Public Provident fund

PPF was established by the central government in 1968 & very safe since it is backed by the government. The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.

• Minimum Amount

The minimum amount you have to put into your PPF account in a year is Rs 500. The maximum you can put is Rs 70,000 per year. But one deposit with a minimum amount of Rs.500/- is mandatory in each financial year.

The deposit can be in lump sum or in suitable installments, but not more than 12 Installments in a year or you cant make two installments in a month subject to total deposit of Rs.70,000/-.

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 deposits should be in multiple of Rs.5/- subject to minimum amount of Rs.500/-.

The deposit in a minor account will be clubbed with the deposit of the account of the Guardian for the limit of Rs.70, 000/-.

No age is prescribed for opening a PPF account.

• Want to buy?

The Account can be opened by an individual or a minor through the guardian. But 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 behalf of their minor
grand son/daughter.

The PPF scheme is operated through Post Office and Nationalized banks.

PPF account can be opened either in Post Office or in a Bank.

• Duration

The Scheme is for 15 years.

The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity.

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

The facility of first withdrawal is available in the 7th year of the account subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter only one Withdrawal in every year is permissible.

The account holder has an option to extend the PPF account for any period in a block of 5 years on 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 on PPF account till the account is closed.

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

• The rate of interest is 8% compounded annually.

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

Let's say on April 1, 2008, you invested Rs 50,000 in PPF and the same amount in NSC. On April 1, 2009, your PPF account will have Rs 54,000

• Income Tax

This investment falls under Section 80C. That means the investment is made under this section are eligible for an income deduction up to a maximum Rs 1, 00,000.

The interest on deposits is totally tax free.

Deposits are exempt from wealth tax.

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

• Transferability

Pre-mature 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 can not continue the account, but account had to be closed.

Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office.

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

Nomination is the facility available.