What is PPF Account -Public Provident Fund .? What are rules for investing in PPF? What interest rate will I get? How to check PPF balance? When I can I withdraw or take loan from PPF? Is there tax saving benefit? How can I invest – offline and online? Read on to get answers..
Tip: If you ask me ‘What is the one investment I should never miss as an Indian’?. Then I recommend PPF – Public Provident Fund as that investment.
PPF Account – Public Provident Fund
‘Provident’ in English means making or indicating to make preparations for the future. PPF or Public Provident Fund is a scheme operated by the Government of India to help Indians plan for their retirement and future. So in simple terms PPF is a collective fund operated by the Indian Government for the general Indian public to plan/prepare for their future.
The Government collects these PPF funds through various avenues. Some of them are Post Offices and scheduled/approved banks. Till now the preferred route was post offices. But there is a gradual shift towards PPF through Banks in Online mode.
The funds collected are then used by the Government and so they pay an interest for that. Since it is operated by GOI there is negligible chance for default.
Eligibility for opening PPF account
The eligibility criteria for opening a Public Provident Fund (PPF) are:
- The individual should be a resident of India – He can be a salaried or a business person (self-employed).
- Must be above 18 years of age
- Non-Resident Indians (NRI) are not eligible. A resident who becomes an NRI after opening the account can continue to invest on non-repatriation basis ie., they cannot take PPF money outside India. Also they cannot extend beyond maturity ie., 15 years.
- There can be only one PPF account per person. If you have a PPF account already, then you cannot open a new one. If it is found you have more than one account, then oldest account will be closed. Also, only principal amount will be retuned. No interest will be paid from beginning
. - PPF can be opened for minors – Only if they have a legal guardian cosigning. Note: Co-signee/guardian’s limit is Rs 1,00,000 including deposit into minor account. For eg., you open a PPF for your son. You make Rs. 30,000 into his account. So,maximum amount you can invest into your own PPF account is Rs70,000. For official government release check PPFRulesAct1968
Also check out: Types of Life Insurance
I have PPF’d my retirement
Rules of PPF account and how to invest
- The PPF account will be active for 15 years. It can be extended in blocks of 5 years (except for NRIs)
- You can appoint a nominee. If you have multiple nominees, mention the percentage to split when appointing. For eg., you appoint your wife and mother. Then mention your wife will get 50% and mother will get 50% of maturity amount. So if you have 20 lakh at end, each will get Rs 10 lakhs.Note: If the PPF balance is greater than Rs.1,00,00 then nominee needs to submit identity proof during claim.
- PPF rules state that account cannot be transferred from one person to another
- The minimum amount that must be invested in a Public Provident Fund is Rs.500. The maximum limit is Rs.1,00,000 for each financial year.Before November 2011 the limit was Rs.70,000. Update: The new PPF limit has been hiked to Rs.1,50,000 with effect from April 2014.
- There can be maximum 12 payments in a year and minimum one payment every year. If you fail to make one payment each year into PPF account, then there is a fine of Rs 50. The account will not be suspended but Loans and withdrawal benefits will be suspended until account is active again. Also you will not earn any interest for the whole year.
- Investments can be made by visiting the nearest post office or through designated banks. SBI and ICICI are preferred as you can do them online. There will be another post on how to do them.
Interest Rate of PPF and how is it calculated?
The Government of India decides the interest rate each year. There is a notification through the Reserve Bank of India from the Finance Ministry. The current rate of interest for Public Provident Fund is 8.7% per annum compounded annually. But, interest calculation is done at end of each month.
Only amounts cleared and credited before the 5th day of each month will be considered for interest. For eg., If you deposited check on 5th April and it got cleared on 7th April then you won’t earn interest for whole April month. The rate is usually on par with the inflation rate and depends on the current economic factors.
