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Public Provident Fund (PPF) India, Interest, Benefit, Withdrawals, Deposit Etc
Though there is a hype of certain types of investments nowadays, some schemes launched by the government are still considered the best safety net for long-term investments. One of which is PPF (Public Provident Fund).
Not only this investment plan makes you financially secure but also brings you lots of benefits with a decent interest rate. Want to know more about PPF? Read through!
Public Provident Fund (PPF)
Public Provident Fund is simply defined as Exempt, Exempt, and Exempt (EEE) as it offers exceptional tax benefits to its subscribers under Section 80C. This popular long-term investment scheme was launched by the Government of India, offering financial security with reasonable interest rate and returns that are fully exempt from tax.
Under the PPF scheme, the subscriber is assured a guaranteed return every year on the amount deposited by them. Earlier, the interest rate was revised every year. However, now, to keep in line with the market, it is set every quarter offering a chance to yield high returns.
Tip: If you are planning to open a PPF account, ensure to deposit before 5th of every month. The catch here is that the interest on PPF deposits is calculated between the fifth and at the end of the month. Therefore, if you deposit the amount before 5th, you will get the maximum amount of interest on your investment.
How to Open a PPF Account?
A PPF account can be started at any authorized bank. The documents required for a PPF account includes:
- PPF Form A, available at any bank or Indian Post Office.
-
Any ID proof:
- Aadhaar Card
- PAN Card
- Driving License
- Passport
- Voter ID
-
Any address proof from the following:
- Aadhaar Card
- Telephone Bill
- Ration Card
- Ele433 wctricity Bill
- Two current passport-size photographs.
- A signed cheque in favor of your PPF account or pay-in-slip at the bank branch.
- In the case of a minor, a birth certificate will also be required as age proof.
Important Note: All the documents have to be self-attested, and originals must be taken along while opening the account.
Eligibility Criteria to Open a PPF Account
- Only an Indian citizen can open a PPF account.
- Every person is allowed to open only one PPF account in their name.
- PPF account for minors can be opened by submitting legal age proof.
- Individuals who had opened a PPF account while they were residents of India can continue the account for 15 years with no option for extension.
- Hindu United Families cannot open a PPF account after 13th May 2005. However, all PPF accounts before this date can be successfully operated until the maturity period of 15 years (no extensions).
What is the interest rate in a PPF?
The interest rate in PPF (Public Provident Fund) is determined by the government every quarter based on the prevailing market rates. As of now, the interest rate is a PPF is 7.1% p.a., compounded annually. This means that the interest earned on the PPF balance is added to the principal amount at the end of each year and earns interest in the subsequent years. The interest rate in a PPF may vary from time to time, however, it is generally higher than the inflation rate and most bank fixed deposits.
Important Points to Note When Opening a PPF Account
- As per the Indian law, an individual is allowed to open only one PPF account.
- Minimum deposit is Rs.500 as initial deposit amount.
- NRIs can not open a PPF account.
- You can visit the nearest Bank branch and give the request for nomination updating/change whenever required.
- Customers need to visit the branch to get the passbook for the PPF account opened online.
List of Banks where You can Open a PPF Account
PPF is a government savings scheme offered by banks and post offices. Some banks do not offer PPF accounts. You can find a list of banks that offer PPF accounts below.
- Axis Bank
- ICICI Bank
- HDFC Bank
- State Bank of India and its subsidiaries
- PNB
- Canara Bank
- Indian Bank
- Bank of India
- Bank of Baroda
- Central Bank of India
- Union Bank of India
- Indian Overseas Bank
How does an account become inactive?
You have to deposit a minimum ₹500 every financial year into your PPF account, or it will become inactive. An inactive account still earns interest until it matures. However, you cannot take loans against your PPF account if it is not active.
How to Revive an Inactive PPF Account?
Revival of inactive accounts means reactivation. If your PPF account has been deactivated, then in that case, you can revive your PPF account by submitting a written application where the account is opened. Along with the application, you are required to pay a penalty of Rs. 50/- for each year of default and Rs. 500/- for each year as an arrear payment.
After the application and cheque deposit is complete, the bank or post office branch will review your records. If the lock-in period of 15 years is complete the account can’t be reactivated.
What is Attachment Immunity?
The amount available in the PPF account of any person is not liable for attachment by any court in India. In case you are facing any non-compliance on financial commitment like failure of repayment of loan etc., in that case, the court may order to freeze your assets, but the balance available in PPF account cannot be attached by the court. This was a positive move taken by the government to encourage investment in PPF accounts.
Benefits of a PPF Account
Investments are usually made with the purpose to grow capital on finance or to acquire tax benefits. Mentioned below are some of the benefits a PPF scheme offers:
Small Investment, Good Returns:
PPF account is a real lifesaver when it comes to small investments. It has a minimum limit of Rs 100 per transaction and allows up to 12 transactions per year. You can also add a lump sum amount at any time in a financial year, provided it is within the limits of your account.
Flexible Installments:
With a PPF account, you get the flexibility of investment. You can invest with as little as Rs 500 to up to Rs 1,50,000 in a year. Not only in investment, but it also allows you flexibility on maturity. Once the account has matured after 15 years, you can simply withdraw the amount, or you can extend it for a further five years.
