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The Government of India (GoI) came up with a set of saving schemes that were primarily distributed by India Post offices. These schemes were introduced with the aim of encouraging the citizens to save money for various causes, such as retirement, children’s education, girl child’s future, among others.
Most of these schemes offer tax benefits along with compound interest on the deposits made. Since the government has introduced these schemes, there is a sense of guarantee. Later, private and public banks also started distributing the schemes.
One such scheme is Public Provident Fund (PPF). The scheme is well-known for its tax benefits and long-term investment returns. Know more about PPF here.
The PPF scheme is one of the popular long-term, retirement saving-cum-investment products it offers guaranteed, fixed returns and tax savings. The PPF was launched in 1968 by the Finance Ministry’s National Savings Institute. Most investors consider PPF as a retirement savings tool due to the long tenure of the account, i.e. 15 years.
You have to make deposits in the account at least once every financial year to keep the account active. Further, you can choose to extend the account in the blocks of five years upon maturity. The extension can be requested any number of times and can be done with additional funds or not based on your preference.
The government sets the interest rate for the account once every quarter. The returns from PPF is way better in comparison to most of its counterparts. Your investment in the account is tax-exempt under section 80C of the Income Tax Act, the interest earned from the PPF account and the maturity amount is also tax-exempt.
The process of opening a PPF account in post offices can be completed in 4 simple steps:
(i) Get an application form from your nearest post office or from the sub-post office in your area. The application form can also be acquired online.
(ii) Fill up the form and submit it with the required KYC documents and passport size photograph.
(iii) The initial deposit required to open a post office PPF account is Rs.500 and the maximum amount allowed initially is Rs.70,000. However, the maximum deposit allowed within a year is Rs.1.5 Lakh.
(iv) Once all documents are submitted with the initial deposit, the applicant will be handed a passbook for the PPF account. The passbook will contain all the details, such as the name of the account holder, PPF account number, branch name etc.
A PPF is a good form of investment if you are risk-averse and do not want to subject your money to market volatility. With the simplicity of its functionality and ease of operation online, it is a convenient channel of saving. Not to forget, the maturity amount is exempted from taxation.
Step 1: Log in to the SBI’s internet banking portal at http://www.onlinesbi.com.
Step 2: Click the ‘New PPF Accounts’ option on the side menu.
Step 3: The ‘New PPF Account’ page will be displayed where your name, address, CIF number, and PAN details will be pre-filled.
Step 4: Enter your bank account number and branch code from which you would like to make the payment for the PPF account. Click on the ‘Get Branch Name’ button.
Step 5: Your personal and nomination details will be displayed for verification. Once done, click on ‘Proceed’.
Step 6: Your PPF account will be created in an instant and the account number will be displayed on the screen.
Step 1: Log in to the HDFC Bank internet banking portal.
Step 2: Click on ‘Public Provident Fund’ and select the ‘PPF Accounts ‘option.
Step 3: Click ‘Open Now’.
Step 4: Enter bank account details from which you would like to pay for your PPF account and the PAN number.
Step 5: Verify if all the details you have entered are correct and click on the ‘Proceed’ button.
Step 6: Verify your Aadhaar number. If your bank account is already linked to your Aadhaar, you can click on ‘Generate OTP’, else you will need to update your Aadhaar online. There is also an option to e-sign with the Aadhar OTP as well.
Step 7: Now, your PPF account is instantly created and the account number is displayed.
Step 1: Log into your bank account on the internet banking or mobile banking platform.
Step 2: Select the ‘Open a PPF Account’ option.
Step 3: If the account is for self, click on the ‘Self Account’ option. If you are opening the account on behalf of a minor, select the ‘Minor Account’ option.
Step 4: Enter the relevant details in the application form.
Step 5: Key-in the total amount you want to deposit in the account per financial year.
Step 6: Submit the application. An OTP will be sent to the registered mobile number. Enter it in the relevant field.
Step 7: Your PPF account will get created in an instant! Your PPF account number will be displayed on the screen. An email will be sent to your registered email address with all the details confirming the same.
Any resident Indian adult can open a PPF account. In the case of a minor or a person with an unsound mind, a legal guardian can open the account on their behalf.
Step 1: Fill in Form C with relevant details. You can download this from your bank or Post Office website or at the branch.
Step 2: Submit the form to the bank or Post Office branch where your PPF account is held.
As per the rules governing PPF accounts, you cannot fully withdraw your PPF account balance only after the account completes its tenure of 15 years. Upon completion of the 15-year term, you can access the entire account balance, withdraw it fully, and close the account.
Any time before completing the full tenure of the account, you cannot withdraw the entire account balance in any circumstances. However, premature withdrawal of up to 50% of the account balance is allowed after completing 5 years. This is permitted under special circumstances only.
You can transfer your PPF account to another branch of the bank/Post Office, switch from bank to Post Office, or switch from Post Office to a bank. Here is the procedure.
Step 1: Visit the bank or Post Office branch where your PPF account is held.
Step 2: Request for the application form to transfer the PPF account and fill it up with the relevant details.
Step 3: The branch representative will process your application and forward it along with the certified copy of the account, nomination form, account opening application, specimen signature, and the cheque/DD for the outstanding balance of the PPF account to the new branch.
Step 4: Once the new branch receives your application and supporting documents, you have to submit a new PPF account opening application along with the old PPF account’s passbook. You may change the nominee at this point.
Step 5: Once this application is processed, your PPF account is successfully transferred to the new branch.
