PPF(Public Provident Fund)

What is PPF? 

PPF Account stands for Public Provident Fund Account and is a Long Term Debt Scheme for the Government of India on which regular interest is paid. Any individual in India( whether salaried or self-employed or any other category) can invest in this scheme and earn a handsome tax-free return under Section 80C on the same which is usually higher than the return offered by banks on fixed deposits.

PPF is very popular form of investment in India with 30 Lakhs Account Holders.


GOOD RETURNS AND ZERO RISK, PPF OFFERS BEST BET FOR CONSERVATIVE INVESTORS

PPF Account can be opened in any Post office and some authorized branches of banks. Many individuals have expressed a preference towards maintaining a PPF account in a Bank as compared to a Post Office as Banks permit online deposits into PPF Account whereas  Post offices do not provide this facility. 

PPF deposit Limits and Interest Rates

The PPF Interest Rate is decided by the Government of India.

Earlier the minimum amount of deposit in minimum is Rs 500 and maximum is 70,000 and interest rate on PPF was 8% and now the Government has  increased the PPF interest Rate from 8.6% to 8.8% w.e.f. 01-04-2012.In November-2011, the PPF Interest Rates were increased from 8% to 8.6% and have been increased from 8.6% to 8.8% w.e.f 01-04-2012. The PPF interest rate is compounded for a calender month on the basis of the lowest balance in an account between the close of the 5th day and the end of the month and the interest on PPF account is credited to the account of the account holder at the end of the financial year.

Tenure of PPF Account

In India PPF Account can be closed at any time after the expiry of 15 years from the date on which it has opened. The whole amount in this account can be withdrawn at the time of closure. For closure of account, the acoount holder shall apply in Form C and furnish the Pass Book of his PPF Account.

Extension of PPF account for 5 more years during which you can make deposits and earn interest, If you continue the account after 15years and deposit regularly, then you can withdraw up to 60% of the balance at the beginning the extended period of 5 years.

Loans on PPF account can be availed from the third financial year excluding the year of deposit. Amount of such loans must not exceed 25% of the amount that stood to the account holder's credit at the end of the second year immediately preceding the year in which the loan is applied for.  A fresh loan is not allowed when a previous loan or interest is outstanding. Interest Rate is 1% if repaid within 36 months and at 6% on the outstanding loan after 36 months. The repayment may be made either in lump-sum or in installments.