A Short Summary on PPF

Deposits

• Individual can open, Cannot be held jointly. Nomination allowed.
• Individual can open on behalf of minor / individual with unsound mind also
• In case of Minor, adult has to be the guardian.
• Minimum tenure of 15 years. Can be extended in blocks of 5 years.
• Current interest rate is 7.1%
• invest a minimum of Rs. 500 (compulsory minimum every year) and a maximum of Rs. 1,50,000 in a financial year.
• (Max aggregate 1,50,000 for self and minor included)

Partial Withdrawal

• Anytime after expiry of 5 year (from end of year in which 1st subscription was made).
• Max 50% partial withdrawal (of balance outstanding at end of 4^th year immediately preceding the year of withdrawal or at end of preceding year, whichever is lower).

Premature Closure

• Allowed after expiry of 5 year (from end of year in which 1st subscription was made).
• Life threatening disease, higher studies, change of residential status (self or dependents)
• Interest at 1% lower

Closure

• Anytime after expiry of 15 year (from end of year in which 1st subscription was made).

Continue account (with deposits)

• Option to continue (by making further deposits) has to be exercised within 1 year of maturity. (ie. If account is continued beyond 1 year after maturity, without deposits, then no option to continue with deposits.)
• Extension will be for a block period of 5 years (renewable after every 5 years again)
• Partial withdrawal during this block period is max 60% (of amount o/s at start of block period)

Continue account (without deposits)

• Account can be continued after maturity without further deposits.
• Interest will continue at PPF applicable rates.
• Allowed one withdrawal per year, of any amount.

Closure on death of account holder

• Immediate payout to nominee or legal heir.
• Continuation cannot be allowed

Protection of PPF balance

• Amount of PPF balance cannot be attached under any order or decree of any court.

Income Tax Exemptions

• PPF tax exempt under section 80C of the Income Tax Act
• Interest on PPF also not taxable under 10(11) of the Income Tax Act

Loan

• After expiry of 1 year (from end of year in which 1^st subscription was made) but before 5 years (from end of year in which 1^st subscription was made).
• Max loan 25% of balance outstanding (at end of 2^nd year immediately preceding the year in which loan is applied.)
• New loan cannot be applied until old loan is repaid.
• Only 1 loan in one year.
• Principal Repayable in 36 months
• Interest repayable in 2 months after full payment of principal – Interest rate 1% per annum
• If loan not repaid completely in 36 months (or only partly paid) then interest rate is 6% per annum from beginning till full repayment.