There is no need to link a PPF account held with SBI to an SBI savings account. At the time of opening the PPF account, either online or offline, you will have provided your existing savings account number held with the bank. This means, your new PPF account is created under the existing customer ID. By default, your PPF account will be linked to your savings account. Therefore, you can use the same login credentials for internet banking and access both your savings account and PPF account details under a single platform.
When you open a PPF account offline, the bank or Post Office will provide you with a passbook. The passbook contains all the necessary information about the PPF account, such as the PPF account number, bank/PO branch details, account balance, transactions made in the account, and others. You can get the passbook updated regularly to access the latest data.
On the other hand, you can log into your account on the internet banking portal. On the home page, choose the PPF account to see the account details, such as the account number, account balance, recent transactions, and others.
You can open a PPF account either at the Post Office branch nearest to you or at a participating bank branch based on your convenience. The participating banks that offer a PPF account are given below.
Step 1: Log on to your internet banking account.
Step 2: Click on the ‘Registration of Aadhaar Number in Internet Banking’ option.
Step 3: Enter your 12-digit Aadhaar number therein and click on ‘Confirm’.
Step 4: Select the PPF account to link it to the Aadhaar number and done.
Step 5: Click on the ‘Inquiry’ option on the homepage to check if the Aadhaar linking request is completed.
Step 1: Get an application form from your nearest post office or online.
Step 2: Fill up the form and submit it with the required KYC documents and passport size photograph.
Step 3: Make the initial deposit required to open a post office PPF account. The amount can range from Rs.500 up to Rs.1.5 lakh per financial year.
Step 4: Once your application is processed, a passbook will be given to you for the PPF account opened.
Step 1: Log in to your internet banking account.
Step 2: Open the PPF account details to check the latest PPF balance and the recent transaction details.
Public Provident Fund (PPF) is a retirement savings scheme offered by the Government of India with the aim of providing a secure post-retirement life to everyone. The minimum deposit you must make in the account per financial year is Rs.500 and it can go up to Rs.1.5 lakh. In addition to providing retirement savings, you can also claim income tax benefits on the amount you invest in the account.
Here are the benefits you can expect from a PPF account
A PPF account can be extended in the blocks of five years any number of times upon the maturity of the account after 15 years from the date of opening the account.
Step 1: Check if you are eligible for premature withdrawal.
Step 2: If you are eligible, get Form C from the bank or Post Office and fill it up with relevant details.
Step 3: If the account is in the name of a minor, you will have to provide an additional declaration stating the money you are withdrawing is for the sake of the minor and that the minor is alive.
Step 4: Submit the form and any supporting documents to the bank or Post Office branch.
Step 5: If all the information and documents you have provided are satisfactory, the bank or PO will process it and release the payment.
PPF accounts are offered by the Government of India and are not specific to a bank. Also, all banks provide the same set of features and benefits when you open a PPF account. The interest rate is set by the government and it remains the same wherever the PPF account is held. Therefore, there is no best bank that offers a PPF account.
There is no specific due date as to when you should deposit money in a PPF account. However, it is beneficial for you to deposit money between 1 April and 5 April of a financial year. If it is not possible for you to make the full year’s deposit at the beginning of the year, you can make monthly deposits within the 5th of the month to earn maximum benefits.
PPF account can be extended any number of times without any restrictions.
An individual can open only one PPF account across the country either in a bank or Post Office.
You can withdraw the money partially after completing five years from the date of opening the account. However, you can only withdraw up to 50% of the total account balance at the end of the fourth year from the date of opening.
When a minor PPF account holder becomes a major or turns 18 years old, you can submit a revised application form along with necessary documents stating the age of the account holder to change the status of the account from minor to major. The guardian can submit the application along with the account holder’s signature on the application form as an attestation.
You can close a PPF account after completing 15 years from the date of opening the account. The procedure is given below.
Step 1: Fill up the relevant information in Form C and attach your PPF passbook.
Step 2: Submit this to the relevant Post Office branch where the account is held.
Step 3: Your application will be processed and the account will be closed. You will receive the payment in your savings account linked to the PPF account
The minimum lock-in period for a PPF account is 15 years, the actual tenure of the PPF account.
A PPF account can be opened by an adult for self or on behalf of a minor. The account tenure is 15 years and the lock-in period for the account is 15 years. You can make a deposit to a PPF account ranging from Rs.500 up to Rs.1.5 lakh per financial year. The deposit can be made in a lump sum or in instalments. There is no restriction on the number of instalments per financial year. The deposits must be made every financial year during the tenure and such deposits are exempt from income tax u/s 80C.
You are required to make a minimum deposit of Rs.500 per financial year to keep the account active. If you fail to make this deposit, the account will be discontinued. You will have to pay a penalty of Rs.50 along with the minimum deposit of Rs.500 to reactivate the account.
An interest rate of 7.1% p.a. (Q1 FY22) is applied to the deposit and is compounded annually. A loan facility is available on the PPF balance. Also, you can make partial and premature withdrawals on the PPF account subject to certain conditions. Upon completing the tenure, you can choose to extend the account with or without making additional contributions. You also have the option to close the account.
In order to reactivate an inactive PPF account, you can follow the steps below:
Step 1: Submit a written letter to the bank or PO branch requesting to reactivate it.
Step 2: Pay a minimum amount of Rs.500 for each year you have not made any contributions along with the penalty of Rs.50 per inactive year.
Step 3: The bank or PO will process your request and reactivate the account.