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Public Provident Fund

All You Need To Know About PPF Account

PPF stands for public provident fund. PPF is actually a saving or investment option. If you are in a search for some long-term investment plan, than PPF is a really good option for you. You can invest your money here for 15 years, and then after can extend your PPF account. So basically, you can save as much time as you want, there is no such maximum time limit. Also it is a very safe option to invest. Your money is safe, no chances of loss of money, which is quite common among a lot of other investment options. Plus, it also has tax benefits, loan options, withdrawn when needed, easy to maintain, and even easy to open. Here we are providing you with 7 point that you should know about PPF accounts.

About the opening of the account

You just need to open a PPF account with any of the following listed banks only – State Bank of India, Bank of India, Central Bank of India or Bank of Baroda. Now you just need Rs. 100/-. Yes, the PPF account can be opened with Rs. 100/- only. Any individual can open a PPF account. The PPF accounts can also be opened at the post offices.

Deposit limit of PPF account

PPF accounts have deposit limits. Deposit limit means that they have a minimum limit that must be deposited by a PPF account owner in a financial year. Similarly, there is a maximum deposit limit as well. The minimum deposit limit is Rs. 500/-, which means you have to deposit at least Rs. 500/- in the whole financial year. And the maximum deposit limit is Rs. 1, 00,000/-, which means one cannot deposit more than lakh rupees in one year. You can add your money at once only or you can divide it in installments.  But you cannot exceed 12 installments per year.

Interests on PPF account

The interest on the PPF account is calculated on the minimum balance available in your account between the 5th of every month to the last day of the month. For example – the interest of February is calculated on the minimum balance between 5th Feb and 28th/29th Feb. So if you want maximum benefit or maximum interest than you should maintain a good amount during these dates and if you want to deposit some money, than try to do that before 5th of every month. The interest is calculated annually and is deposited to your account on 31st of March.

Withdrawal from PPF

If you want to take out all the money from your PPF account then you can do that only after your PPF account gets mature. Until that time you can withdraw only prematurely. Withdrawing prematurely means you cannot withdraw all amount but can withdraw some part of it. But there are some conditions to do that, firstly you can withdraw only once in a year, you cannot withdraw more than once, and that to from 7th year onwards, you cannot withdraw before that, no matter what happens. Secondly, you cannot exceed the amount from being 50% of the balance at the end of the 4th year or 50% of the balance at the end of the immediate preceding year, whichever is lower.

Tax benefits from PPF

PPF also provides tax benefits. Depositing in PPF gives you benefits in tax. Also, after maturity of the PPF account, the whole amount plus the interest is non taxable.PPF deposits are exempted from wealth tax also.

Loan from PPF account

If there is any such situation, where you want to borrow some money from some financial institution, than here also your PPF account can help you out. You can get loan on your PPF account. But you can get this loan only from 3rd year to 6th year and had to pay it back within 24 months or 2 years. The amount of the loan is decided by your accounts balance at the end of the 2nd year. You can get 25% of this balance. Now the interest rate of this loan is a bit higher than the PPF interest rate. It is 2% more than that time PPF interest rate.

PPF account after 15 years

If you wish to then you can extend your PPF account after 15 years as well with or without subscribing further. If you subscribe further, then, you will get same interest rate as you were getting previously. But, if you continue it without subscription, then you don’t have any withdrawal limits and you can take as much money as you want, but only once in a year. However, this time period for which you want to extend your PPF account should be in batch of 5 years only.