- Opening an Account: To open a PPF account, individuals need to visit designated banks, post offices, or authorized online platforms. They need to fill out the PPF account opening form, provide KYC documents, and make an initial deposit.
- Investment Limit: The minimum annual investment in a PPF account is ₹500, while the maximum is ₹1.5 lakh. Deposits can be made in a lump sum or a maximum of 12 installments per year.
- Tenure and Maturity: The PPF account has a maturity period of 15 years. However, individuals have the option to extend the account indefinitely in blocks of 5 years each, with or without making further contributions.
- Interest Rate: The interest rate on PPF deposits is set by the Government of India and is compounded annually. It is subject to periodic revision. As of now, the interest rate is 7.1% per annum (FY 2024-2025).
- Tax Benefits: Contributions made to a PPF account are eligible for tax benefits under Section 80C of the Income Tax Act, up to a maximum of ₹1.5 lakh per financial year. Additionally, the interest earned and the maturity proceeds are tax-free.
- Loan Facility: From the 3rd financial year up to the 6th financial year, individuals can avail of loans against their PPF accounts. The maximum loan amount available is 25% of the balance at the end of the second year immediately preceding the year in which the loan is applied for.
- Partial Withdrawals: From the 7th financial year onwards, individuals can make partial withdrawals from their PPF accounts, subject to certain conditions. The maximum amount that can be withdrawn in a financial year is capped at 50% of the balance at the end of the fourth year immediately preceding the year of withdrawal.
- NRI Accounts: If an individual becomes an NRI after opening a PPF account, the account can be continued until maturity, but further contributions are not allowed. The account will earn interest at the rate applicable to Post Office Savings Account until maturity.
Public Provident Fund | A Complete Guide