Public Provident Fund (PPF) - Benefits, Interest Rate, Forms

Public Provident Fund or PPF is a tax-cum-saving scheme from Govt. of India, suitable for every investor. The purpose of PPF is to assemble little funds over a period of time with sensible returns joined with income tax benefits. The plan is completely ensured by the Central Government.

PPF Features

• One can voluntarily open an account with any nationalized bank, selected authorized private bank or post office. The account can be opened in the name of individuals including minor.
• The minimum amount is Rs.500 which can be deposited.
• The entire balance can be withdrawn on maturity.
• Interest received is tax free.
• The maximum amount which can be deposited every year is Rs. 1,50,000 in an account at present.
• The interest earned on the PPF subscription is compounded annually.
• All the balance that accumulates over time is exempted from wealth tax.
• Moreover, it has low risk – risk attached is Government risk.
• PPF is available at post offices and banks.

Eligibility to open PPF Account

• Resident Individual in his/her own name and as guardian of a minor or a person of unsound mind can open the account.
• PPF Account can not be opened in joint names.
• Non Resident Indians (NRIs) can not open PPF account w.e.f. 25.07.2003
• HUFs can not open PPF account w.e.f. 13.05.2005
• Accounts opened by NRIs and HUFs prior to above mentioned dates will continue till maturity. Thereafter no extension is allowed and no interest is payable on HUF and NRI PPF Accounts.
• Only one account can be opened by an individual in one name. Second PPF Account opened in contravention of PPF Rule will be treated as irregular account and will be closed and will not carry any interest.

Who can not open PPF account?

• From 13th May 2005 it is not allowed to open the accounts of juristic persons i.e. HUFs, Trusts, etc. It may, however, be noted that the above amendments shall not be applicable to the Accounts opened prior to 13.05.2005 and these accounts shall continue till maturity but they will not be allowed to seek extensions.
• Account cannot be opened in joint names.
• Account cannot be transferred from one person to another.
• Non-Resident Indians are not eligible to open the account under the Scheme.

Two PPF Accounts

Only one account is to be opened in one name. If two accounts are opened by mistake, the second account will be treated as irregular account and will not carry any interest unless the two accounts are amalgamated with the approval of the Ministry of Finance through the Local Small Savings Office.

PPF account for Minors

• The account on behalf of a minor can be opened by either father or mother. Both the parents cannot open a separate account for the same minor.
• The Grand Father / Grand Mother cannot open an account on behalf of their minor grandson / granddaughter when parents of the minor are alive. If neither parent is alive nor where the only living parent is incapable of acting, a person entitled under the law for the time being in force to take care of the property of minor, can open a PPF Account on behalf of such minor.
• When the minor attains majority before the maturity of the Account, the ex-minor will himself continue the account thereafter. He will submit a revised application form for opening the account. His signature will be attested by the Guardian or a respectable person, known to the Bank.

Public Provident Fund (PPF) Documents Required for Opening of Account

The following documents are accepted as valid documents for the purpose of identification and address proof:

1. Passport
2. Driving license
3. Voter’s ID card
4. PAN card
5. Job card issued by NREGA signed by the State Government officer
6. Letter issued by the National Population Register containing details of name and address)

In case of minors, following documents are required:

1. Proof of Date of Birth
2. Details of Guardian(Natural/Legal) along with KYC documents

Deposit in PPF Account

The account can be opened with a minimum initial deposit of Rs. Five Hundred only and thereafter deposit of any sum in multiple of Rs Fifty can be made subject to not more than Rs.One lakh Fifty thousands in an account during a F.Y in one lump sum or in installments. Maximum limit of Rs one lakh fifty thousand by an individual, shall be inclusive of the deposits made in his own account and in the account opened on behalf of the minor. The total deposit in a year as specified, shall be inclusive of deposits made in respect of years of default of the preceding years but excluding the default fee.

Duration of PPF Account

The account is of 15 years duration and the account can be extended for one or more blocks of 5 years without loss of interest on written request within 1 year from the date of maturity.

Lock-in period of PPF Account

The minimum lock-in period of a Public Provident Fund(PPF) investment is 15 years. You can withdraw your entire corpus at the end of the 15th year. But if you wish to stay invested for a longer period, you can continue to do so (with or without making additional contributions). You can apply for extensions in 5 year blocks. There is no limit on how much time you can stay invested in the fund after the initial lock-in period of 15 years.

