Public Provident Fund (India)The Public Provident Fund is savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits.[1]Contents 1Eligibility 2Investment and returns 3Duration Of Scheme 4PPF Maturity Options 5Loans 6Features 7Withdrawals from PPF account 8Nomination 9PPF defaults and revival 10Transfer Of Account 11PPF tax concessions

Eligibility[edit]Individuals who are residents of India are eligible to open their account under the Public Provident Fund scheme. A PPF account may be opened under the name of a minor by his/her legal guardian. However, each person is eligible for only one account under his/her name.Non-resident Indians (NRIs) are not eligible to open an account under the Public Provident Fund Scheme.This is an act regulation by Indian Govt. However a resident who becomes an NRI during the 5 years' tenure prescribed under Public Provident Fund Scheme, may continue to subscribe to the fund until its maturity on a non-repatriation basis. Deposit to PPF is tax deductible for individual taxpayers in India u/s 80C of Income Tax Act, 1961. FYIInvestment and returns[edit]A minimum yearly deposit of Rs. 500 is required to open and maintain a PPF account, and a maximum deposit of Rs.1.5 lakhs (w.e.f August 2014) can be made in a PPF account in any given financial year. The subscriber should not deposit more than Rs.1.50 lac per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.The government of India decides the rate of interest for PPF account. The current interest rate effective from 1 April 2013 is8.70% Per Annum(compounded annually)[2]which was revised from 8.80% effective from 1 April 2012.[3]Interest will be paid on 31 March every year. Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.Duration Of Scheme[edit]Original duration is 15 years. Thereafter, on application by the subscriber, it can be extended for 1 or more blocks of 5 years each.PPF Maturity Options[edit]Subscriber has 3 options once the maturity period is over.[4]1. Complete withdrawal- Subscriber can opt to withdraw the whole amount after the completion of 15 years.[5]2. Extend the PPF account with no contribution PPF account can be extended after the completion of 15 years, subscriber doesnt need to put any amount after the maturity. This is the default option meaning if subscriber doesn't take any action with in one year of his PPF account maturity this option activates automatically. Any amount can be withdrawn from the PPF account if the option of extension with no contribution is chosen. Only restriction is only one withdrawal is permitted in a financial year. Rest of the amount keeps earning interest.3. Extend the PPF account with contribution- With this option subscriber can put money in his PPF account after extension. If subscriber wants to choose this option then he needs to submit Form H in the bank where he is having a PPF account within one year from the date of maturity (before the completion of 16 yrs in PPF). With this option subscriber can only withdraw maximum 60% of his PPF amount (amount which was there in the PPF account at the beginning of the extended period) within the entire 5 yrs block. Every year only a single withdrawal is permitted.Loans[edit]Loan facility available from 3rd financial year up to 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% more than the prevailing interest on PPF. However, the rate of interest of 1% more than PPF interest p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2013.Up to a maximum of 25 per cent of the balance at the end of the 2nd immediately preceding year would be allowed as loan. Such withdrawals are to be repaid within 36 months.A second loan could be availed as long as you are within the 3rd and before the 6th year, and only if the first one is fully repaid. Also note that once you become eligible for withdrawals, no loans would be permitted. Inactive accounts or discontinued accounts are not eligible for loan.Features[edit]The public provident fund is established by the central government. One can voluntarily open an account with any nationalized bank,selected authorized private bank or post office. The account can be opened in the name of individuals including minor.The minimum amount is Rs.500 which can be deposited. The rate of interest at present is 8.7% per annum, which is also tax-free. The entire balance can be withdrawn on maturity. Interest received is tax free. The maximum amount which can be deposited every year is Rs. 1,50,000 in an account at present. The interest earned on the PPF subscription is compounded annually. All the balance that accumulates over time is exempt from wealth tax. Moreover, it has low risk risk attached is Government risk. PPF is available at post offices and banks.Withdrawals from PPF account[edit]There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period. However, pre-mature withdrawals can be made from the end of the sixth financial year from when the commenced. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.After 15 years of maturity, full PPF amount can be withdrawn and all is tax free, including the interest amount as well.Nomination[edit]Nomination facility is available in the name of one or more persons. The shares of nominees may also be defined by the subscriber.PPF defaults and revival[edit]If any contribution of minimum amount in any year is not invested, then the account will be deactivated. To activate the bearer needs to pay Rs.50 as penalty for each inactive year. He/she also needs to deposit Rs.500 each as each inactive years contribution.In case death of account holder then the balance amount will be paid to his nominee or legal heir even before 15 years. Nominees or legal heirs are not eligible to continue the account of the deceased.If balance amount in the account of a deceased is higher than Rs.1,50,000 then the nominee or legal heir has to prove the identity to claim the amount Transfer Of Account[edit]The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charges.Step 1 Approach the bank or post office branch where the PPF account is held and ask for the form for making the transfer. The bank or post office will provide you with a form which is to be filled. The sample PPF form of SBI available online.Step 2 The existing bank will then forward the certified copy of the account, the account opening application, nomination form, and specimen signature. It will also forward the cheque/dd for the outstanding amount in the PPF account to new bank at the branch specified by the customer.Step 3 Once your bank receives these documents, the bank will inform you and ask you to submit a new PPF account opening form along with the old PPF passbook. You can also provide nominations for this new account. You will also be required to submit the KYC documents.Step 4 If you hold an internet banking facility with your bank, after a few week, check that the transferred PPF account now shows up under the PPF account tab/link in your login. If that is not the case, enquire the local bank branch.PPF tax concessions[edit]Annual contributions qualify for tax rebate under Section 80C of income tax. Contributions to PPF accounts of the spouse and children are also eligible for tax deduction. Balance in PPF account is not subject to attachment under any order or decree of court. But, Income Tax authorities can attach the account for recovering tax dues. The highest amount that can be deposited is 1,50,000 (please note that the limit has been increased from 1,00,000 to 1,50,000 in 2014-15 budget and the circular has been issued on 20 August 2014) Tax bracket for PPF is EEE (i.e. Exempt,Exempt,Exempt). So contribution is exempted under 80C, Interest earned is tax exempted and withdrawal is also tax exempted. Interest earned is fully exempted from tax without any limits. Annual contributions qualify for tax rebate under section 80c of income tax. Contributions to PPF accounts of the spouse and children are also eligible. The scheme is fully guaranteed by the Central Government.

Public Provident Fund Account

From 1.4.2014, interest rates are as follows:- 8.70% per annum (compounded yearly).Minimum INR. 500/- Maximum INR. 1,50,000/- in a financial year.Deposits can be made in lump-sum or in 12 installments. An individual can open account with INR 100/- but has to deposit minimum of INR 500/- in a financial year and maximum INR 1,50,000/-

Joint account cannot be opened.

Account can be opened by cash/cheque and In case of cheque, the date of realization of cheque in Govt. account shall be date of opening of account.

Nomination facility is available at the time of opening and also after opening of account. Account can be transferred from one post office to another.

The subscriber can open another account in the name of minors but subject to maximum investment limit by adding balance in all accounts.

Maturity period is 15 years but the same can be extended within one year of maturity for further 5 years and so on.

Maturity value can be retained without extension and without further deposits also.

Premature closure is not allowed before 15 years.

Deposits qualify for deduction from income under Sec. 80C of IT Act.

Interest is completely tax-free.

Withdrawal is permissible every year from 7th financial year from the year of opening account..

Loan facility available from 3rd financial year.

No attachment under court decree order.

The PPF account can be opened in a Post Office which is Double handed and above.