to earn interest at normal rate as admissible till the account is closed.

  • One withdrawal in each financial year is also admissible in such account.

  • A PPF account can be opened either in a Post Office or in a Nationalsed Banks.

  • The Account is transferable from one Post Office to another and from Post Office to Bank or from a Bank to a Post office.

  • Account is transferable from one Bank to another bank as well as within the bank to any branch.

  • Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.

  • The interest on deposits is totally tax free.

  • Deposits are exempt from wealth tax.

  • The balance amount in the PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.

  • Nomination facility is available.

  • The Best option for long term investment.

  • Loans can be taken from PPF account at the rate of 2.00% per year.