PPF - Public Provident Fund

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The PPF(Public Provident Fund) Scheme, 1968 is a tax-free savings avenue that was introduced by the Ministry of Finance (MoF) in India in the year 1968. Interest earned on deposits in the PPF account are not taxable. Deposits made towards PPF accounts can be claimed as tax deductions. This makes the PPF Scheme one of the most tax efficient instruments in India. It was launched to encourage savings among Indians in general, especially to encourage them to create a retirement corpus.

How to open a PPF account?

A PPF account can be opened with either a Post Office or with any nationalized banks like the State Bank of India and Punjab National Bank. These days, even certain private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility. Submit the duly filled application form along with the required documents i.e. the KYC documents like identity proof, address proof, and signature proof. And then deposit a prescribed amount towards the opening of the account.

Features of  PPF

Tenure: The PPF has a minimum tenure of 15 years, which can be extended in blocks of 5 years as per your wish.
Investment Limits: PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in lump sum or in a maximum of 12 installments.
Opening Balance: The account can be opened with just Rs 100. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax saving.
Deposit Frequency – Deposit into a PPF account has to be made at least once every year for 15 years.
Mode of deposit – The deposit into a PPF account can be made either by way of cash, cheque, Demand Draft or online fund transfer.
Nomination – A PPF account holder can designate a nominee for his account either at the time of opening the account or subsequently too
Joint accounts – A PPF account can be held only in the name of one individual. Opening an account in joint names is not allowed
Risk factor –  Since PPF is backed by the Indian government, it offers guaranteed, risk­-free returns as well as complete capital protection. The element of risk involved in holding a PPF account is minimal.
Who can invest in PPF – Any Indian citizen can invest in PPF. One citizen can have only one PPF account unless the second account is in the name of a minor. NRIs and HUFs are not eligible to open a PPF account.



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