Get a complete guide to open Public Provident Fund (PPF) Account Online, rules, eligibility, interest rate , account transfer, nomination, withdrawal, deposit, PPF Scheme details more Information About Public Provident Funds. How To Invest in PPF, Features of PPF account

To maximise their investment, people with Public Provident Fund (PPF) accounts must submit their contribution for the fiscal year 2023–24 before April 5.

For instance, if your PPF account balance is Rs. 2 lakh and you want to contribute an additional Rs. 1.5 lakh all at once, the additional money would lose out on some interest returns if it is invested after April 5.

Your new PPF account balance will be Rs 3.5 lakh if the additional contribution of Rs 1.5 lakh is invested before April 5. (Rs 2 lakh earlier and Rs 1.5 lakh invested now). The total amount of Rs 3.5 lakh, or about Rs 2,070, would be used to compute the monthly interest on the corpus in accordance with PPF rules. But, if the additional Rs 1.5 lakh is invested after April 5, it won’t be used for determining the interest for the month of April.

Features of PPF account

• Duration: The PPF has a minimum term of 15 years, which can be increased by 5 year increments at your discretion.
• Investment limits: PPF has a minimum investment requirement of Rs. 500 and a maximum investment cap of Rs. 1.5 lakh every fiscal year. A maximum of 12 installments or a lump sum can be used to make investments.
• Opening balance: A monthly balance of just Rs 100 can be used to open the account. Investments made annually over Rs 1.5 lakh would not be eligible for tax savings or interest.
• Deposit frequency: Over a period of 15 years, a PPF account must receive at least one deposit every year.
• Deposit methods: You can deposit money into a PPF account using cash, checks, demand draughts (DD), or online fund transfers.
• Nomination: A PPF account holder may name a candidate for his account at the time the account is opened or at a later time.
• Joint accounts: Only one person’s name may be on a PPF account. It is not permitted to open an account in joint names.
• Risk: PPF guarantees guaranteed, risk-free earnings as well as total capital protection because it is sponsored by the Indian government. Holding a PPF account carries just a little amount of risk. PPF accounts are used to diversify an investor’s portfolio because their returns are fixed.
• Tax benefit: Section 80C of the Income Tax Act of 1961 exempts the PPF interest and maturity amount from taxation.
• Partial withdrawal: Beginning with the eighth financial year, PPF funds may be withdrawn in part.

What is the interest rate on PPF?

The current PPF interest rate is 7.1% p.a. that is compounded annually.

Every year, the interest rate, which is paid on March 31st, is fixed by the Finance Ministry. The lowest balance between the end of the fifth day and the last day of each month is used to compute interest.

Also, you can calculate the returns on a specific investment in a PPF account using our PPF calculator.

How does the PPF account work?

An adult can open a PPF account on their own behalf or on behalf of a minor. The lock-in term for the account is 15 years, and the account’s tenure is 15 years. From Rs. 500 to Rs. 1.5 lakh can be deposited into a PPF account each financial year.

It is possible to pay the deposit all at once or in installments. The amount of installments that may be made within a financial year is unrestricted. Throughout the term, the deposits must be made annually, and they are free from income tax under section 80C.

To keep the account open, you must deposit a minimum of Rs. 500 per financial year. The account will be shut down if you don’t make this deposit. To reactivate the account, you must make a minimum deposit of Rs. 500 and pay a penalty of Rs. 50.

The deposit is subject to a 7.1% annual interest rate (Q4 FY2022-23) that is compounded every year. For the remaining PPF balance, a lending facility is offered. Also, subject to certain restrictions, you may withdraw money from your PPF account early and in part. You have the option to continue the account after the term has ended, either with or without making new contributions. You may also choose to terminate the account.

PPF account eligibility

• PPF investments are open to all Indian citizens.
• Unless the second account is in the name of a minor, a citizen is only permitted to have one PPF account.
• A PPF account cannot be opened by NRIs or HUFs. If they already have a PPF account in their name, it will continue to be operational until the account’s completion date. But, unlike in the case of Indian citizens, these accounts cannot be extended for 5 years.

