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Public Provident Fund FAQs

Who should invest in PPF?

Anyone looking for a safe investment option to save taxes and earn guaranteed returns should open a PPF account.

How can I open a PPF account?

Opening a PPF account is a very easy process. You can open one at a Post Office or more easily at the designated banks (State Bank of India, ICICI Bank, Axis Bank and Punjab National Bank).

Is PPF risky?

PPF is backed by the Indian government and offers guaranteed, risk­-free returns as well as complete capital protection.

What is the PPF interest rate?

The current interest rate is 7.8% that is compounded annually. The interest rate is set by the Finance Ministry every year and will be paid on 31st March. The interest is calculated on the lowest balance between the close of the fifth day and last day or every month.

What is the PPF investment limit?

PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in lump sum or in a maximum of 12 installments. The account can be opened with just Rs 100. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax saving.

What are the PPF tax benefits?

All deposits made in the PPF are deductible under Section 80C of the Income Tax Act. Furthermore, the accumulated amount and interest is also exempt from tax at the time of withdrawal.

What is the PPF investment tenure?

The PPF has a tenure of 15 years. The tenure can be extended in blocks of 5 years as many times as you want.

Who can invest in PPF?

Any Indian citizen can invest in PPF. One citizen can have only one PPF account, unless the second account is in the name of a minor. NRIs and HUFs are not eligible to open a PPF account.

What happens upon maturity of PPF?

You can either withdraw the entire amount, which won’t attract any taxes. Partial withdrawal of up to 60% can also be made. Furthermore, you can stay invested for additional blocks of 5 years, with or without making any contributions.

Can I withdraw from PPF account?

PPF permits partial withdrawals after the account has completed 6 years.The withdrawal can be a maximum of 50% of the closing amount at the end of the 4th year.

Is loan available against PPF?

You can take a loan against your PPF account between the 3rd and 5th year. The loan amount can be a maximum of 25% of the 2nd year immediately preceding the loan application year. A second loan can be taken before the 6th year, if the first loan is repaid fully.

How can I check my PPF account balance?

A PPF account is linked to a Post Office or a bank. You can link your account to their facilities and check the balance online or at the particular branch.

Anything else I should know?

A PPF account cannot be closed before maturity. Furthermore, a PPF account can be transferred from one point of designation to another. But, do remember that a PPF account cannot be closed prematurely. Only in the case of the account holder’s demise can the nominees file for closure of the account.

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  1. PPF is a very popular investment under Section 80C of the Income Tax Act - with twin benefits of tax saving along with long term secure investment.