A Public Provident Fund is a type of long-term investment plan backed by the government of India, offering attractive interest rates along with returns. The amount to be deposited in the fund ranges from INR 500 to INR 1,50,000 each financial year, either in EMIs or lump sum. The amount deposited, maturity amount & interest amount are totally exempt from taxes.

Features of PPF Account

Provided are the features of a PPF Account:

• Opening Balance:

One can open a PPF Account with a nominal amount of INR 100 per month.

• Tenure:

PPF is a well-designed Long Term Investment Plan with a minimum tenure of 15 years, which can further be extended for a block period of 5 years.

• Investment Limits:

The minimum investment limit is INR 500, & the maximum limit is INR 1,50,000 every financial year. The investment amount can be deposited either in EMIs or in a lump sum.

• Mode of Deposit:

The mode of deposit can be cheque, cash, online fund transfer, or dem& draft.

• Frequency of Deposit:

The funds should be deposited into the PPF account a minimum of one time each year for 15 years.

• Joint Account:

A PPF account cannot be opened in joint names; i.e. it can be held in the name of a single individual.

• Nomination:

An account holder can also be appointed for a PPF account at the time of opening a PPF account or later on.

• Tax Benefit:

As per section 80C of the Income Tax Act, 1961, the maturity amount & the proceeds from interest are tax-free.

• Risk Factor:

PPF offers guaranteed & risk-free returns along with capital protection because the government backs it.

• Partial Withdrawal:

This account allows the partial withdrawal of funds from the 5^th financial year onwards.

Documents Required

Provided is the list of documents required to be provided while opening a PPF account:

• Account Opening Form
• Address Proof
• KYC documents such as Voter ID, Aadhar Card, Driving License, etc.
• Passport-sized photograph
• PAN card
• Form-E (Nomination Form)

Eligibility Criteria

Provided are the eligibility parameters that are to be met to open a PPF account:

• It can be opened by an Indian resident only.
• NRIs are not allowed to open a PPF account; however, an Indian resident who now has become a NRI can continue the same account till the time it matures.
• Parents or guardians can also open PPF accounts for their minor children.
• Joint accounts or multiple accounts are not allowed.

How to Open a PPF Account?

To open a PPF account, an individual can visit a Post office, private banks, nationalised banks, etc.

Provided are the steps to open a PPF account by visiting a Post Office:

Step 1: Visit your nearby post office to get a PPF account opening form. Alternatively, it can be downloaded online.

Step 2: Fill out the account opening form with all your required details & submit it along with your passport-sized photograph & KYC details.

Step 3: Deposit the initial deposit that is required to open the account, which can range between INR 500 & INR 1,50,000.

Step 4: After the account opens, a passbook will be given for the updating of entries.

Also, one can avail of the facility to get his/ her account opened online by following below-mentioned steps:

Step 1: Open your bank’s internet banking portal.

Step 2: Click the tab “Open a PPF Account”.

Step 3: Select a suitable option between “Self Account” & “Minor Account”.

Step 4: Input the details, such as bank details, nominee details, etc.

Step 5: Verify the PAN number that is displayed on the screen.

Step 6: Once the details are verified, provide the amount to be deposited in your PPF account.

Step 7: Provide your bank with st&ing instructions as to how much amount is to be deducted & whether in lump sum or at a fixed interval.

Step 8: An OTP will be received at your registered mobile number.

Step 9: Your PPF account is now open.

Step 10: In the case of some banks, you may be asked to provide a hard copy of the reference number with your KC details.

Benefits of Tax

Provided are the benefits of tax one gets when a PPF account is opened:

• The funds deposited in the PPF account are eligible to get deductions under section 80C, a maximum of up to INR 1,50,000 each financial year. The amount of tax that can be saved can be ascertained with the help of the Income Tax Calculator.
• The amount of interest received is also exempt from tax.
• The maturity amount, i.e. principal & interest, is also exempt from tax.
• It gains a triple tax Exempt-Exempt-Exempt (EEE) status, i.e. the investment amount, maturity amount, & interest amount are all exempt from tax.
• Also, the amount deposited in the PPF account does not attract any Wealth Tax.

How to Withdraw from a PPF Account?

Follow these steps in case of partial or complete withdrawal:

Step 1: Visit the bank or post office from wherever the PPF account was opened to get the withdrawal form (Form 3 or Form C).

Step 2: Fill out the details required in the withdrawal form.

Step 3: Submit the withdrawal form wherever you maintain the account, i.e., at the bank or post office.

How to Close a PPF Account?

The PPF account can be closed upon the completion of the 15-year tenure, & the amount can be withdrawn. But, it allows you to withdraw the funds partially, i.e. up to 50% once a period of 5 years is completed.

Step 1: Fill out Form C & attach the PPF passbook along with it.

Step 2: Submit the same to the post office or bank account wherever you maintain your account.

Step 3: After successful processing, the PPF account gets closed.

Step 4: The amount will be disbursed in the respective savings account linked to your PPF account.

Conclusion

If you are a risk-averse individual, i.e. avoid taking risks or prefer low-risk investments backed by the government, PPF can be the best choice.

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