How to open a PPF account?

Any nationalised bank, such as the State Bank of India, Punjab National Bank, etc., as well as a post office are places where a PPF account can be opened. These days, even a few private banks, including ICICI, HDFC, and Axis Bank, are permitted to offer this service.

You must submit the following paperwork:

• completed out application for starting a new account
• KYC records include Aadhar, voter identification, a driver’s card, etc.
• evidence of a home address
• Form for nominee declaration
• a passport-sized photo

Process to open a PPF account online:

Step 1: Access your bank account via online banking or a mobile banking app.

Step 2: Click on “Create a PPF Account.”

Step 3: Choose “Self Account” if the account is for personal use.
Choose “Minor Account” if you are opening the account on behalf of a minor.

Step 4: Fill out the application form with the pertinent information.

Step 5: Enter how much money you intend to deposit into the account overall each financial year.

Step 6:Send in your application. With the registered mobile number, an OTP will be sent. Put it in the appropriate field.

Step 7: A moment later, your PPF account will be created! On the screen, your PPF account number will be shown. Your registered email address will receive a message with all the necessary information confirming the same.

April 5 and yearly interest

According to the aforementioned theory, an investor who deposits Rs. 1.5 lakh before April 5 will receive interest at the present rate of 7.1% on the lowest account balance between April 5 and the end of the month.

The lowest balance, for instance, is Rs 1.5 lakh. According to the regulations, the investor will receive Rs 10,650 in interest on the Rs 1.5 lakh deposit placed before April 5 at the conclusion of the fiscal year. He will forfeit the first month’s interest if he waits until after April 5 instead.

The person will thus only get interest payments for 11 out of the 12 months of the fiscal year, with April being an exception. At the current interest rate of 7.1%, this would amount to Rs 9,762.50 for the entire year on a deposit of Rs 1.5 lakh.

Process to open a PPF account in a post office

Step 1: Purchase an application form online or at the local post office.

Step 2: Complete the form and send it in along with the necessary KYC paperwork and a passport-size photo.

Step 3: Open a post office PPF account by making the necessary opening deposit. The sum every fiscal year might range from Rs. 500 to Rs. 1.5 lakh.

Step 4: After your application has been approved, you will receive a passbook for the PPF account that has been opened.

Procedure for withdrawal from PPF

PPF accounts reach maturity after 15 years. The entire corpus may be withdrawn upon maturity. A PPF account can be opened at a post office or bank branch. Form C must be completed and delivered to the bank or post office where the PPF account was opened at the time of withdrawal. The invested sum with returns is then credited to the bank account when the PPF account has been terminated.

Procedure for withdrawal from PPF

If you want to take a partial or full withdrawal of the funds in your PPF account.

Step 1: Get the Form 3/Form C application for PPF withdrawal from the bank or post office where you opened the PPF account.

Step 2: Complete the application form with the necessary details.

Step 3: Deliver the application to the relevant bank or post office branch where your PPF account is located.

PPF Withdrawal Form

To withdraw money from the PPF, a person must submit Form 3/Form C. Three sections make up this form:

Section 1: Declaration section, where you must provide the number of your PPF account and the amount you wish to withdraw. You must also include the precise number of years that have transpired since the account was first opened.

Section 2: The section on office use includes information such as:

Date of opening of the PPF account
The amount currently in the PPF account as a whole
Date on which the withdrawal request from the past was granted
Amount amount that can be withdrawn from the account.
money that has been approved for withdrawal.
the responsible party’s date and signature, who is typically the service manager.

Part 3: The bank information section requests information about the bank that will be directly credited with the funds or the bank to whom a demand draught or check will be issued. A copy of the PPF passbook must be sent with this application as well.

Tax benefits of investing in PPF

One investment instrument that fits under the Exempt-Exempt-Exempt (EEE) classification is PPF. In other words, this means that all PPF deposits are tax deductible in accordance with Section 80C of the Income Tax Act. It should be remembered that the maximum PPF contribution for one financial year is Rs. 1.5 lakh.

