What is the PPF account? How this saving product is different from other products? What is the current interest rate on your PPF account? Can investing in PPF account save tax? And so much other important things about the public provident fund will be answered here. You would also get a big list of frequently asked questions about PPF in the article below.
So let us start with the basic question and that is:
What is the PPF account?
PPF account or Public Provident fund account is one of the most admired and highly subscribed national saving products of India. It was launched on 1st July 1968.
You can open a public provident fund account in a post office, any of public sector banks or other banks as authorized by the Central Government.
PPF account has been very popular in recent years and has many benefits over other debt instruments.
However, the interest rates on PPF account are not fixed and change time to time, still it is one of the great investment alternatives for all individuals either salaried or self-employed who want their wealth growing without worrying about their hard earned money.
In the first year of the scheme, the interest rate was 4.8 % only. The scheme had given handsome returns from 1.4.1986 to 28.02.2001.
The biggest advantage of owning a PPF account is that you can save taxes on your deposits under section 80C of Income tax and the interest earned is completely tax-free. So whatever amount you receive after the maturity is completely free from any tax.
However, the disadvantage is the longer maturity period of 15 years.
Please find below chart of change in interest rates of PPF account from 01.12.2011 to 01.10.2018
In following section you would find frequently asked questions about public provident fund account.
Where and How I can open a PPF account?
A PPF account can be opened in a post office or in banks which are authorized by Government.
How to open a PPF account in SBI?
SBI is the largest and oldest commercial bank in India; it is also one of the most preferred banks by common people in India to seek banking services. Even I have my PPF account in SBI.
If you have a savings account at SBI, you can open a PPF account in SBI quite easily. You just need to fill form A and submit it to your branch with necessary documents. Your account would be opened and linked to your saving account from where you can transfer money to your PPF account anytime from anywhere.
If you have internet banking in your SBI account, you can also raise a request for opening a new public provident fund account by login into your online saving account and visiting “New PPF account” link under Request and Enquiries tab.
Managing an online public provident fund account is very convenient because you can access information regarding the latest interest rate, date of maturity, date of account opening and getting the latest account statements without even visiting your bank branch.
What are documents required for opening a PPF account at SBI?
You require following documents if you want to open a PPF account in SBI;
Form A, Proof of Identity and address as per SBI requirement, copy of your PAN card, A passport size photograph and form for nomination.
Can I have multiple PPF accounts?
No, an individual can have only one public provident fund account at a time. However, you can open an account for a minor for whom you’re a guardian.
Can I open a PPF account as HUF (Hindu undivided family)?
No, opening a PPF account as HUF is not allowed.
Is the nomination facility available?
Yes, you can nominate one or more persons in your public provident fund account. You can nominate during opening of your public provident fund account or after your account is opened and active. No nomination is required for the account of a minor. Also, you can not nominate a trust in your account.
Can I transfer my PPF account from a post office to a bank?
Yes, you can transfer your account from a post office to any bank which is authorized by the government. The service is completely free of charge.
How to check my PPF account balance?
You can check your public provident fund account balance easily by visiting your post office or bank where you had opened your public provident fund account. Just get your passbook updated there. If you had linked your account with your saving account you can check your balance instantly by login into your internet banking of your saving account.
How to know the current Interest rate in PPF account?
You can know the current interest rate on public provident fund account by visiting the bank or post office where you have your account. You can also access the current interest rate on public provident fund account at this link.
Can I open a public provident fund account jointly with someone?
No, you are not allowed to open account jointly.
What are the minimum and maximum deposit amount for public provident fund?
The minimum amount to be deposited in a financial year is Rs. 500. The maximum amount is Rs.150000. However, you can open your account with just Rs. 100, but the total deposit in a year must not be less than Rs. 500. You can deposit a lump sum amount or in maximum of 12 installments in a financial year.
What if I miss deposit in any year?
As per rule, you need to make a minimum deposit of Rs. 500 in your account in a year. But if you fail in depositing the minimum amount in any year then you need to deposit with a fee of Rs.50 along with the minimum deposit amount of Rs. 500.
Can I deposit amount in my PPF account online?
Yes sure, you can deposit any amount as per rule to your public provident fund account online. What you need to do is just link your public provident fund account with your saving account and transfer money from your saving account to your public provident fund account anytime.
What is the Current interest rate for public provident fund account?
Your PPF account interest rate is subject to change. So suppose you're getting 8% interest rate this quarter, Your PPF account rate of interest may drop or rise from this level. The current rate of interest applicable to your PPF account is 8%.
How the PPF account interest rate is calculated?
Here is a bonus tip, if you are planning to deposit in your account, make a deposit before the 5th day of any month because as per rule the interest is calculated on minimum balance available between 5th and the last day of the month. The interest earned is credited on the last day of the financial year or on 31st March.
Can I save tax if I invest in a PPF account?
Yes, the amount invested in public provident fund account is eligible for deduction under section 80C of income tax. So, this is an added advantage of investing in public provident fund. Also, the amount received after maturity is completely tax-free. But, the deposit must not exceed Rs.150000 in any given year. Any amount deposited above Rs.150000 does not earn any interest and is not liable for deduction under section 80C of income tax.
How can I withdraw money from my PPF account?
You can withdraw all the amount from your account after maturity by filling the Form C. From 7th year, you can withdraw once in a year amount as permissible by the rules of the scheme.
Can an NRI open a public provident fund account?
An NRI is not allowed to open a PPF account. However, if you opened an account as a resident Indian and later you become an NRI, you can continue your subscription till the maturity on non-repatriation basis.
What is the meaning of non-repatriation basis : The maturity amount can't be taken back to the country you are located currently.
Can I continue my account beyond 15 years?
Yes, you can continue your account after maturity what you need to do is just visit the branch or post office one year before maturity where you have your public provident fund account and fill the form H and submit it. Your account would be extended for a block of 5 years with deposits.
You can also continue your account without deposits after maturity.
Can I take a loan on my public provident fund account?
Yes, you can apply for a loan in your PPF account subject to some conditions from 3rd financial year to the 6th financial year. However, you have to repay the loan within 36 months.
What are different types of Forms in public provident fund account and how to get them?
There are a total of 15 types of forms available to operate in the public provident fund account. You can get them all from this link.
How to open a public provident fund account at a post office?
You can open your public provident fund account in a post office which is double-handed or above. You can get more details about opening your public provident fund account at a post office at this link. There is no difference in the interest rates of public provident fund account whether it is in a bank or in a post office.
How much I should invest in a Public Provident Fund account?
If you have just started earning and want to make a portfolio for your retirement you need to have equity concentrated portfolio because that could serve your purpose and would provide you inflation-beating returns in the long term.
According to me, you must not invest more than 10 % of your investable capital in public provident fund account. Equity has beaten all the investment products in the long term. I personally have only 5% of my total capital in this fund and the rest is in equity diversified mutual funds and stocks. My equity funds have delivered 13% returns on XIRR basis since 2010.
Unlike other debt investments, the PPF account is one of the most favored investment products because it provides safety of capital along with reasonable growth.
You can consider it for your portfolio but don't give it too much emphasis over equity. You can't have a PPF concentrated portfolio if you dream to achieve inflation-adjusted returns on your portfolio for the long term.
You can also not avoid such a good investment product if you want to have a balanced portfolio of equity and debt products. The choice is yours.
Are you investing in the public provident fund account?
What is your experience and how do you rate this debt product in your portfolio?
Please share your thoughts about public provident fund account in comments below.
You can also share or suggest ideas if I have left any key information about public provident fund account which you consider should be here.