Tax Benefits of PPF

Investments up to Rs.1.5 lakh are eligible for tax deductions under Section 80C. And since the maximum amount you can deposit in a PPF is Rs.1.5 lakh per annum, it simply means that the entire amount can tax deductible (provided you have made no other investments under Section 80C).

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You should also know that PPF investments fall under the Exempt-Exempt-Exempt (EEE) category.
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This means:

• The amount you invest in PPF is exempt from tax
• The interest you earn on PPF is exempt from tax
• The final corpus at the time of withdrawal is also exempt from tax.
• And if you are investing mainly for the purpose of tax saving, the EEE tax status helps. This is why the PPF scheme is considered a great tax saving option.

Deposit rules in PPF

You have to make at least one deposit per year for 15 years. The PPF minimum deposit is Rs.500, while the maximum that can be invested in a financial year is Rs.1.5 lakh. If you make any deposit in excess of Rs.1.5 lakh in a financial year, the transaction will be automatically rejected. Until recently, the number of deposits was capped at 12. But now, you can make any number of deposits in multiples of Rs.50 in a financial year. You can make deposits in PPF online, or by cash, cheque and demand draft.

Nomination facility in PPF

You can nominate more than one person. If you choose to nominate more than one person, you will need to mention the percentage of share; the shares of all nominees should add up to 100 per cent. Also, if the account has been opened on behalf of a minor, a nomination facility is not provided.

Interest in PPF Account

The PPF(Public Provident Fund) interest rate is fixed by the Finance Ministry every quarter. The current PPF interest rate is 7.1%. And, though the interest is calculated every month, it gets credited to your account on 31st March every year. Also, the PPF interest is calculated on the minimum balance between the fifth and the last day of the month.

Say, you have a balance of Rs.1 lakh in your PPF account on 30th April. Now, let's imagine you deposit Rs.10,000 in your PPF account on 3rd May and Rs.5,000 on 21st May. Now, the interest on your fund for the month of May will be calculated on Rs.1.10 lakh and not Rs.1.15 lakh.

Previous Interest Rates of PPF

1986–2016

2016–17

2017–18

2018–19

2019–20

2020–21

2021–22

2022–23

PPF Loan Rules

• The depositor is eligible for a loan.
• The first loan can be taken in the third financial year from the financial year in which the account was opened up to 25% of the amount at the credit at the end of first financial year.
• The principal amount of loan shall be repaid by the account holder before the expiry of thirty six months from the first day of the month following the month in which the loan is sanctioned.
• The repayment of the loan can be made either in lump sum or in installments.
• After the principal amount of the loan is fully repaid, the account holder shall pay interest thereon in not more than two monthly installments at the rate of one percent, Per annum of the principal for the period commencing from the first day of the month following the month in which the loan is drawn up to the last day of the month in which the last instalment of the loan is repaid.
• Where the loan is not repaid or is repaid only in part, within a period of 36 months, interest on the amount of loan outstanding shall be charged at six per cent per annum instead of at one percent, per annum with effect from the first day of the month following the month in which the loan was obtained to the last day of the month in which the loan is finally repaid.

PPF Withdrawal Rules After 15 Years

At the time of withdrawal (after 15 years), you have 3 options:

1. Complete withdrawal: You can close your PPF account and withdraw your funds at the end of the 15th year. You will have to submit Form C to the post office or bank, where you have your PPF account, to terminate it.
2. PPF account extension without contributions: If you don't want to close your account, you can keep it active without making any further deposits for any amount of time. Interest will continue to be accrued on the balance till it is closed. You are allowed one withdrawal each financial year. There is no limit on the amount that you can withdraw though.
3. PPF account extension with contributions: In case you want to keep your account active and continue making contributions to it, you can also apply for an extension of your account in 5 years blocks. There is no limit on the number of times you can extend the duration of your PPF account in your lifetime. And after the 15th year, you can maintain the account with or without making investments. You will have to submit Form 15 H to extend the duration of your PPF account within one year of the maturity of your account. You are allowed one withdrawal each year during the extended tenure provided, in 5 years, and you can not withdraw more than 60 percent of the total balance reflecting at the beginning of the extension period.

If you continue to make deposits without having submitted Form H, the deposits made after maturity will not earn any interest and neither will they qualify for deductions under Section 80C of the Income Tax Act.

Procedure for withdrawal from PPF

In case you wish to partially or completely withdraw the balance lying in your PPF account.

Step 1: Fill in the application form using Form C with relevant information.

