Public Provident Fund
Public Provident Fund is a scheme of Central
Govt. framed under the Public Provident Fund Act, 1968. The scheme came into
force w.e.f. 01.07.1968. This is a government backed, long term small savings
scheme. The account under this scheme can be opened in selected branches of
banks and post offices.
Eligibility: A Resident Indian individual on his behalf or
on behalf of a Minor or a person of unsound mind of whom he is a guardian is
eligible to open a PPF account. The account
on behalf of a minor can be opened either by the father or mother of the minor
only and not by both. In case of death
of both father & mother, grand parents can open the account as guardian of
the grandchild. Only one PPF account can
be opened by the individual, except an account that is opened on behalf of a
minor or person of unsound mind. Opening
of PPF account by NRI (Non-Resident Indian), HUF (Hindu Undivided Family),
Person of Association (POA), Trust or in Joint Name is not permitted. Also,
Joint account shall not be opened under this scheme. Documents required to open
a PPF account: PPF Account opening
form In case of existing accounts,
Aadhaar number is to be obtained (If Aadhaar number is not available, proof of
enrolment is to be obtained) Nomination
Form Passport size Photograph Copy of Pan Card / Form 60-61 ID Proof and Residence proof as per Bank’s
KYC norms.
Monetary Limit: The minimum deposit is Rs. 500 and maximum
limit is Rs.1, 50,000/- can be invested in a financial year under this
scheme. The combined deposit amount in
the PPF account of an individual and in the account operated by this individual
on behalf of a Minor together cannot exceed Rs.1,50,000. If the subscription is done through Cheque /
DD, the date of realization will be the date of deposit.
Duration: The term of the account is 15 financial
years, excluding the financial year in which the account was opened. In case of death of the account holder, their
nominee/legal heirs can close the account before maturity.
Extension of Account: After maturity of the
account, the account holder has three options: ✓ First, the account can be
closed immediately ✓ Second, the account can be continued
without deposits for any period ✓ A customer can extend the
tenure of the PPF investment for a block period of 5 years at a time beyond the
maturity period by submitting account extension form within one year from the
date of maturity.
Rate of Interest: Rate of interest payable on the investment is
as declared by the Central Govt. from time to time. Interest is calculated on
the lowest balance between the close of the fifth day and last day of every
month. Interest shall be credited in account at the end of year irrespective of
change of account office due to transfer of account during the year.
Withdrawals: Any time after the expiry of five years from
the end of the year in which the account was opened, the account holder may,
avail withdrawal by applying in Form-2, from the balance to his credit, an
amount not exceeding fifty per cent. of the amount that stood to his credit at
the end of the fourth year immediately preceding the year of withdrawal or at
the end of the preceding year, whichever is lower: ✓ Provided that the amount
of loan outstanding, if any, along with interest shall be paid by the account
holder before availing the facility of withdrawal under this paragraph: ✓
Provided further that the facility of withdrawal may be availed only once in a
year only from the accounts which have not become discontinued. In case of an account opened on behalf of a
minor, or a person of unsound mind, the guardian may apply for the withdrawal
for the benefit of the minor or a person of unsound mind by submitting
certificate to the account’s office.
Premature closure of account: Premature closure is allowed after the
completion of 5 financial year from the account opening date under following
cases: ✓ That the amount is required for the
treatment of serious ailments or life threatening diseases of the account
holder, spouse or dependents on production of supporting documents from
Competent Medical Authority. ✓ That the amount is required for
higher education of account holder or the minor account holder on production of
documents and fee bills in confirmation of the admission from recognized
institute. ✓ On change in residency status of the
account holder on production of copy of Passport and visa or Income tax return.
Note: Provided further that on such
premature closure, interest in the account shall be allowed at a rate which
shall be lower by one per cent than the rate at which interest has been
credited in the account from time to time since the date of opening of the
account, or the date of extension of the account, as the case may be. a) In
case of extended accounts for blocks of 5 years, partial withdrawal is allowed
up to 60% of the balance at the beginning of the extension period. b) A
resident who opened an account under PPF Scheme, subsequently becomes a
Non-Resident during the currency of the maturity period, the account shall be
deemed to be closed with effect from the day he / she becomes a non-resident.
Interest in account shall be allowed at rate lower by one percent than the rate
at which interest has been credited in account from time to time since date of
opening of account or date of extension.
Loans & repayment: At any time after the expiry of one year from
the end of the year in which the initial subscription was made but before
expiry of five years from the end of the year in which the initial subscription
was made. The customer must apply in Loan
application form, amount cannot exceed 25% of the balance at the credit at the
end of 2nd preceding year. No loan is
permitted if an earlier loan is outstanding or the customer is eligible for
withdrawals. Subsequent loan cannot be taken in same financial year even if the
1st loan is fully repaid.
In case of death of account holder,
the nominee or legal heir shall be liable to pay interest on loan availed by
account holder but not repaid before his death. Such amount of due interest
shall be adjusted at the time of final closure of the account.
Nomination: Nomination facility is available in the name
of one or more persons. The shares of
the nominees can also be defined by the customer. If the minor is a nominee, then the customer
should also appoint somebody to receive and hold the PPF funds until the
nominee attains the maturity. No
nomination is permitted in case of minor’s account. Nominee cannot continue the
account after the death of the customer.
Nominee can apply to close the account and receive the fund after the
death of the customer in premature closure form.
Transfer of Account: The account can be transferred to/from other
branches/banks/post offices. The transferee bank branch must be a designated
branch for opening PPF Account. No charges for transferring the account.
Tax benefits: Subscriptions during the financial year up to
Rs.150000 only qualify for rebate under sec 80 C of Income Tax Act. Interest accrued in PPF account and
withdrawals thereof are fully exempt under sec. 10(11) of Income Tax Act. The investment under the scheme is fully
exempt from wealth tax.
Discontinued Accounts: Accounts in which the minimum subscription of
Rs. 500/- is not made during a financial year, is called a default in the
subscription. It can be condoned by
depositing Rs.500 (subscription amount) and Rs.50 (default fee) for each
financial year of default. The account
holder of discontinued account shall not be eligible to open new account before
closure of such discontinued account after maturity. Facility of loan and partial withdrawals
shall not be allowed in such accounts, and to be allowed only for regular
accounts only.
Passbook: Passbook will be issued to every subscriber.
In the event of loss of passbook, a duplicate passbook can be issued on payment
of a fee.
