Friday, 6 August 2010

All about Public Provident Fund (P.P.F) Scheme

Public Provident Fund Scheme is a statutory Scheme of the Central Government of India established in the year of 1968 and so the scheme is called Public Provident Fund Scheme, 1968.

Where to operate P.P.F Account? It can be opened and operated in any post office in India or in any nationalized bank in India and also can be transferred form any post office in India to any other post offices in India or to any nationalized bank and branches there of in India and vice versa.

Maximum and Minimum Deposit. You can deposit a minimum amount of Rs. 500/- and the multiples of Rs. 5 up to a maximum of Rs. 70000/- in a financial year. If you could not deposit the minimum amount in a financial year your P.P.F account will be treated as discontinued and the money can withdraw only after the maturity of 15 years. The discontinued account can be reopened by depositing the minimum amount of Rs. 500/- and a fine of Rs. 50/- for every defaulted years. You can deposit a total of 12 numbers of deposits in a financial year subjected to maximum two deposits in a calendar month.

Who can open a P.P.F Account? A resident Indian citizen in any age can open a P.P.F account. A Non resident Indian Citizen cannot open a P.P.F account. IF the person who opened a P.P.F account changed his residential status before the maturity of the account, he can continue the account till the maturity on a Non Repatriation Basis. A minor can operate a P.P.F account only through his/her guardian and the combined deposit of the minor and guardian should not be more than the maximum limit of Rs. 70000/- (Guardian means Father or Mother or in the absence of them or if the only living parent is incapable of acting, a person entitled under the law can operate the P.P.F account of a minor)

Benefit of P.P.F Account. The amount deposited in P.P.F account in a year can be consider as a Tax Saving Investment and the amount (maximum up to Rs.70000/-) can be deducted from your income under section 80 C of Income Tax Act, which is allowed to get a deduction of Rs. 100000/-

Interest on P.P.F is credited every year (at present 8%) is also consider as a non taxable income (Interest is calculated for the lowest amount between 01st and 5th of every month)

The Deposit in P.P.F is exempt from Wealth Tax

The Balance amount in P.P.F account is not subject to the attachment under any order in respect of any debt or liability.

The depositor can nominate anybody to get the Balance in P.P.F after the death of the depositor.

You may retain the money in the P.P.F account itself even after the maturity and can earn the same rate of interest admissible for PPF every year and can close it any time you wish to do so.

The account holder can opt to extend the P.P.F account for a block year of 5 years without making any further deposits.


The amount deposited in P.P.F has a lock in Period of 15 years, But you can withdraw 50% of the available balance proceeding 3 years from the 7th year onwards. But only one withdrawal is allowed in a financial year.

In the event of death of the depositor, the legal hires cannot continue the account. It should be closed and the premature closing of P.P.F is allowed only in the event of the death of the depositor.

A P.P.F account cannot be opened by Grand Parents for their Grand children.

Even if there are a few disadvantages in P.P.F the advantages are more than that of disadvantages and it is the best investment for long term and a complete risk free investment.

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  9. There was a news recently reporting that the maximum investment limit in an individual's PPF account has been revised upwards from erstwhile Rs 70,000 to Rs 100,000 per year. Can you confirm the date from which this will enhanced limit will be implemented.

  10. when I withdrow the ammount diposit in last 15 year.

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  12. [...] Public Provident Fund. One can start a public provident fund account for the higher education of your children. This is one of the best options which has no any risk factor involved in it. The interest earned from Public Provident Fund is not taxable as per the current tax rules. The amount you invested also exempted from income tax under section 80C of income tax act. If you start a PPF account for your children when they born, you can accumulate a good amount when they reach at higher education level. Read more about the Public Provident Fund. [...]