When it comes to investment Public provident fund (PPF) is first choice of large number of Indian people. It is one of best government tax-saving scheme. Currently it has interest rate of 8.1% compound annually with locking period of 15 years. However, one can withdraw partially money after 5th year on-wards.
If you want to invest in ppf you must know some facts related to ppf. Below list provides highlight points of PPF account.
- The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
- The Scheme is for 15 years.
- Public Provident Fund Interest Rate is fixed by the Ministry of Finance, Government of India, annually, and at present is 8.1% compounded annually
- The minimum deposit is 500/- and maximum is Rs. 1,50,000/- in a financial year.
- 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.1,50,000/- per FY.
- It is not mandatory 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 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.
- 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 CPF/PF account can also open a PPF account.
- A Power of attorney holder can neither open or operate a PPF account.
- The grand father/mother cannot open a PPF account on behalf of their minor
- grand son/daughter.
- The deposits shall be in multiple of Rs.100/- subject to minimum amount 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.1,50,000/-.
- No age is prescribed for opening a PPF account.
- According to Public Provident Fund Scheme 1968, the facility of loan against the PPF deposits is available from 4th to 6th year of deposit to the extent of 25 % of the amount deposited as at the end of the last financial year. The loan is repayable in 36 months. There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period. However, pre-mature withdrawals can be made from the end of the sixth financial year from when the commenced. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.
- Public Provident Fund Withdrawal or 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 has to be closed.
- 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 held beyond 15 years subject to a ceiling of 60% of the balance at the end of the 15 year term.
- The PPF scheme is operated through Post Office and Nationalized banks through its authorized branches as per GOI notification.
- 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.
- 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 PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
- More than one person nomination facility available.
- Best for long term investment.