its urgent

CA SHUBHAM Mittal (CA ) (441 Points)
Replied 14 March 2010

There is difference between PF and PPF ,PF is a retirement benefit scheme under this scheme sum amount is deducted by employer from the salary of employee and generally the same amount is contributed by emloyer to fund the accumulated sum on the credit of fund is paid to the employee at the time of his retirement or his resignation.

There are three types of Employees provident fund

1. Statutory Provident Fund

2. Recognised Provident Fund

3. Unrecognised Provident Fund.

whereas, Public Provident Find has established by Central Government for the benefit of general public. Any body can contribute in PPF by opening an PPF account at SBI any amount minimum to Rs. 500 and Maximum of Rs. 70000 per annum can be contributed to the fund. The accumulated sum is rrepayable after 15 years but it may be extended and at present it carries 8 % compound Interest but it is payable at the time of maturity.

Under Sec 80 C deduction is available of maximum of Rs. 100000 but in PPF u can only contribute Rs 70000 in one year .

kumarsatish022 (Professional) (165 Points)
Replied 14 March 2010

d thanks for the reply , but if 80000 is deposited in PPF then whatas PPF contribution is based on one's salary? 2) can PPF account be opened in the name of minor?

Shikha Bajaj (CA ) (433 Points)
Replied 14 March 2010

PPF A/c can be opened in the name of minors. The max contribution per annum is Rs. 70,000/-

CA SHUBHAM Mittal (CA ) (441 Points)
Replied 14 March 2010

no u cant deposit more than 70000/- in a single year and it can be opened in the name of minor,

PPF has no connection with one's salary anybody can deposit money in it.

RAMESH KUMAR VERMA ( CS PURSUING ) (43848 Points)
Replied 16 March 2010

kind attn all the viewers,

PUBLIC PROVIDENT FUND:-

Who can open?	Any adult on his / her name or on minor's name in the capacity of guardian of the minor.
Minimum amount	Rs. 500/- per annum is required to be deposited. The accounts in which deposits are not made for any reason are treated as discontinued accounts and such accounts cannot be closed before maturity. The discontinued account can be activated by payment of the minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
Maximum amount	Rs. 70,000/- per annum The depositor has flexibility and freedom for depositing any amount in a maximum 12 installments in a financial year.
Maturity period	15 years. An Account, on the expiry of fifteen years, can be extended for a further period of five years at a time.
Interest Rate	The interest is paid as per the rates declared by the Government from time to time. The current rate is 8% per annum. The interest is compounded annually. The interest for the month is calculated on the minimum balance available in the account from 5th of a month to the last date of the month.
Nomination facility	Available
Transferability	A PPF account can be transferred from a branch of State Bank of India or a nationalized bank to Post Office and vice versa and also from a branch of State Bank of India to a designated branch of Nationalized Bank. A PPF account cannot be transferred from one person to another. Even in the case of death of a depositor, the nominee cannot continue the account.
Loan facility	A depositor can avail of loan facility in the third financial year from the financial year in which the account was opened. Application in prescribed form is to be made for loan along with the pass book of the account. In case, the loan is sought from minor's Account, the guardian has to make a declaration that the money is required for the use/benefit of the minor. The loan can be taken up to 25% of the amount in the account at the end of the second year immediately preceding the year in which the loan is applied for. The loan is repayable in lump sum or convenient installments. Where loan is repaid within 36 months, interest is charged at 1% and if it is not repaid within 36 months, the interest at the rate of 6% is charged on the outstanding balance. The interest is to be paid in not more than two installments after the loan amount is fully repaid. Once the first loan is repaid, second loan can be obtained on same terms. This facility is available till the end of 5th financial year from the end of the financial year in which initial subscripttion was made.
Withdrawal facility	A depositor can make partial withdrawals, once every year from his PPF account after expiry of five years, from the end of Financial Year, in which the initial deposit was made. Application in prescribed form is to be made for withdrawal along with the pass book of the account. In case, the withdrawal is sought from minor's Account, the guardian has to make a declaration that the money is required for the use/benefit of the minor. The amount of withdrawal is restricted to 50% of the credit balance at the end of the fourth year immediately preceding the year of withdrawal or the year immediately preceding the year of withdrawal, whichever is lower. In case of accounts extended beyond Maturity period partial withdrawals are allowed once in a year with the condition that the amount of withdrawal during a five year block period should not exceed 60% of the balance in the account at the commencement of the block period.
Premature Encashment	Premature closure of a PPF Account is not permissible except in the case of death of the depositor.
Deduction u/s 80C	Available
Interest Taxability	Interest income is totally tax free.
Other features	The benefits of exemption of interest from Income Tax is not available on deposits made in a PPF account after expiry of fifteen years without exercising option in writing for continuance of the account within one year. PPF accounts can be opened and operated through an authorized agent appointed by the National Savings Organisation. Only local cheques are accepted for deposit and the date of presentation of local cheque and demand draft is treated as date of deposit in the Account. Balance in PPF account cannot be attached under court decree. Entire deposit in a PPF account is exempt from the Wealth Tax. The deposit in a minor account is clubbed with the deposit of the account of the guardian for the limit of Rs.70,000/-. On death of the account holder his nominee(s)/legal heir(s) cannot continue the account. The account has to be closed in such case. Deposits in excess of Rs.70,000/- in a financial year in a PPF account are refunded without interest and the excess amount is not considered for income tax rebate.

