What is a Public Provident Fund (PPF) Account?

What are the key features and benefits of the Public Provident Fund (PPF) scheme in India?. Watch our video to find out!

The Public Provident Fund (PPF) scheme is a very popular long-term savings scheme in India because of its combination of tax savings, returns, and safety. 

The PPF scheme was launched in 1968 by the Finance Ministry. 

The main objective of the scheme is to help individuals make small savings and provide returns on the savings.

Who can open a PPF account? 

  • Any Indian citizen over 18 years of age can open a PPF account.

  • A guardian on behalf of a minor/ person of unsound mind . ? 

  • No upper age limit for opening the account

  • Only one account can be opened by one person all across the country

Where and with how much money can you open a PPF Account? 

  • You can open a PPF account In any bank or post office. The PPF account opening charges are just Rs. 100. This one-time amount has to be paid over and above the minimum deposit of Rs 500. 

How much can be deposited every year? 

  • A minimum Rs. 500 and maximum of Rs. 1.50 lakh in a Financial Year can be deposited. 

  • An individual can deposit money a maximum of 12 times during a given financial year. 

Ways of Depositing Money into Your PPF account? 

  • There are multiple ways like PO (postal order), cheque, cash, and online fund transfers. These days, PPF online transfer is a more convenient option.

What is the Lock-in period? 

  • The lock-in period for PPF is 15 years. 

  • This tenure can be extended by 5 years at the end of the period. 

Can you withdraw before maturity? 

  • Partial withdrawals ie. 50% is permitted from the 7th year onwards every year. 

  • Withdrawals can be made only once in a financial year. 

Can you get a loan on a PPF account? 

  • You can take a loan on your PPF account between the 3rd and 6th year.  If you want a second loan, it can be taken after 6th year and after the first loan is refunded. 

What are the tax benefits? 

  • The money invested in PPF in a financial year gets exempted from an individual’s taxable income under Section 80C. 

  • Also, the interest earned on PPF deposits along with the accumulated amount is tax free. 

Interest rate? 

  • Interest is paid on 31st March every year. Current interest is 7.1%