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Garima , 15 February 2008  

Public Provident Fund


  • The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
  • The Scheme is for 15 years.
  • The rate of interest is 8% compounded annually.
  • The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year.
  • One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
  • The deposit can be in lumpsum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs.70,000/-.
  • It is not necessary to make a deposit in every month of the year. The amount of deposit can be varied to suit the convenience of the account holders.
  • The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity.
  • The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
  • . A PPF account can be opened by an individual in his own name or on behalf of a minor of whom he is the guardian or by the Karta of Hindu undivided family (w.e.f. 22.7.1985) of which he is a member or behalf of  an association of persons (w .e. f. 23.6.1986) or a body of individuals consisting only husband and wife  governed by the system of community of property in force in the union Territories of Dadar and   Nagar Haveli,Goa, Daman and Diu .
  • Where a deposit is made by means of an outstation cheque or instrument, collection charges at the prescribed rate shall be payable alongwith the deposit and the date of realization of the amount shall be the date of deposit.
  • Joint account is not permissible.
  • Those who are contributing to GPF Fund or EDF account can also open a PPF account.
  • A Power of attorney holder can neither open or operate a PPF account.
  • The grand father/mother cannot open a PPF behalf of their minor
    grand son/daughter.
  • The deposits shall be in multiple of Rs.5/- subject to minimum amount of Rs.500/-.
  • The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit of Rs.70,000/-.
  • No age is prescribed for opening a PPF account.
  • Interest is not contractual but rate is notified by Ministry of Finance, Govt. of India, at the end of each year.
  • The facility of first withdrawal in the 7th year of the account subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter one Withdrawal in every year is permissible.
  • Pre-mature closure of a PPF Account is not permissible except in case of death.
  • Nominee/legal heir of PPF Account holder on death of the account holder can not continue the account, but account had to be closed.
  • Legal heirs can claim the amount upto lakh without production of the succession certificate after observing certain formalities.
  • The account holder has an option to extend the PPF account for any period in a block of 5 years on each time.
  • The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.
  • One withdrawal in each financial year is also admissible in such account.
  • .    The first loan can be taken in the third financial year from the financial year in which the account was opened upto 25% of the amount at credit at the end of the first financial year. Subsequent loan can be taken when the earlier loan with interest has been fully repaid.
  • The loan is repayment either in lump-sum or in convenient instalments numbering not more then 36 . Interest at the rate of 1% above would be charged if loan is repaid in 36 month.Such interest should be paid in not more than 2 monthly instalments .If the amount of loan is not repaid within 3 month, interest on outstanding amount of loan would be charged at 6%.Calculation of interest from 1st day of the month following the month in which the loan is drawn upto the last day of the month in which the last instalment of the loan is repaid.
  • The PPF scheme is operated through Post Office and Nationalized banks.
  • PPF account can be opened either in Post Office or in a Bank.
  • Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office.
  • Account is transferable from one Bank to another bank as well as within the bank to any branch.
  • Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
  • The interest on deposits is totally tax free.
  • Deposits are exempt from wealth tax.
  • The balance amount in PPF in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
  • Nomination facility available.
  • Best for long term investment.
  • . A female subscriber can change her name in the PPF account in the event of her marriage

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