Interest rates of PPF over time

 

  • 01.04.1986 to 14.01.2000………………………… 12%
  • 15.01.2000 to 28.02.2001……………………….. 11%
  • 01.03.2001 to 28.02.2002 ………………………. 9.5%
  • 01.03.2002 to 28.02.2003 ……………………….. 9%
  • 01.03.2003 to 30.11.2011………………………… 8%
  • 01.12.2011 to 31.03.2012………………………… 8.6%
  • 01.04.2012 onwards……………………………… 8.8%
 

PPF defaults and revival

If the PPF account-holder fails to deposit the minimum Rs 500 in a given financial year, the account is considered as discontinued but the interest will continue to accrue and be paid at the end of the term. Loans and withdrawals are not allowed. This account can be revived on payment of a fee of Rs 50 for each year of default, along with the arrears of subscription of Rs 500 for each such year

Withdrawals from PPF account

There is a lock in period of 5 years and the money can be withdrawn at the end of the fourth financial year from when the PPF commenced. The maximum amount that can be withdrawn is the amount that adds up to 50% of the amount that stood at the end of the fourth year of the PPF.

Loan on Public Provident Fund (PPF)

The first loan can be taken in the 3rd financial year from the date of opening of the account, or upto 25% of the amount at credit at the end of the first financial year. The facility can be availed of any before expiry of 5 years from the end of the year in which the initial subscription was made. The loan is repayable either in lumpsum or in convenient installments numbering not more than 36. The rate of interest charged on loan taken by the subscriber of a PPF account on or after  01.12.2011 shall be  2% p.a. However, the rate of interest of  1% p.a. shall continue to be charged on the loans already taken  or taken up to 30.11.2011.

 
A loan repayable in 36 months can be obtained in or after the 3rd year, up to 25 per cent of the balance at the end of the preceding financial year. The interest charged on the loan is 1 per cent higher for the first 36 months, and thereafter, 6 per cent on the outstanding amount. A second loan can be obtained before the end of the 6th financial year if the first one is fully repaid.

Tenure and Extension period of PPF account

The tenure of the PPF account is 15 years, which can be further extended in blocks of 5 years each for any number of blocks. The extension can be with or without contribution. An account holder, continuing with fresh subscription, can withdraw up to 60% of the balance to his credit at the commencement of each extended period in one or more installments but only once in a year.

How interest is calculated in PPF?

Rate of Return on PPF is 8.8 % p.a. (Compounded annually). Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.Till March 2010,cheque deposited for clearing( if cleared eventually)up to 5th of the month was eligible for that month's interest.Since 29/03/2010 however thro' a circular, it is notified that only the amounts which are actually cleared on or till 5th of the month are eligible for that month's interest.

PPF rules for NRI

Non-resident Indians (NRIs) are not eligible to open an account under the Public Provident Fund Scheme. If a resident who subsequently becomes NRI during the currency of maturity period prescribed under Public Provident Fund Scheme, may continue to subscribe to the fund till its maturity on a non-repatriation basis.

Public Provident Fund (PPF) India Taxation Rules

Under Section 80C of the Income tax Act, an individual is eligible to claim deduction from total income in respect of contributions to any PPF (belonging to self, husband, wife, any child) subject to an overall limit of Rs 1,00,000 for a Financial Year (FY).

Hence, the deduction could be claimed in respect of contributions made in his own PPF account or in the account of spouse or any child.
 
E.g., A wife can invest Rs.50,000 in her PPF account, 30,000 in her husband PPF account and Rs.20,000 in her son PPF account to claim deduction. The overall investment should not exceed Rs.1,00,000.

If the same PF account exists for 4 year and above, and later if you withdraw the same, then the PF amount is not taxable. If you are withdrawing the PF amount before 4 years, then its taxable based on your annual taxable income. 

Public Provident Fund (PPF) India Details

  • Interest rate of 8.8% per annum.
  • Minimum deposit is 500/- per annum. Maximum deposit is Rs. 1,00,000/- per annum
  • The scheme is for 15 years.
  • Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section 80C of IT Act.
  • Interest is completely tax-free.
  • Deposits can be made in lumpsum or in 12 installments.
  • One deposit with a minimum amount of Rs 500/- is mandatory in each financial year.
  • Withdrawal is permissible from 6th financial year.
  • Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
  • Free from court attachment.
  • Non-Resident Indians (NRIs) not eligible.
  • An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
  • Ideal investment option for both salaried as well as self employed classes.
  • Investments in a PPF account can be made in multiples of Rs 5, either lumpsum, or in installments (not exceeding 12 in a year and more than one deposit can be made in a month). The credit to the PPF account is made on the date of presentation of the cheque and not on the date of its clearance. This allows flexibility in savings.