PROVIDENT FUND:-

EMPLOYEES' PROVIDENT FUND SCHEME 1952

Employee Definition:
"Employee" as defined in Section 2(f) of the Act means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.

Membership:
All the employees (including casual, part time, Daily wage contract etc.) other then an excluded employee are required to be enrolled as members of the fund the day, the Act comes into force in such establishment.

Basic Wages:
"Basic Wages" means all emoluments which are earned by employee while on duty or on leave or holiday with wages in either case in accordance with the terms of the contract of employment and witch are paid or payable in cash, but dose not include

a. The cash value of any food concession;

b. Any dearness allowance (that is to say, all cash payment by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other allowance payable to the employee in respect of employment or of work done in such employment.

c. Any present made by the employer.

Excluded Employee:
"Exclude Employee" as defined under pare 2(f) of the Employees' Provident Fund Scheme means an employee who having been a member of the fund has withdraw the full amount of accumulation in the fund on retirement from service after attaining the age of 55 years; Or An employee, whose pay exceeds Rs. Five Thousand per month at the time, otherwise entitled to become a member of the fund.

Explanation:
'Pay' includes basic wages with dearness allowance, retaining allowance, (if any) and cash value of food concessions admissible thereon.

Employee Provident Fund Scheme:
Employees' Provident Fund Scheme takes care of following needs of the members:
(i) Retirement (ii) Medical Care (iii) Housing
(iv) Family obligation (v) Education of Children
(vi) Financing of Insurance Polices

How the Employees' Provident Fund Scheme works:
As per amendment-dated 22.9.1997 in the Act, both the employees and employer contribute to the fund at the rate of 12% of the basic wages, dearness allowance and retaining allowance, if any, payable to employees per month. The rate of contribution is 10% in the case of following establishments:

· Any covered establishment with less then 20 employees, for establishments cover prior to 22.9.97.

· Any sick industrial company as defined in clause (O) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 and which has been declared as such by the Board for Industrial and Financial Reconstruction,

· Any establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and

· Any establishment engaged in manufacturing of (a) jute (b) Breed (d) coir and (e) Guar gum Industries/ Factories. The contribution under the Employees' Provident Fund Scheme by the employee and employer will be as under with effect from 22.9.1997.

Employees' Provident Fund Interest rate:
The rate of interest is fixed by the Central Government in consultation with the Central Board of trustees, Employees' Provident Fund every year during March/April. The interest is credited to the members account on monthly running balance with effect from the last day in each year. The rate of interest for the year 1998-99 has been notified as 12%. The rate of interest for 99-2000 w.e.f. 1.7.'99 was 11% on monthly balances. 2000-2001 CBT recommended 10.25% to be notified by the Government.

Benefits:
A) A member of the provident fund can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 55 year. Full amount in provident fund can also be withdrawn by the member under the following circumstance:

· A member who has not attained the age of 55 year at the time of termination of service.

· A member is retired on account of permanent and total disablement due to bodily or mental infirmity.

· On migration from India for permanent settlement abroad or for taking employment abroad.

· In the case of mass or individual retrenchment.

B) In the case of the following contingencies, the payment of provident fund be made after complementing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member:

· Where employees of close establishment are transferred to other establishment, which is not covered under the Act:

· Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947.

Withdrawal before retirement:
A member can withdraw upto 90% of the amount of provident fund at credit after attaining the age of 54 years or within one year before actual retirement on superannuation whichever is later. Claim application in form 19 may be submitted to the concerned Provident Fund Office.

Accumulations of a deceased member:
Amount of Provident Fund at the credit of the deceased member is payable to nominees/ legal heirs. Claim application in form 20 may be submitted to the concerned Provident Fund Office.

Transfer of Provident Fund account:
Transfer of Provident Fund account from one region to other, from Exempted Provident Fund Trust to Unexampled Fund in a region and vice-versa can be done as per Scheme. Transfer Application in form 13 may be submitted to the concerned Provident Fund Office.