Step 2: Submit the application to the concerned branch of the bank / post office where your PPF account lies. You can easily get the form from branch or download in Forms Section below.

What does Form C look like

This form has 3 sections:

Section 1. Declaration section where you must give your PPF account number and the amount of money you propose to withdraw. Along with that, you also need to mention how many years have actually passed since the account was first opened.

Section 2. Office use section which comprises of details like:

• Date when the PPF account was opened
• Total balance standing in the PPF account
• Date on which the previously requested withdrawal was allowed
• Total withdrawal amount available in the account.
• The amount of money sanctioned for withdrawal.
• Date and signature of the person in charge – usually the service manager.

Section 3. Bank details section asks for the details of the bank where the money is to be credited directly or the bank in whose favour the cheque or the demand draft is to be issued. It is also mandatory to enclose a copy of the PPF passbook along with this application.

Extension of PPF with Contribution

A subscriber can extend the life of the PPF account indefinitely in blocks of 5 years at a time. The subscriber has to submit a request to extend the account, with further contributions by submitting Form H.

• The choice of extension with contribution has to be made within one year from the date of maturity, otherwise, the default choice of extension without further contribution applies
• Once the account is extended with contributions, the maximum 60% of the balance as on the date of extension of the account can be withdrawn
• This amount can be withdrawn in one go or can be spread over several years
• A maximum of one withdrawal can be made in a year

Extension of PPF without further contribution

If no choice is made, then the default choice, .i.e. extension without further contribution applies.

• You do not need to fill any form to choose this option
• A maximum of one withdrawal is allowed per year and any amount up to the total balance in the account can be withdrawn
• Once the PPF account is renewed with/without contribution, the option cannot be switched, i.e. from with contribution to without contribution or vice versa.

In case the amount is deposited in the account without choosing the correct option, no interest will be payable on such amount. Also, no deduction under the Income Tax Act will be available on such contributions.

PPF Withdrawal Rules Before 15 Years

Premature withdrawals are allowed after the completion of five years from the end of the year in which the initial investment was made. That means, if you started your PPF account in Feb 2010, you can begin making partial withdrawals from the financial year 2015-16.

You cannot withdraw the entire amount from your PPF account. The amount is capped at the lower of the two - 50% of the balance at the end of the fourth financial year or 50% of the balance at the end of the preceding year.

Premature Closure

You can opt for the early closure of your PPF account only under certain circumstances; only if five years have elapsed since the opening of the account. To know when you can close your account prematurely, here are some specific grounds:

• If the account holder, his/her spouse, parents, dependent children are afflicted with a life-threatening disease, the PPF account can be closed. Relevant supporting documents and medical reports must be submitted to verify the reasons.
• If you need funds for higher education, you can opt for premature closure of your account. You will need to furnish relevant documents such as fee receipts and admission confirmation letters to substantiate the requirement.
• If your residency status has changed, you can prematurely close your PPF account. To attest the change in residency status, you will need to provide a copy of your passport, visa or Income Tax Return.
• In the case of premature closure of PPF accounts, the account holder receives 1% lower interest than the prevailing rate.

Public Provident Fund (PPF) Limitations

PPF accounts also come with a few drawbacks. Here is what you need to know:

• PPF comes with a lock in period of 15 years. This is considerably longer than the lock-in period of other tax saving investments like Equity Linked Saving Scheme (just three years). This can be a big problem in case of an emergency or if you want to meet some financial requirements during the investment period. And while you do have the option to make premature withdrawals, there are lots of rules and regulations regarding when and how much you can withdraw (as we have already discussed). So, before investing in a PPF account, you will have to be sure that you can stay invested for 15 years.
• Public Provident Fund interest rate is not very high; especially when you consider the fact that this is a long-term investment scheme. On the other hand ,ELSS has the potential to offer double-digit returns to investors.
• PPF accounts cannot be held jointly - this can be a limitation if you want to open a joint account with your spouse or other family members.
• The maximum amount that can be invested in a PPF account in a year is Rs.1.5 lakh. On the other hand, there is no limit to the amount you can invest in other tax saving instruments like ELSS funds, NPS or FDs, although the maximum tax benefit that can be claimed is the same - Rs.1.5 lakh under Section 80C.
• Resident Indians can open new PPF accounts, but this feature is not extended to NRIs. For instance, if you had a PPF account as a resident Indian, but have become an NRI, you can continue to deposit into your account. However, you cannot open any fresh accounts.