Easy Loan Option:
PPF account allows you to take a loan after two years. You can withdraw up to 25% of the previous year’s balance from 3rd year onwards. A secure credit is available from 3rd year to 6th year. Once the loan is taken, it can be repaid within 36 months, and the rate of interest is charged at the rate of 1%.
Numerous Tax Benefits:
The best thing about earnings from the PPF account is that it is completely tax-free. All the deposits you make in your PPF account are eligible for tax deductions under Section 80C. So, you can save up to Rs 1,50,000 per year. Not only the interest that is earned yearly but also the total amount on maturity is completely tax-free. So, it’s an overall win-win game.
Risk-free Returns:
If you are looking for risk-free, government-backed investment plans, PPF would be the ideal deal. The money you invest is completely secure, and it also fetches you a reasonable rate of interest compounded annually. It has a facility of partial withdrawals and loans. It is one of the most recommended schemes and has been trusted by people for many years.

Frequently Asked Questions
Q- How many Public Provident Fund (PPF) accounts can be opened?
Unfortunately, only one PPF account can be opened under an individual’s name. However, you can open and operate a PPF account on behalf of a minor until he/she attains maturity.
Q- Is it mandatory to have a PAN number for opening a PPF account?
Opening a PPF account is like opening any other bank account. You must have a PAN card number. However, if you do not have one or it is still in process, you can declare it in Form No. 60 and get your new PPF account opened!
Q- Is there a provision for opening a joint PPF account?
PPF is an individual account, and it cannot be opened in the name of more than one person.
Q- Can a PPF account be opened in a minor’s name?
Yes, any of the two parents or a legal guardian to the minor can open a PPF account for them. The parents or guardians will be required to submit their documents along with the birth certificate of the minor.
Q- What is the minimum and maximum amount that can be invested under the Public Provident Fund (PPF) Scheme?
You can invest a minimum of 500 rupees to a maximum of 1,50,000 rupees in one financial year the PPF account.
Q- How many deposits can be made in a PPF account in one financial year?
Though you can make more than one deposit in a month, the total number of deposits cannot exceed 12 in a financial year.
Q- Am I eligible to claim the benefits of section 80C, if I contribute to my parents PPF account?
Unfortunately, you cannot claim tax benefits in this case. Though tax laws permit you to claim 80C tax benefits for deposits into your spouse’s account, the same decree does not apply in the case of parents, siblings, or relatives.
Q- What is the maturity timeline of a Public Provident Fund (PPF) account?
A Public Provident Fund (PPF) account matures post-completion of 15 years from the end of the year in which it was opened. Fifteen years is the locking period of any PPF account.
Q- What is the difference between withdrawals and loans against PPF Account?
Withdrawal is a simple drawing of a certain amount from your account that you are not liable to pay back. However, when you are applying for a loan against your PPF account, you are responsible for paying the loan amount along with interest.
Q- To what limit I can take a loan against my PPF Account?
You can apply for a loan up to 25% of your total amount collected by the end of the immediate 2nd preceding year.
Q- Can PPF account be closed or terminated before maturity?
While earlier there was no provision of premature closure or termination of the PPF account except in the case of death, it is now possible under certain circumstances.
According to the PPF amendment scheme 2016, closure or termination of a PPF account is possible, if the account holder has completed five financial years, where:
- The investment is required for the treatment of severe illness or life-threatening diseases of the Account holder’s spouse, dependent children, or parents. The account holder will be required to submit supporting documents from a competent medical authority.
- The investment is needed for higher education. The account holder can close or terminate the account on the submission of documents and fee bills confirming their admission in a recognized university of higher education in India & abroad.
Q- Is it compulsory to withdraw my savings amount at the end of 15-year tenure?
No, it is not binding to withdraw the investment amount on maturity. If you wish to extend the tenure of the PPF account, it can be continued for five years as five years of extension is available.
The extensions can last with or without any deposits. However, you will continue to receive interest on the amount even during the extension period.
Q- What happens in case of failure of deposit in one or more Financial Years?
A penalty of Rs. 50 will be charged every year if you fail to deposit the minimum amount of Rs. 500.
Q- What if I wish to transfer my existing PPF account maintained with another bank/post office to the Bank of my choice? Is it possible?
Yes, your PPF account can be transferred to any bank of your choice and it will be considered as a continuing account.
Q- Will my PPF account number change, if I transfer it from a Bank/Post Office to another Bank/Post Office?
Yes, your PPF account number will change if you transfer your account from one bank to another.
Q- In case of an untimely death before the maturity period, what will happen to the savings in my PPF account?
Your legal heirs or nominee can claim the amount of your PPF account.
Q- In the event of the death of a guardian, what happens to the minor’s PPF account?
Well, in such cases, the minor is treated as a benefactor. The amount in the PPF account only becomes payable on the death of the benefactor as per Section 8 of the PPF Act.
However, the account of the minor remains functioning and a new account need not be opened. The surviving guardian or a custodian appointed by an expert court may continue the minor’s PPF account after submitting the required guardianship certificate.