Nomination:
The member of Provident Fund shall make a declaration in Form 2, a nomination conferring the right to receive the amount that may stand to the credit in the fund in the event of death. The member may furnish the particulars concerning himself and his family. These particulars furnished by the member of Provident Fund in Form 2 will help the Organization in the building up the data bank for use in event of death of the member.

Annual Statement of account:
As soon as possible and after the close of each period of currency of contribution, annual statements of accounts will de sent to each member through of the factory or other establishment where the member was last employed. The statement of accounts in the fund will show the opening balance at the beginning of the period, amount contribution during the year, the total amount of interest credited at the end of the period or any withdrawal during the period and the closing balance at the end of the period. Member should satisfy themselves as to the correctness f the annual statement of accounts and any error should be brought through employer to the notice of the correctness Provident Fund Office within 6 months of the receipt of the statement.

SCHEME	EMPLOYEE’S	EMPLOYER’S	CENTRAL GOVERNMENT
Provident fund scheme	12%	Amount >8.33%(in case where contribution is 12% of 10% in case of certain establishment as per details given earlier)	NIL
Insurance scheme	NIL	0.5%	NIL
Pension scheme	NIL	8.33% (diverted out of provident fund )	1.16%

ramesh.arti @ yahoo.co.in

1 Like

Balaji (Knowledge Seeker) (317 Points)
Replied 16 March 2010

Dear Mr.Verma,

After the death of the account-holder,though the nominee/legal heir cannot deposit any fresh subscripttions into that PPF account, it may be noted that the balance in the account will continue to earn interest till the end of the month preceding the month in which payment of the balance is made to the nominee/legal heir of the deceased account holder.There is no compulsion to close the account immediately on the death of the account-holder.

All other points are well-covered in your reply.

RAMESH KUMAR VERMA ( CS PURSUING ) (43848 Points)
Replied 16 March 2010

AS PER NOTIFICATION IN RBI STATUS OF NRI IS BELOW:-

Important Notifications in respect of investments by Non-Resident Indians (NRI) :

The Government of India has issued four notifications as under :

(1) Public Provident Fund (Amendment) Scheme, 2003 — Notification No. GSR 585(E) dated 25-7-2003, effective 25-7-2003.

(2) Post Office Savings Bank General (Amendment) Rules, 2003 — Notification No. GSR 586(E) dated 25-7-2003, effective 25-7-2003.

(3) National Savings Certificates (VIII Issue) (Third Amendment) Rules, 2003 — Notification No. GSR 591(E) dated 25-7-2003, effective 25-7-2003.

(4) Kisan Vikas Patra (Second Amendment) Rules, 2003 — Notification No. GSR 592(E) dated 25-7-2003, effective 25-7-2003.

All the above notifications prohibit Non-Resident Indians from opening new PPF accounts, opening new Post Office savings Bank accounts, purchasing National Savings Certificates and purchasing Kisan Vikas Patras, respectively. But NRIs can continue to operate their existing accounts and hold their existing investments till maturity.

Balaji (Knowledge Seeker) (317 Points)
Replied 16 March 2010

Dear Verma,

As per the Notification dt. 25/7/2003, an NRI cannot open a PPF account.However a resident who subsequently becomes NRI during the currency of maturity period prescribed under PPF Scheme,may continue to subscribe to the Fund till its maturity on a non-repatriation basis.

Please let me know (with the relevant Notification Ref.) if there is any amendment to the PPF rules after this whereby an NRI can also invest.Thanks.

RAMESH KUMAR VERMA ( CS PURSUING ) (43848 Points)
Replied 16 March 2010

VIEWERS, PLEASE NOTED THAT

AS PER NOTIFICATION IN RBI STATUS OF NRI IS BELOW:-

Important Notifications in respect of investments by Non-Resident Indians (NRI) :

The Government of India has issued four notifications as under :

(1) Public Provident Fund (Amendment) Scheme, 2003 — Notification No. GSR 585(E) dated 25-7-2003, effective 25-7-2003.

(2) Post Office Savings Bank General (Amendment) Rules, 2003 — Notification No. GSR 586(E) dated 25-7-2003, effective 25-7-2003.

(3) National Savings Certificates (VIII Issue) (Third Amendment) Rules, 2003 — Notification No. GSR 591(E) dated 25-7-2003, effective 25-7-2003.

(4) Kisan Vikas Patra (Second Amendment) Rules, 2003 — Notification No. GSR 592(E) dated 25-7-2003, effective 25-7-2003.

All the above notifications prohibit Non-Resident Indians from opening new PPF accounts, opening new Post Office savings Bank accounts, purchasing National Savings Certificates and purchasing Kisan Vikas Patras, respectively. But NRIs can continue to operate their existing accounts and hold their existing investments till maturity.