Attachment of PPF account with debt

Public Provident Fund is regarded as a secure investment not only because it offers guaranteed returns but also because a PPF account cannot be attached to pay off debt or liability. This means, that no creditor be it an individual, entity or establishment can gain access to your PPF account funds to recover dues.

However, this rule does not apply to income tax authorities. Therefore, if the account holder has any dues pending, the PPF account can be attached for the payment of dues.

Death of PPF account holder

• In case of death of account holder, the account shall be closed and nominee or legal heir(s) shall not be allowed to continue deposits in the account.
• At the time of closure due to death PPF rate of interest shall be paid till the end of the preceding month in which account is closed.

How to open a PPF account in SBI online

Step 1: Log in to the SBI’s internet banking portal at http://www.onlinesbi.com.

Step 2: Click the ‘New PPF Accounts’ option on the side menu.

Step 3: The ‘New PPF Account’ page will be displayed where your name, address, CIF number, and PAN details will be pre-filled.

Step 4: Enter your bank account number and branch code from which you would like to make the payment for the PPF account. Click on the ‘Get Branch Name’ button.

Step 5: Your personal and nomination details will be displayed for verification. Once done, click on ‘Proceed’.

Step 6: Your PPF account will be created in an instant and the account number will be displayed on the screen.

How to link an SBI PPF account to an SBI account online?

There is no need to link a PPF account held with SBI to an SBI savings account.

At the time of opening the PPF account, either online or offline, you would have given your existing savings account number. This means, your new PPF account is created under the existing customer ID.

By default, your PPF account will be linked to your savings account. Therefore, you can use the same login credentials for internet banking and access both your savings account and PPF account details under a single platform.

How to know your PPF account number?

When you open a PPF account offline, the bank or Post Office will provide you with a passbook. The passbook contains all the necessary information about the PPF account, such as the PPF account number, bank/PO branch details, account balance, transactions made in the account, and others. You can get the passbook updated regularly to access the latest data.

On the other hand, you can log into your account on the internet banking portal. On the home page, choose the PPF account to see the account details, such as the account number, account balance, recent transactions, and others.

How to open a PPF account in HDFC Bank?

Step 1: Log in to the HDFC Bank internet banking portal.

Step 2: Click on ‘Public Provident Fund’ and select the ‘PPF Accounts ‘option.

Step 3: Click ‘Open Now’.

Step 4: Enter bank account details from which you would like to pay for your PPF account and the PAN number.

Step 5: Verify if all the details you have entered are correct and click on the ‘Proceed’ button.

Step 6: Verify your Aadhaar number. If your bank account is already linked to your Aadhaar, you can click on ‘Generate OTP’, else you will need to update your Aadhaar online. There is also an option to e-sign with the Aadhar OTP as well.

Step 7: Now, your PPF account is instantly created and the account number is displayed.

How to open a PPF account online?

Step 1: Log into your bank account on the internet banking or mobile banking platform.

Step 2: Select the ‘Open a PPF Account’ option.

Step 3: If the account is for self, click on the ‘Self Account’ option. If you are opening the account on behalf of a minor, select the ‘Minor Account’ option.

Step 4: Enter the relevant details in the application form.

Step 5: Key in the total amount you want to deposit in the account per financial year.

Step 6: Submit the application. An OTP will be sent to the registered mobile number. Enter it in the relevant field.

Step 7: Your PPF account will get created in an instant! Your PPF account number will be displayed on the screen. An email will be sent to your registered email address with all the details confirming the same.

Where to open a PPF account?

You can open a PPF account either at the Post Office branch nearest to you or at a participating bank branch based on your convenience. The participating banks that offer a PPF account are given below.

• Bank of Baroda
• HDFC Bank
• ICICI Bank
• Axis Bank
• Kotak Mahindra Bank
• State Bank of India
• Bank of India
• Union Bank of India
• Oriental Bank of Commerce
• IDBI Bank
• Punjab National Bank
• Central Bank of India
• Bank of Maharashtra
• Dena Bank

Transfer of PPF Account

The PPF account can be transferred from the bank to the post office or vice versa. It can also be transferred between different branches of the same bank.

Revival of Inactive PPF Account

The PPF Account becomes inactive if the minimum contribution of Rs 500 per year is not made. To revive an inactive PPF account:

• A written request to reactivate the account should be submitted at the post office or the bank branch where the account is based
• A fine of INR 50 for each year the account has been inactive has to be paid
• Arrears of a minimum amount of INR 500 for all the years the account has been inactive have to be paid

Transfer PPF account to ICICI Bank

PPF account can be transferred from one authorised bank or Post office to another. In such case, the PPF account will be considered as a continuing account. To enable customers to transfer their existing PPF accounts from the other bank/post office to ICICI Bank, following process is to be followed.

