Public Provident Fund (PPF) is one of the many small saving investment schemes, offered by India Post. The scheme can be started with minimal investment amount and offers a tax deduction on the deposit under section 80C and the interest is also completely tax-free. According to experts, investing in PPF can be considered as an alternative to investing in debt instruments. The maturity term of PPF is 15 years. Other than this, the scheme comes with many other features.
Here are some salient features of the scheme, which subscribers should know about:
- Any individual can subscribe to PPF either on their own or on behalf of a minor as a guardian.
- Deposits can be made in multiples of Rs 5. The minimum deposit and maximum deposit amount are set at Rs 500 and Rs 1.5 lakh, respectively.
- An individual who is a member of a Hindu Undivided Family can not subscribe to the fund on behalf of and out of the income of the Hindu Undivided Family.
- Those having General Provident Fund, or Employees Provident Fund (EPF) can also open a Public Provident fund account.
- Only one bank account can be opened in one name either in a post office or in a bank.
- The subscription can be deposited in a lump sum or in installments, which can not be more than 12 in a year. However, more than one installment can be made in a month.
- It is not necessary to subscribe to every month of the year. The amount of subscription can also be varied to suit the convenience of the subscriber.
- Balance in the fund earns interest at the rate fixed by the government from time to time. Currently, it offers 7.9 per cent interest to its depositors.
- The account can be transferred from one post office to another at the request of the subscriber. The account standing in a bank can also be transferred to the post office and vice versa.
- The account can be closed on maturity, which is after 15 years from the close of the financial year in which the initial subscription was made. One can also continue after the term of 15 years for an additional block of 5 years with the help of Form H.
- A subscriber can take a loan from the fund in case of a financial need. The first loan can be taken in the third year from the year of opening an account.
- The loan is repayable either in a lump sum or in convenient installments of not more than 36 months. Subsequent loans can be taken when the earlier loan with interest has been paid off.
- A subscriber can make one withdrawal during a year, wherein the first withdrawal can be made after the expiry of 5 years from the end of the year in which the initial subscription was made. The amount of withdrawal will be limited to 50 per cent of the balance at the credit at the end of the preceding year, or at the end of 4th year immediately preceding the year in which the amount is withdrawn, whichever is lower.
- The PPF account is not transferable from one person to another. In case of the death of the subscriber, the nominee cannot continue the account of the deceased subscriber with the subscription. However, the amount will continue to earn interest on the balance in the account.
- A PPF account cannot be opened in the joint names, nor can it be opened by an NRI (Non-Resident Indian).