In addition, there is no tax due when the accumulated funds and interest are withdrawn. The fact that a PPF account cannot be terminated before maturity should not be overlooked.

Partial Withdrawal

After the PPF account has been open for at least six years, partial withdrawals are permitted. Only 50% of the corpus may be withdrawn in this situation. The PPF account still has the majority of the corpus. Beginning with the sixth financial year after the account is first opened, partial withdrawals from PPF are permitted. There is no tax imposed on partial withdrawals from the PPF account. Also, each financial year only one partial withdrawal is permitted. In order to open a PPF account, Form C must also be submitted at a bank or post office.

PPF Premature Closure

Premature closure is permitted under specific circumstances and only when the PPF account has been open for at least five years. According to this, the entire corpus may be withheld for reasons related to health and education. The specific conditions include children’s or account holders’ further education as well as life-threatening illnesses or major diseases experienced by account holders, spouses, or children.

Process of transfer of a PPF account

You can move your PPF account to a different bank or post office location, from one to the other, or from a post office to a bank. The steps are listed below.

Step 1: Visit the bank or post office branch where your PPF account is held.

Step 2: Get the application form for the PPF account transfer and complete it with the necessary information.

Step 3: After processing your application, the branch representative will send it to the new branch along with the certified copy of the account, the nomination form, the account opening application, a specimen signature, and a check or DD for the PPF account’s unpaid balance.

Step 4: After the new branch receives your application and supporting materials, you must submit an application to start a new PPF account along with the passbook from the old PPF account. The nomination is now subject to change.

Step 5: Your PPF account is successfully transferred to the new branch when this application has been processed.

The compounding interest

Compound interest is the foundation of the PPF scheme, a long-term investment strategy. The programme includes a 15-year lock-in period. An investor can earn Rs 18,18,209 and a maturity amount of Rs 40,68,209 if they consistently and regularly invest between April 1 and April 5 over the course of 15 years.

But if the investor waits till the last minute each fiscal year for 15 years, he will only receive Rs 15,48,515 in interest as opposed to Rs 18,18,209. Moreover, the maturity amount will decrease from Rs. 40,68,209 to Rs. 37,98,515.

Moreover, annual lump sum investments are preferred than monthly contributions. A person will earn Rs 39,44,599 when their PPF investment of Rs 12,500 matures after 15 years if they make the contribution before the fifth of every month.

While by placing a lump sum investment into the PPF account between April 1 and April 5 of a financial year, he can earn an additional Rs 1,23,610 in interest.

All modest savings programmes, including the Senior Citizens Savings Program, Monthly Income Savings Program, National Savings Certificate, Kisan Vikas Patra, and Sukanya Samriddhi Account Program, just had their interest rates changed by the government. Only the interest rates on the Post Office Savings Account (POSA) and Public Provident Fund (PPF) remained constant.

Participating Banks Offering PPF account

• Bank of Baroda
• HDFC Bank
• ICICI Bank
• Axis Bank
• Kotak Mahindra Bank
• State Bank of India
• Bank of India
• Union Bank of India
• Oriental Bank of Commerce
• IDBI Bank
• Punjab National Bank
• Central Bank of India
• Bank of Maharashtra
• Dena Bank

How to activate an inactive PPF account?

The actions listed below can be used to reactivate a PPF account that has been inactive:

Step 1: Send a letter asking to have it reactivated to the bank or post office branch.

Step 2: Pay the penalty of Rs. 50 each inactive year in addition to a minimum of Rs. 500 for each year you did not make any contributions.

Step 3: Your request will be processed by the bank or PO, and the account will be reactivated.

How to link Aadhaar with a PPF account online?

Step 1: access your online banking account.

Step 2: Choose the “Aadhaar Number Registration in Online Banking” option.

Step 3: Fill up the form with your 12-digit Aadhaar number and press “Confirm.”

Step 4: After choosing the PPF account, link the Aadhaar number to it.

Step 5: To see if the Aadhaar connecting request has been successful, click the “Inquiry” link on the homepage.