Customer requires to submit PPF transfer request in the bank/post office where PPF account is held

The existing bank/Post office will arrange to send the original documents such as a certified copy of the account, the account opening application, nomination form, specimen signature etc. along with cheque/DD of the outstanding balance in the PPF account to ICICI Bank branch address provided by the customer

Process at ICICI Bank Branch

Once PPF transfer in documents are received at ICICI Bank, branch official will intimate customer about the receipt of documents. Then customer is required to submit fresh PPF account opening form (Form A), Nomination form (Form E / Form F in case of change of nomination), along with the original PPF passbook. A fresh set of KYC documents are also required to be submitted by the customer.

Benefits of PPF account in ICICI Bank

• Online fund transfers from your savings bank account that’s linked with the PPF account
• A standing instruction facility to ensure regular investments
• The option to view your PPF account statement online

Transfer of PPF account to HDFC Bank

PPF account can be transferred from other bank or Post office to HDFC Bank. In such case, the PPF account will be considered as a continuing account. Below is the process to be followed :

• Customer requires to submit PPF transfer request in the bank/post office where PPF account is held
• The existing bank/Post office will arrange to send the necessary documents along with cheque/DD of the outstanding balance in the PPF account to HDFC Bank branch address provided by the customer

Process at HDFC Bank Branch

• Once PPF transfer in documents are received at HDFC Bank, branch official will intimate customer about the receipt of documents.
• The customer is required to visit the branch to complete the transfer formalities.

Summary

If you are averse to high risk investments and want the security that is a characteristic of government-backed investment instruments, PPF can be a good option. But from a return point of view, ELSS and NPS fare better than PPF owing to the higher capital appreciation potential of equities. Opt for an ELSS fund if you are looking for a short-term tax-saving investment. And if your objective is to prepare a retirement corpus, then you can reap better rewards by investing in NPS

• Minimum deposit Rs.500/- & Maximum deposit Rs.1,50,000/- in a Financial year.
• Loan facility is available from 3rd financial year upto 6th financial year.
• Withdrawal is permissible every year from 7th financial year.
• Account matures on completion of fifteen complete financial years from the end of the year in which the account was opened.
• After maturity, account can be extended for any number for a block of 5 years with further deposits.
• Account can be retained indefinitely without further deposit after maturity with the prevailing rate of interest.
• The amount in the PPF account is not subject to attachment under any order or decree of a court of law.
• Deposit qualifies for deduction under Sec.80-C of I.T.Act.
• Interest earned in the account is free from Income Tax under Section -10 of I.T.Act.

FAQ on Public Provident Fund (PPF)

Can I withdraw PPF after five years?

Yes, you can make partial withdrawals from your PPF account after five years. However, the maximum amount you can withdraw is capped at the lower of the two - 50% of the balance at the end of the fourth financial year or 50% of the balance at the end of the preceding year.

Can I close my PPF account after 3 years?

No. You cannot close your PPF account after three years. Premature closures are only permitted after 5 years and under specific circumstances.

What happens to my PPF account after 15 years?

Your PPF account matures in 15 years. You can either withdraw the corpus or stay invested for an additional 5 years.

Can a person have two PPF accounts?

No. Only one PPF account per individual is allowed.

I deposited the money in my wife's PPF account. Who can avail tax deductions?

Only the account holder can claim tax benefits. In this case, only your wife is eligible to claim tax deductions.

Can I extend my account on maturity for two years?

No. You can seek extension only in blocks of five years after PPF maturity. There is no limit on the number of times you can seek an extension.

Is it mandatory to withdraw all the money from my PPF account at the end of 15 years?

No. It is not mandatory to withdraw the money from your PPF account at the time of maturity. The balance will continue to earn interest until it is closed.

What are PPF account benefits?

PPF offers fixed and guaranteed returns and has a long-term maturity period. This makes it is a suitable savings tool for financial goals that have a longer time horizon. Hence, PPF is a must for your retirement portfolio. You can invest up to Rs 1,50,000 per year in PPF and get tax exemption on that. The interest earned on the deposit is not taxed. The entire amount can be withdrawn on maturity and is tax-free in the hands of the subscriber. For self-employed people, who don’t get a salary and hence don’t enjoy the benefits of Employee Provident Fund, PPF is an extremely useful tax-saving instrument.