The table below gives the historic PPF fund interest rates. Source : Wikipedia.org – Public Provident Fund. As you can see, the current rate for 2014-2015 period is 8.7%. Usually PPF rate is 0.25-0.5% above the 10 year government bond yield for the same period.
| From | To | Interest Rate |
| 1952 | 1955 | 3% |
| 1955 | 1957 | 3.5% |
| 1957 | 1963 | 3.75% |
| 1963 | 1964 | 4% |
| 1964 | 1965 | 4.25% |
| 1965 | 1966 | 4.5% |
| 1966 | 1967 | 4.75% |
| 1967 | 1968 | 5% |
| 1968 | 1969 | 5.25% |
| 1969 | 1970 | 5.5% |
| 1970 | 1971 | 5.7% |
| 1971 | 1972 | 5.8% |
| 1972 | 1974 | 6% |
| 1974 | 1975 | 6.5% |
| 1975 | 1976 | 7% |
| 1976 | 1977 | 7.5% |
| 1977 | 1978 | 8% |
| 1978 | 1979 | 8.25% + 0.5% |
| 1979 | 1981 | 8.25% |
| 1981 | 1982 | 8.5% |
| 1982 | 1983 | 8.75% |
| 1983 | 1984 | 9.15% |
| 1984 | 1985 | 9.9% |
| 1985 | 1986 | 10.15% |
| 1986 | 1987 | 11% |
| 1987 | 1988 | 11.5% |
| 1988 | 1989 | 11.8% |
| 1989 | 2001 | 12% |
| 2001 | 2005 | 9.5% |
| 2005 | 2010 | 8.5% |
| 2010 | 2011 | 9.5% |
| 2011 | 2012 | 8.6% |
| 2012 | 2013 | 8.8% |
| 2013 | 2014 | 8.7% |
| 2014 | 2015 | 8.7% |
Advantages and Disadvantages of Public Provident Fund(PPF):
Pros of PPF:
- Full security – As it is a government scheme, there is no chance of default. Its 99.5% safe.
- Compounded earnings – Since it is a longer horizon scheme, you will get the benefits of compounding. For eg., you invest Rs 24000 each year (total investment=Rs 3,60,000), then at end of 15 years you get Rs.7,41,620 at maturity.
- It locks your money and it is cumbersome to withdraw. So it instills discipline. You will not withdraw at every chance
- There is tax saving benefit under section 80C upto maximum Rs.1,00,000
- You can withdraw partially or take loans during emergency
- One of best interest rates among tax savings schemes and other fixed interest instruments. Almost on par with Indian WPI inflation rate or above. Definitely read: What is inflation – Causes, How to calculate,how it affects you
- The benefits of maturity are tax free.
- The amount paid in the event of death is free from court attachments. ie., Assume you owe Rs 10,00,000 to a bank. If you die, the lender can attach you assets like shares, fixed deposits, house to recover their money. But they cannot touch your PPF amount. It goes solely to the nominees. Even if you go bankrupt, the creditors can’t touch your PPF account. Cool right
Cons of PPF:
- High lock in period of 15 years. Premature closure is not allowed.
- The procedure to withdraw money from PPF is a bit tedious. With lots of procedures
- An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
That’s it. The pros far outweigh the cons. Check our FREE PPF Calculator here. Haven’t you opened your PPF yet ? Get going.
PPF Loans
- You can take a loan from your PPF account. You can take a loan from 3rd year your account was open until the end of 5th year. For eg., if you opened your PPF account on September 2012 , then you can take a loan from April 1st 2014 to March 31st 2018.
- How much loan from PPF? – You can take upto 25% of PPF corpus at end of previous financial year. Ie., if you apply on 4th year, then 2nd year corpus will be considered.
- What is interest rate for PPF loan ? – The interest rate is usually 2% above the PPF rate. For eg., if PPF is 8.7%, then your PPF loan interest will be 10.7%
- How many loans can I take? – You can take upto 2 loans. Second loan can be taken after fully repaying 1st loan . Note: It must be before 5th year end. You must repay your loan in less than 36 months
- You can use the below forms for taking loan
Use this form for applying loan in SBI PPF account: SBI PPF Loan Form
Suggested Read: Top 10 tips to improve credit score to get loans fast
Withdrawal from PPF
- You can withdraw from PPF account on emergency situations from the end of 6th financial year.
- It is limited to one withdrawal per year.
- You can withdraw upto maximum 50% in your PPF corpus balance. For eg., if PPF account was opened in 2006-07 and first withdrawal was made during 2012-13. Your withdrawal will be limited to 50 % of the balance as on 31.03.2009 or 31.03.2012 whichever is lower. Also if you have a loan, that amount will be deducted before calculating the 50% limit.
- Once withdrawn you cannot repay your amount.
- If after 15 years, then the limit is increased to 60% of corpus.
