Tax benefits under the PPF scheme make it one of the most impressive options to invest in. The deposit made up to 1.5 lakh in the PPF account can be exempted and the amount received after its maturity is also tax-free. A person who wants to build post-retirement savings can invest in the PPF scheme.
PPF account lock-in period is 15 years, before which, only a partial withdrawal is allowed under some terms & conditions. However, before investing in a PPF scheme, it is advised to be aware of what it is all about, the rules & policy behind it and the conditions to avail numerous advantages from it.
What is a PPF account or Public Provident Fund?
PPF or Public Provident Fund is a scheme that allows the individual to save a part of his/her income annually, in order to build post-retirement savings or retirement corpus. The amount deposited into the PPF scheme makes an individual eligible to receive interest on the principal amount along with tax-saving benefits too. It was introduced to encourage those who don’t fall under the Employee Provident Fund Organization (EPFO) to save and build a retirement corpus. A tax benefit of up to Rs 1.5 lakh under Section 80C of the Income Tax Act can be availed through the PPF scheme.
Who can open a PPF account?
Listed below are the people who are eligible to open a PPF account-
- Only Indian citizens are eligible to open a PPF account
- An Indian citizen settled abroad can continue operating his/her PPF account
- Parents/guardians on behalf of their minor children can open a PPF account
*It is to be noted that joint accounts and multiple accounts are not allowed to be opened
List of forms associated with PPF scheme
Following are the forms that are required to be used when opening a PPF account or to avail its related services-
|Form A||To open a PPF account|
|Form B||To make a deposit into the account or to make repayment of the loan|
|Form C||To obtain the partial withdrawal|
|Form D||To request a loan|
|Form E||For making a nominee|
|Form F||For making changes to the account details|
|Form G||To claim funds in the account either by a legal heir or nominee|
|Form H||For extending the tenure of the account|
What are the Limitations of the PPF Account?
A PPF account offers numerous benefits; however, it still has a few limitations as explained below-
- PPF account comes with a lock-in period of 15 years, which becomes a hindrance in case one would want to withdraw some amount for emergency or to meet financial requirements
- There are rules to be followed to partially withdraw the amount from the PPF account
- PPF does not offer competitive interest rates
- PPF account cannot be jointly held
- The maximum amount that an individual can contribute to the PPF account is Rs. 1.5 lakh only
- Only Indian citizens can open a PPF account, NRIs are not given the opportunity to open such an account
- One cannot close a PPF account within 5 years of opening the account. The PPF account can only be closed in case of life-threatening ailments affecting the account holder, his/her spouse, or children. Supporting documents are further required to support such claims
What are PPF withdrawal limits?
A PPF scheme remains locked for 15 years, after its maturity, an individual can withdraw the complete amount from the account. However, a partial withdrawal facility is also available which is only available after the completion of 6 years. Listed below are the rules associated with PPF premature withdrawal-
- Premature withdrawal can only take place after the completion of 6 years
- The amount to be withdrawn has a limit assigned to it
- In case of taking a loan against the PPF account, the amount will be deducted from the withdrawal amount
- Only one withdrawal is allowed per financial year
How to withdraw money from a PPF account?
The partial withdrawal from a PPF account can only take place after the completion of 6 financial years from the date of opening the account. The complete withdrawal of money from the PPF account can only be done after 15 years of the lock-in period are complete. In case of partial or complete withdrawal of money, following are the steps to be followed carefully-
- Fill the Form C
- Enter all the required details in the form like PPF account number, amount to be withdrawn, the total number of financial years completed since the opening of the PPF account
- Submit the form along with the PPF passbook
- The bank will further check all the details written on the form along with the eligibility of the account holder for the amount withdrawal
- Upon completion of the above-mentioned process, the amount will be credited to the account holder savings account
What are PPF withdrawal rules on extension?
If one wishes to extend the tenure of the PPF account, he/she can do it but in a block of 5 years at a time. Also, if an individual does not pull out the overall amount after the PPF maturity, the tenure will extend automatically. The account then will fetch additional interest according to the applicable rate of interest.
- Withdrawal after extension
If the PPF account holder wishes to extend the tenure of the PPF account in the blog of 5 years, he/she can withdraw the amount but before the extension gets started.
- PPF extension with an additional contribution
PPF account holders can extend the tenure of their PPF account by continuing to add contributions to it. The extending tenure will earn them interest on the deposited amount too.
- Withdrawal after PPF extension with a contribution
After the PPF account extension with contribution, the account holder is given the opportunity to withdraw 60% of the balance at the time of extension over the block of 5 years. Note that only one withdrawal per year is allowed.
How to check the PPF balance online?
Following are the steps to check PPF balance online-
- Link your existing bank account with the PPF account
- Net banking facility should be activated to check PPF balance online
- Next, log in to the bank’s net banking portal
- Locate a section to check PPF balance and status
- The process to check PPF balance might vary from one bank to another bank online
- In case of an inactive net banking facility, it is advised to get it activated at the earliest
- It is advised to link the existing bank account with the PPF bank account to perform various bank related transactions
How to check PPF balance offline?
There is a second way to check the balance offline too. Following are the steps to check PPF balance offline-
- Visit the bank’s branch through which you have opened your PPF account
- Get the PPF passbook updated by connecting with the banking personnel
- The PPF passbook offers an overview of the transactions, current PPF balance details, etc
- When you choose to open a PPF account with the bank, the bank provides you with a passbook. The passbook contains all the details like PPF account number, bank branch details, account balance, details of the transactions, etc
How to check PPF balance through the Post office?
People in remote and rural areas still have limited access to banks and banking facilities. In such a situation, post offices are made available to offer them all the banking facilities and ease to open a PPF account. In the case of opening a PPF account with a post office, the way to check the PPF balance is to follow the given instructions-
- Upon opening a PPF account with the post office, you will be given a passbook
- Get the passbook updated at regular intervals to check PPF balance
- The passbook carries all the PPF related details like PPF account number, number of transactions, total balance, etc
How to open a PPF account online?
Before opening a PPF account online, it is mandatory that the individual has an account with the bank and access to internet banking. Following are the steps to follow to open a PPF account; however, it is to be noted that the steps might slightly vary from one bank to another.
- Log in to the respective bank’s net banking portal
- Locate the option that will allow you to open a PPF account
- If there are options to choose self PPF account or a minor PPF account, choose one accordingly
- Enter the required details like bank details. Mention the nominee details too
- Next, enter the amount you wish to deposit in your PPF account
- Select whether you want the money to be deducted at fixed intervals or at one go
- Enter the OTP which is sent to your registered mobile number (this step might vary from bank to bank)
- Once the above-mentioned steps are completed, your PPF account will be created. Note the account number and other required details for future references
- There are banks that require an individual to submit the physical copies of all the supporting documents and details to be submitted for KYC purpose
How to open a PPF account offline?
It is easy to open a PPF account offline by following the given instructions-
- Visit your respective bank’s branch
- Connect with the banking personnel to open a PPF account
- Next, fill the PPF account opening form
- Submit all the required supporting documents and the amount for the PPF account
- Once the verification process is completed, your PPF account will be opened
Documents required to open a PPF account
Given below are the documents required to open a PPF account-
|Documents to open PPF account|
|PPF account opening form- Form A|
|KYC documents like Aadhaar card, PAN card, Voter ID card etc|
|Proof of Address|
|Passport size photograph|
|Nomination form- Form E|