How is PPF interest calculated?

The interest rate on PPF is announced by the government every quarter. It is linked to the rates on government securities and changes accordingly. The interest on the PPF is calculated based on your balance in your account before the fifth of every month. So ideally, make your deposit before the fifth of the month to get maximum benefit. Any deposit made after that will not earn interest for that particular month.

How does a PPF account work?

The minimum amount that must be invested in a PPF account is Rs 500 and the maximum is Rs 1, 50,000 in a year. On maturity, the account can be extended for a 5-year period. There is no limit to the number of times the account can be extended. An individual can have only one PPF account in their name. However you can open a PPF account in your minor child’s name. When doing this please remember that the total investment in both PPF accounts should not exceed Rs 1,50,000 in a year. You can also invest in your PPF account online through internet banking!

Will I continue to earn interest on my inactive PPF account?

No, interest is not calculated for the year(s) the account remains inactive. Once the account is revived, interest will be calculated on the total balance available at the time of revival.

If I have a PPF account in my name and another one in my minor daughter’s name, can I claim tax deductions on both PPF accounts?

Rs. 1.50 lakh is the maximum total investment that you can make to your account, your spouse’s and/ or your minor child’s account cumulatively in a financial year. Also, only amounts up to Rs. 1.50 lakh can be claimed as deductions under Section 80C of the Income Tax Act.

Can I open a PPF account on the behalf of my grandchild?

No, only parents/ legal guardians can open and operate a PPF account a PPF account on behalf of their minor child/ward.

Is it possible to extend my PPF account for 3 years on maturity?

No. Extensions can only be made in blocks of 5 years.

Can I transfer my PPF account to another branch or office?

Yes, you can transfer your PPF account to another branch or office.

Why is the PPF so popular?

The PPF is popular because it is one of the safest investment products. i.e., the government of India guarantees your investments in the fund. The interest rate is set by the government every quarter. PPF scores over many other investment options mainly because your investment is tax exempt under section 80C of the Income Tax Act (ITA) and the returns from PPF are also not taxable.

Can I increase my investment under the PPF scheme by opening 2 or more accounts in my name?

No. Under the Public Provident Fund Scheme, a person can hold and operate only one account in his/her name.

Can I continue to use an inactive account?

Yes. You can do so by paying the holding branch a penalty of Rs.50 for every year the account was inactive. You will also have to deposit a minimum of Rs.500 for every year the account was inactive as well as Rs.500 for the year you are activating the account.

Will I continue to earn returns if my account is inactive?

No. Interest will not be calculated for the year(s) the account is inactive. Once the account is revived, interest will be calculated on the balance held at time of revival.

If I open a PPF account in my minor child’s name, can I claim tax deductions from both accounts i.e. my child’s and mine, when I file taxes?

The maximum investment cap of Rs.1.5 lakhs applies to all contributions you make to your account, your minor child’s account and/or your spouse’s account, collectively. Only amounts up to Rs.1.5 lakhs can be claimed as deduction U/S 80C of the Income Tax Act. For e.g. if you contribute Rs.1 lakh toward your account and Rs.1 lakh toward your child’s account, you can claim only Rs.1.5 lakhs as deduction and not Rs.2 lakhs.

What if I wish to invest more money than the Rs.1.5 lakh limit?

Interest will be calculated and paid out only on amounts up to Rs.1.5 lakhs for any year. Only the maximum annual investment limit i.e. Rs.1.5 lakhs a year will be considered towards all PPF calculations for all purposes.

The limit was raised from Rs.1 lakh to Rs. 1.5 lakh mid-way through 2014. If the limit is raised this year in the same way, how will I make the additional deposit? Should I wait for next year?

When the limit is raised during a financial year, banks and post offices are instructed to accept additional investments if investors wish to contribute up to the revised maximum limit. This is what was done last year for those who wished to contribute up to Rs.1.5 lakhs under the revised limit.

How is interest calculated? I got interest for 11 months instead of 12 months for the last year.

For any given month, investments made on or before the 5th will be considered for interest calculations for that month. Interest is calculated on the lower of the balance held on the 5th of a month to the end of the month.

For e.g. An account held Rs.1 lakh at the start of September. The account holder decided to invest Rs.50,000. He did so on September 10th. In this case, the balance on the 5th of September was Rs.1 lakh and was Rs.1.5 lakhs at month-end. Here, Rs.1 lakh is the amount that will be considered for calculation of interest. The additional investment of Rs.50,000 would be considered for the month of October.