- You also need to give a valid justification in writing. You must mention a proof why you are withdrawing. For eg., if you are building a house or taking loan for child’s marriage, then some bank managers ask for the proof.
PPF Withdrawal form from India Post
How to invest in PPF – Offline and Online:
Investing in PPF can be done in two ways. Through Indian Post Offices and designated bank branches (SBI, PNB, ICICI, IDBI etc.,)
If you want to invest offline in through SBI with your savings account, then
- Download and fill up the PPF account Opening Form. Click here
- Attach photocopies of ID proof, Address Proof and 2 passport photo
- Sign the form and self attest the proofs.
- Take them to your nearest branch and submit. If you have an SBI account, then the PPF will be attached to your account. Else you need to open an account with that branch.
- You can make payments every month into PPF manually. Or ask for ECS debit from your Savings account. Use below form for opening PPF in SBI.
PPF Opening form from IndiaPost
The procedure is almost similar for all branches. We suggest you open PPF account with banks instead of post office. Why? Because you can convert to online mode. No need to visit personally everytime.
Similar Morning Star PPF article: 20 Must know facts on PPF
To invest online in PPF through your bank
- All banks want your PPF account to be used through them.
- You can see a ‘Invest PPF online’ once you login to your savings account
- Just click on that and follow instructions. Fill all details
- Then link your PPF and Savings account
- Give the PPF account number as ‘Payee Name’ .Very important step.
- You can then manually transfer or schedule auto debits. We will create a separate post with step by step procedure.
Check ICICI website for opening PPF online
Transfer PPF account from Post Office to Bank branch
- Download transfer form SB-10b from www.indiapost.gov.in/pdfForms/SB10-b-ApplnforTfrofAccnt.pdf
- Or get the form from your nearest post office. Fill in the details
- Approach the Head Postmaster and ask for the transfer. Submit the form with ID proof and copy of Post Office Savings book. Once it is processed, the Post Master will send originals of Nomination form, Certified copy, Account opening form to the SBI branch you mentioned. He will also attach a cheque for the corpus in your amount.
- Once received by your branch, fill new account opening form at branch. Refer procedure above for offline investment. Repeat.
- The bank will then transfer the old balance to your new PPF and you will get a passbook. It will not be considered as new account but a transferred account.
- You can check your PPF balance online by directly accessing from your Savings account.
What to do with PPF once matured
Assume that you have completed 15 years of your Public Provident Fund. You have 3 options
- Extend your period by block of 5 years. Note: You can’t do it at end of 15th year. You have to do the extension before the end of 14th year. You can keep extending every 5 years as long as you want with fresh investments.
- Withdraw all your money at end of 15th year. The interest and whole corpus is tax free. Close the PPF account.
- Just leave the account idle. Your money will get its interest every year and it will be compounding (@ 8.7% p.a as per current rates). You can withdraw from your Public Provident Fund as much times as you want after 15th year. In full or in parts. Note: Only one withdrawal per year.
The post had so much information it is already bit long. So, as mentioned above, we will do a separate post on checking balance for EPF and how to invest online with ICICI/SBI in separate posts. Look out for those posts.
Hope we have answered your questions like What is PPF? Can I take Loan on PPF ? Withdrawals from PPF? Interest rates of PPF . If you think the post is useful shout us on Google +, Facebook and Twitter. We have provided all details free of cost about public provident funds which a planner will charge you. Help your friends and get them benefited. Share the post with options below.
Sir i deposit my all balance in my PPF account after 5th of month. As.like this…. 28 July 2016 – 5000 rs.
30 August 2016 – 5000 rs.
4th November 2016 credit by 10000
7th January 2017 credit by 10000 and at last
27 January 2017 credit by 70000 now my total balance is 100000 (one lakh ) after that I got only 1901 rs. Interest on my account 31st March 2017 . Pls. Reply me it’s correct or not. How to calculate the interest in my balance.
Is it possible to take loan against ppf account online after 3 year of opening and money will be transferred to saving account in same bank
Bank sbi
Hi parsha,
I Ritesh More and i wanted to invest in PPF, currently my age 29 year old and i m employer in cg, I wanted to invest rs. 1000/- every month in PPF. Plz let me know how i invest where i have to go and should i eligible for this scheme.
Hi Parani,
I find your blog very helpful.
