PPF is a government scheme in India designed to encourage long-term savings investments.
It also provides tax benefits, a fixed interest rate, and specified lock-in period, making it a popular choice for retirement planning.
Important PPF Rules
- Tenure: 15 years, extendable in 5-year blocks.
- Eligibility: Only Indian residents can open a PPF account.
- Deposit Limits: Minimum ₹500, maximum ₹1.5 lakh per year.
- Interest Rate: Varies quarterly, compounded annually.
- Tax Benefits: Deductions under Section 80C, with interest and maturity tax-free.
For Minors PPF Accounts
PPF (Public Provident Fund) accounts or Post Office Savings Accounts for minors until they turn 18 interest rate will be 4% p.a.
Maturity period will start if the minor reaches the age of 18.
When the minor reaches 18 years of age applicable standard PPF rate will be 7.1% (as per the current rate).
What if you have multiple PPF accounts?
If you have multiple PPF accounts, the second account will not earn interest unless you merged both account prior to December 12, 2019.
Merged account earns interest only if the balances within the Rs 1.5 lakh limit.
For example:
Say you have two accounts like A1 & A2. In A1 account you have deposited Rs. 1,10,000 and A2 Rs. 90,000 in one financial year.
As, the limit is set at 1,50,000. A person will earn interest on Rs. 1,10,000 from A1 account and Rs. 40,000 from A2 account .
For NRIs PPF Accounts
NRIs cannot extend the tenure of their PPF accounts once the 15-year maturity period ends.
Starting from October 1, 2024, active PPF accounts for NRIs will earn no interest, though they can continue investing until maturity but cannot open a new PPF account as an NRI.
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