If, however, the account holder had deposited the additional Rs.50,000 on September 3rd, the balance on the 5th of September would have been Rs.1.5 lakhs. This would have been the amount considered for interest calculations for the month of September.

I want to leave some money to my grandchild. Can I open the PPF account on her behalf?

No. Grandparents cannot open PPF accounts in their grandchildren’s names. The amount can be given to the parent/guardian who can open and operate the account in the name of their minor child/ward. However, if both parents of the minor child die, the grandparents, as guardians, can open and operate a PPF account for the minor child.

Is it mandatory to withdraw all the money in my PF account at the end of 15 years?

No. It is not necessary to redeem all the funds held in the account at maturity. The account term can be continued or extended for as long as the investor wishes to operate it. The account can be continued for 5 years per extension. Extensions can be done by depositing fresh funds or without making any further deposits.

Will I continue to earn interest on my account if I extend the maturity period beyond 15 years?

Yes. Interest will be calculated and paid out based on the interest rates prevailing during the period of extension. If no fresh deposits are made during the period of extension, interest will be calculated based on the balance held at the end of the 15th year. If fresh deposits are made to extend the term, it will be added to the balance at the end of the 15th year and the total amount will be treated as principal for interest calculations.

Can I extend my account for 2 years on maturity?

Extensions can be made in blocks of 5 years each.

What happens to the money in my account if I die before maturity?

It can be claimed by the nominees or the legal heirs in the absence of nominees. If a nominee was named by the account holder, he/she will receive the entire amount held in the account. If more than one nominee was named, the nominees will receive funds held in the account proportionately i.e. as stated by the account holder in the nomination form.

Is it necessary to name nominees?

It is not mandatory to name nominees for a PPF account. However, it is advisable to do so to avoid conflicts in the event of death and to have a clear transfer of funds to a desired person.

How can a nominee/legal heir claim funds in a PPF account?

Nominees or legal heirs can claim funds in a PPF account when the account holder has passed away. They will be required to produce proof of death of the account holder. Nominees can claim funds in the proportion stated by the account holder in the nomination form.

How long can I extend my account for?

PPF accounts have a maturity period of 15 years. However, this can be extended for as long as the account holder wishes to continue it. Extensions can be done for 5 years at a time. For e.g. if an account matures on March 31st 2015, it can be extended till March 31st 2020. The next extension will be until March 31st 2025 and so on.

I deposited money in my wife’s PPF account. Who can avail the tax deduction?

In this case it will be you who will be able to avail the PPF tax deduction. The person making the contribution is eligible for tax deductions U/S 80C.

I deposited money in my parents’ PPF accounts but did not qualify for tax deduction U/S 80C. Why?

Only contributions made to an account holder’s own account, his/her spouse’s account or his/her minor child’s account can be claimed as deductions U/S 80C of the Income Tax Act. The total contribution to any one or all of the abovementioned person’s account is subject to the investment cap of Rs.1.5 lakhs per annum.

If I withdraw money from my PPF account, can I redeposit it to meet the minimum annual investment requirement?

Yes, you can withdraw money for personal purposes. It can be used to invest the Rs.500 required as annual investment.

Can I open a PPF account along with my wife or child?

No. The option to hold PPF accounts jointly is not provided under the PPF scheme. A person can hold and operate only one account in his/her own name.

If I need money, can I make withdrawals in addition to taking out a loan against my PPF account?

No, withdrawals and loans are exclusive of each other as per the rules of operating a PPF account. Loan facilities are extended to account holders only between the 3rd and 6th year of operating an active account whereas partial withdrawals are allowed from the 7th year onwards. This means you cannot avail a loan from the 7th year onwards nor can you make withdrawals before the 6th year.

This scheme was devised to promote savings and while loans and withdrawals are allowed to a certain extent to allow for some liquidity, the scheme, in general, does not aim to encourage a reduction in savings potential.

Which bank is the best for a PPF account?

PPF accounts are offered by the Government of India and are not specific to a bank. Also, all banks provide the same set of features and benefits when you open a PPF account. The interest rate is set by the government and it remains the same wherever the PPF account is held. Therefore, there is no best bank that offers a PPF account.

When to deposit money in a PPF account?

There is no specific due date as to when you should deposit money in a PPF account. However, it is beneficial for you to deposit money between 1 April and 5 April of a financial year. If it is not possible for you to make the full year’s deposit at the beginning of the year, you can make monthly deposits within the 5th of the month to earn maximum benefits.