I plan to invest in PPF this year, and I am 28 years old. I have the lumpsum money in hand for the year. For better returns, is it better to invest in lumpsum or in small chunks when it comes to PPF? Can you advise on this please.
Dear sir
I have a PPF account and know something about it.
15 year and 5 years extension has been completed on 31.03.14
Now I want to if I withdrawal the money now then I get the interest or not.
Manoj Kumar
GPO Chennai open ppf account 2012 now transfer Punjab national bank Chennai JAN 2016 but bank account open account 10.04.2016 due to technical problem .Interest 2015-16 not credit my account due march month not account live so credit interest
I have opened my ppf ac in the month of july 2015. and there onward I deposited Rs. 1000/= per month regularly Till March 2016 I Have deposited total amount of Rs. 9000/ and interest credited rs.268/-only for said principal amount. I don’t understand how the interest is calculated @ 8.7 or 8.1 percent
Hi,
I have opened a PPF account through SBI online in 2015 when the ROI was 8.7 %. I would like to know that will that ROI be constant for my PPF through out the tenure? SBI online is showing my ROI as 8.1% now !!! but I booked at 8.7%…
Hi
If I open my ppf account on 6 April 2016, then what will be the maturity date. will it be 31/03/2031 or 31/03/2032
YOUR PPF MATURITY DATE i.e 31/03/2031
I beg to differ with Mr Piyush bajaj. The maturity date will be 31.3.2032 and not 31.3.2031.
I beg to differ with Mr Piyush bajaj. The maturity date will be 31.3.2032 and not 31.3.2031. PPF a/c matures on 31st march ocurring after 15 completed years
I beg to differ with Mr Piyush bajaj. The maturity date will be 31.3.2032 and not 31.3.2031. 15 completed years are required for the PPF a/c to mature.
kindly clarify and mail me on my id about maturity date of a minor account if minor achived majority before 15 year of opening and what withdrawl provisions are applicable to him whether it ristrict to 60% in next five year or 50% every year till 15 year passed from date of majority of minor since minor starts operation as a fresh from date of majority its important please clarify earliest pending this bank is not allowing second withdrawl considering same comes under first extended period from date of opening of account and not permitting to pay
regards
sushil
Hi i have transferred my PPF account from one PSU bank to another PSU bank, then what would be my PPF account opening date whether it is transferred date from one bank to another bank or the date on which i have opened PPF account in first bank.
Hi Sunil
should be the first bank opening date if it was actually transferred.
Yes, PPF A/c(i.e You Open In Fist Bank) Is Your Opening Date
Sir na mai govt employees ho or na hi kisi company me kam krta ho can I open ppf account
Hi Ajeet
Yes you can. Kar sakte hein..
Nice post, but I have a query:-
1. If a husband opens a PPF account & nominates his Wife, will she avail the complete amount if she husband dies unexpectedly. (death before 15 years of locking period)
2. Can I add a nominee even after opening the PPF account. This is my 6th year & I have not nominated anyone yet.
3. Can a account holder change the nominee (remove the previous & add a new one)
Thank you in advance,have a great day!!
HI Niranjan
Yes, wife is eligible for actual payments + interest. Yes, you can add or change nominee anytime.
After completion of 15 years I have extended my P F f account for 5 years in April 2015 ie due in March 2020. But now I want to close the same in March or April 2016 Can I do so? Please guide
Hi Dhond
No you cant close the account. You can only withdraw and that too maximum of 60% in this 5 year period.
Just to clarify, 90% if no further contribution made in extension. 60% if fresh investments made. One withdrawal permitted in one year.
My wife is expired on 25 sept 2015 & since 14 years her PPF account is in operation & nominated to me as husband.In this death case PPF nomination was not registered & nomination witness is not found,whether the witness is neccesery to attend for death claim finalisation?
Please reply me what i have to do?
What is the period for calculation of completion of an year, It is April to March (financial year) right? Also suppose i open account in march so at the end of march will they consider one year to be completed?
Hi Akash
Yes. Anytime in financial year is considered as one year.
Can a father deposit money into the PPF a/c of his MAJOR son and father claim 80c deduction in his own IT returns. The son is maintaining the ppf a/c by 500 pa, and using the 80c limit for himself by other 80c permissible options. Father is not having his own PPF a/c.
ALSO ASSUMING, father has his own ppf a/c, can he deposit 50000 in his own a/c and 100000 in major son a/cand claim 150000 deduction ?
