• By ADMIN
• Posted 12 Jun, 2023
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FAQs - Public Provident Fund (PPF)

1.What is Public Provident Fund (PPF)?

The Public Provident Fund is a post office savings scheme launched by the National Savings Institute. Some nationalised and private banks are authorised to accept PPF investments. PPF is backed by the government of India, and the risk involved is very minimal, and it offers guaranteed risk-free returns. The scheme is available for all the citizens of India except NRIs. It is regulated by Public Provident Fund Scheme, 1968.

2.How its beneficial to Public and What tax benefit it could get to Public?

PPF account is entirely tax free. Principal, Interest earned and maturity amount on PPF are exempt from taxes.

Amount contributed to PPF account is eligible for deduction u/s 80C up to 1,50,000 a year.

3.How safe is money invested in PPF?

PPF is backed by the Central Government of India, and it is considered safer than other investment options.

4.Whether interest earned in PPF is taxable under Income-tax Act, 1961?

No. It is fully exempted.

5.Who is eligible to open PPF?

Only Indian citizens are allowed to open PPF account. HUF and NRI are not allowed to open PPF accounts.

Exceptions:

Any resident Indian who has become an NRI can continue with their existing account until the completion of tenure (i.e., 15 years).

6. How many accounts one can open?

A person can open only one PPF account. Multiple PPF accounts are not allowed.

7.Whether Joint account is allowed?

No.

8. Whether PPF account can be opened in the name of minor/unsound mind person?

Yes. Guardian can open accounts in the name of Minors/unsound mind persons.  But one accounts for one minor / unsound mind person.

9. What is the minimum and maximum age limit to create a PPF account?

There is no age limit to create a PPF account.

10. What is the minimum and maximum one can invest?

Minimum investment is Rs 500 Per Year

Maximum investment is Rs 150,000 Per Year.

11. Whether one can invest Rs.1,50,000 on his account as well as minor account per year?

No. The cumulative deposit into his own PPF account and all his minor(s) account shall not exceed Rs.1,50,000 per year.

12. What is the present interest rate?

The present interest rate is 7.1% (June 2023). Interest shall be credited to the account at the end of each year.

13. What is the PPF account tenure?

The tenure period of PPF is 15 years.

14. Can we extend the tenure of 15 years further?

Yes. Can extend the tenure of a PPF for another 5 years.

15.If I invest Rs 150,000 per annum every year, how much I will get on maturity after 15 years?

If you invest Rs 150,000 per annum every year, you will get Rs 40,68,209 on maturity.

1. Amount deposited: 22,50,000 (1,50,000 * 15 years)
2. Interest earned: 18,18,209

Total amount (a + b) = 40,68,209

16.When is an account treated as Discontinued?

Where an investor fails to subscribe to the minimum amount Rs 500/- in a financial year, the account will be treated as discontinued.

17. How can a Discontinued Account be revived?

An investor to a discontinued account may revive the discontinued account by payment of Rs. 50/- as penalty for each year of default along with arrear subscription of Rs. 500/- for each year.

18.Whether Loan facility is available under the PPF scheme?

Yes. Customer can avail loan after completion of 2 year from the date of initial subscription but before expiry of 5 years. Loan up to 25% of total amount of credit balance in your account at the end of second year immediately preceding the year in which the loan is applied for.

19.Whether partial withdrawal is available under the PPF scheme?

Withdrawal is allowed every year from the end of the 5th year. The amount is limited to 50% of the account balance at the end of 4th year immediately preceding the year of withdrawal or at the end of the preceding year whichever is lower.     

20.What will happen to the maturity proceeds when the account holder died?

In the event of the death of the account holder, the account shall be closed and the nominee or the legal heir shall not be allowed to continue the account. The balance in the PPF account will be paid to the Nominee or to the Legal heirs.

21.What are the circumstances in which premature closure of an account is allowed?

(a) treatment of life-threatening disease of the account holder, his spouse or dependent children or parents, on production of supporting documents and medical reports confirming such disease from treating medical authority.

 (b) higher education of the account holder, or dependent children on production of documents and fee bills in confirmation of admission in a recognised institute of higher education in India or abroad.

(c) on change in residency status of the account holder on production of copy of Passport and visa or Income-tax return:

22.Whether interest received from premature closure of account / partial withdrawal is taxable under Income-tax Act, 1961?

No. It is exempted u/s 10(11) of Income-tax Act, 1961.

23.Is the maturity proceeds from PPF is protected from any attachment by any order or decree of any court?

Yes. Amount standing to the credit of any account holder shall not be liable to attachment under any order or decree of any court in respect of any debt or liability incurred by the account holder.

24.Will it be better than FDR?

Both FD and PPF are good options. PPF is preferred by people who are looking to save taxes.  PPF scheme is backed by the Indian government, the risk of losing your money in this scheme is very low.