How many times a PPF account can be extended?

PPF account can be extended any number of times without any restrictions.

How many PPF accounts can be opened?

An individual can open only one PPF account across the country either in a bank or Post Office.

How much money can be withdrawn from a PPF account?

You can withdraw the money partially after completing five years from the date of opening the account. However, you can only withdraw up to 50% of the total account balance at the end of the fourth year from the date of opening.

How to convert a minor PPF account to a major?

When a minor PPF account holder becomes a major or turns 18 years old, you can submit a revised application form along with necessary documents stating the age of the account holder to change the status of the account from minor to major. The guardian can submit the application along with the account holder’s signature on the application form as an attestation.

How to close a PPF account in a Post Office?

You can close a PPF account after completing 15 years from the date of opening the account. The procedure is given below.

Step 1: Fill up the relevant information in Form C and attach your PPF passbook.

Step 2: Submit this to the relevant Post Office branch where the account is held.

Step 3: Your application will be processed and the account will be closed. You will receive the payment in your savings account linked to the PPF account

What is the minimum lock-in period for a PPF account?

The minimum lock-in period for a PPF account is 15 years, the actual tenure of the PPF account.

How does the PPF account work?

A PPF account can be opened by an adult for self or on behalf of a minor. The account tenure is 15 years and the lock-in period for the account is 15 years. You can make a deposit to a PPF account ranging from Rs.500 up to Rs.1.5 lakh per financial year. The deposit can be made in a lump sum or in instalments. There is no restriction on the number of instalments per financial year. The deposits must be made every financial year during the tenure and such deposits are exempt from income tax u/s 80C.

You are required to make a minimum deposit of Rs.500 per financial year to keep the account active. If you fail to make this deposit, the account will be discontinued. You will have to pay a penalty of Rs.50 along with a minimum deposit of Rs.500 to reactivate the account.

An interest rate of 7.1% p.a. (Q2 FY22) is applied to the deposit and is compounded annually. A loan facility is available on the PPF balance. Also, you can make partial and premature withdrawals on the PPF account subject to certain conditions. Upon completing the tenure, you can choose to extend the account with or without making additional contributions. You also have the option to close the account.

How to activate an inactive PPF account?

In order to reactivate an inactive PPF account, you can follow the steps below:

Step 1: Submit a written letter to the bank or PO branch requesting to reactivate it.

Step 2: Pay a minimum amount of Rs.500 for each year you have not made any contributions along with the penalty of Rs.50 per inactive year.

Step 3: The bank or PO will process your request and reactivate the account.

Is it mandatory to withdraw the PPF account balance at the end of the 15 years?

It is not mandatory for you to withdraw the PPF balance at the end of the maturity period, i.e. 15 years. You can let the money stay in the account so that it accrues interest as long as you close the account.

Can I extend the tenure of the account for 3 years since I may need the sum then?

You can only extend the account tenure in the blocks of five years upon maturity.

How many times am I allowed to extend the tenure in the blocks of five years?

There is no upper limit on the number of times you can extend the tenure of the account as long as you extend it in the blocks of five years. However, you can only extend the tenure upon the maturity of each block.

I don’t think I can continue to contribute to my PPF account anymore. Can I close my account?

Individuals are allowed to close their PPF account only after completing five years. Also, there are certain criteria to be satisfied in order to close the account.

Useful Forms for Public Provident Fund (PPF)

FAQ on Public Provident Fund (PPF)

PPF Partial Withdrawal Form

PPF Scheme Rule 1968

PPF Scheme Rule 2019

Click for PPF Scheme Forms

Click for PPF Interest Rate since inception

Form A: One can use this form to open a new PPF account.
Form B: To make deposits in the account and repay loans against it, investors should fill out this form.
Form C: For partial withdrawal from the PPF account, one needs to use this form.
Form D: Investors often plan to take a loan against the PPF amount. In such a scenario, he must consider this form for an easy loan application process.
Form E: It is essential to add a nominee for a PPF account. While doing so, the applicant should select this PPF form.
Form F: In case of a change of nominee, this form needs to be filled out.
Form G: To claim funds from a PPF account, an individual should submit this form in the online portal after properly filling it out.
Form H: The maturity period of a Public Provident Fund account is 15 years. However, investors can extend this period by 5 years after filling out this PPF form.

Useful External Links

PPF on Wikipedia

PPF information on Official website of Indian Post office