WHAT IS A PPF ACCOUNT? WHAT ARE ITS BENEFITS?
What is a PPF account?
A Public Provident Fund account or PPF is a small saving account for everyone. Backed by the Govt. of India, it offers better interest rate than a fixed deposit. It is also untaxed under section 80C of the Income Tax Act. You can open a PPF account in a bank or a post office.
Why should you open this account?
It is an ideal choice for anyone looking for safe investments with guaranteed returns. It helps build a retirement corpus while also saving on tax. The balance in your PPF account is not subject to attachment under any order or decree of the court – that is, it cannot be claimed as restitution by any creditors. However, income tax & other government authorities can claim the account in order to recover any unpaid tax dues.
What are the tax exemptions or implications on your PPF account?
Under section 80C of the Income Tax Act, the amount invested in the PPF account is exempt from tax. It falls under the EEE (Exempt, Exempt, Exempt) category. It means that the money invested, interest earned and maturity proceeds all are exempted from tax.
Who is eligible to open this account?
Individuals and resident minors. Only one account is allowed per individual. Minors and children with unsound minds or other special needs can open under the care of a legal guardian – their father, mother, or court-appointed guardian.
How much money can I deposit? How often can I deposit?
- Minimum Amount: Rs 500/- in a financial year
- Maximum Amount: Rs 1,50,000/- per year
- Mode of Payment: Cash or cheque
- Any number of times in a year in multiple of Rs 50/-. Can be done in a lump sum or monthly
How long can I keep the account open?
The minimum tenure of the account is 15 years. Extension of account is possible in a block of 5 years and should be done in the last financial year.
When should I request an extension for my PPF account?
If you want to extend your tenure beyond 15 years, you can do so in blocks of 5 years after submitting Form H in the bank where you have a PPF account. This will have to be done at least one year from the date of maturity (before the completion of 16 yrs in PPF).
How and when can my account become inoperative?
In case you have not contributed any amount for whole one financial year, it becomes inoperative.
You can activate your account by paying a minimum annual due for each lapsed year, that is, Rs 500 per inoperative year. You will also have to pay a penalty of Rs. 50 per year.
List of Banks Where You Can Open a PPF Account
Public Banks:
- State Bank of India
- United Bank of India
- Punjab and Sind Bank
- Punjab National Bank
- Indian Overseas Bank
- UCO Bank
- Union Bank of India
- Canara Bank
- IDBI Bank
- Central Bank of India
- Bank of Baroda
- Bank of India
Private Banks:
- ICICI Bank
- Axis Bank