Hi LAkhi
Not possible. U can claim deduction only for respective amount deposited in your own name.
My ppf a/c in in sbi Malad w branch but can i deposit my ppf contribution for this year wirh SBI thakur complex/village branches which are now near my residence? also, inexactly whose name i write the contribution cheque while depositing it?
Hi Kulkarni
Use the Form B to fill details and deposit with cheque. Cheque should be in favor of “PPF Holder Name – PPF Account Number”. For eg., “Kulkarni – XXXXX” and presented with filled up Form B. After on eweek you can update the passbook.
Hi sir mera ppf acount sbi vadodara Gujarat m h yadi me iss account ko indore madya pradesh ki sbi branch m transfer karna chahu to ho sakta h kya
Hi Shyam
Ho saktha hai. Aap vadodara sbi branch contact kijiye! (Yes possible, please contact the SBI Vadodara branch to transfer the account)
Thank you for this detailed post on PPF. I have just one small query. I have a PPF account with SBI and it is linked to my internet banking. When I check my statement, I can see all my deposits, but I do not see the interest credited. I understand that interest is calculated on the amount present in the account on the 5th of every month, but is the interest not credit to the account monthly too?
Hi
No, interest is not credited monthly.
Your article is informative . giving a brief details about the beginners.
Sir, shall i pay the amount once in a year or monthly?.
Monthly 2000×12=24000.
Hi
Putting in yearly at start of year is always prudent. But I would suggest to go monthly using ECS. Because if you keep it in bank thinking to save every month and yearly then like most people you may spend it on something else, atleast part of it
Depends on your financial discpline.
Because taking out from PPF is a pain. But if it is in Savings account then it is likely to be spent away rather easily.
Hi Daran,
Thanks for sharing the information. I dopened account in the month nov2015 by feb 2016 i deposited max amount for the ppf account. will i get interest on the 2015 or i have to wait till april 2016 to get my iterest.
Thanks in advance
Hi
Interest will be calculated from Nov 2015 if deposited before 5th but interest will be taken for compounding as part of principal only from April 2016. Hope it clears your doubt.
i opened ppf account in in jan 2001, i want to withdrawl partially on 15 th feb,2016.what maximum amount i can withdraw?
Hi
It depends on how much you deposited and when. I have already shared the general withdrawal rules …
Thanks for this wonderful information on PPF.
Could you please suggest best options for Recurring Deposit Account (RD) for maximum benefits (i.e. no tax on maturity)
Hi Raj
RDs information can be obtained from internet for best rates.
i have lost my ppf post office passbook what is the procedure to get the duplicate one
Hi Ahuja
You can just visit the branch where you opened PPF account, request for re-issue of passbook by filling & submitting form below. Just take two government issued ID proofs with you.
http://www.indiapost.gov.in/pdfForms/ApplnforIssueofDuplicatePBs.pdf
Dear Sir,
Thank you for the very good article. I would like to know that interest rate right now 8.7%. It’s applicable my hole 15 year investment period? For example if I started invest to PPF right now and the interest 8.7% I getting 15 years same OR It will be change every year depend upon the economy level?
Above table showing every year different interest rates. So may be in future the interest it will be go down and our PPF Investment final calculation will be variation.
Please let me know.
Thank you for the valuable time.
Hi Dominic
Interest rate will be decided every year. It is not static and yes may go up/down in future. Even considering this, PPF is one of best fixed investments you can buy . Don’t think twice.
Regards
Parani
Thank you for the information
Welcome..Please let us know if further questions
Thanks for sharing these details on the PPF procedure.
Glad you liked it!
Sir, Great article with good examples. I have a small doubt. I understand that the lock in period is for the ppf account and not for each investment made in the account. Is my understanding right?
Hi Vijaya Sarathy
Yes , the lock in period is end of 6th year from date of PPF account opening and not each individual investment.
The maximum amount that can be withdrawn pre-maturely is equal to 50% of
the amount that stood in the account at the end of 4th year preceding
the year in which the amount is withdrawn or the end of the preceding
year whichever is lower. An example of withdrawal has already been given in the post.
complete information. thanks.
Sorry I’m replying after months.. I missed ur comment earlier…
Yes, ppf is another great vehicle..if u ask me I suggest not to look beyond ppf,elss for 80c section after deducting child tuition fees and term insurance premium..