What is PPF? Is it fruitful to invest in it : 5 points you need to know

Are you planning to be financially secured in the long run? Then you should consider one of the oldest saving scheme-Public Provident Fund (PPF).

Latest News
What is PPF? Is it fruitful to invest in it : 5 points you need to know


Have you decided to save some part of your hard earned salary but do not know where to invest? Are you planning to be financially secured in the long run? Then you should consider the Government backed, one of the oldest saving scheme-Public Provident Fund (PPF). 

With interest rates on taxable fixed income investments decreasing, PPF remains a favourite long-term investment option for allocating funds. 

One of the striking features of the PPF scheme is that the interest rate and returns it gives, are completely exempted from Tax. 

Here are 5 points that will help you understand the PPF scheme better: 

What is PPF scheme? 
Public Provident Fund or PPF is a goverment supported long-term investment scheme, that allows the subscriber to invest minimum Rs 500 to maximum Rs. 1,50,000 in one fiscal year and can even avail the facilities such as loan, withdrawal and extension of account.

Why you should invest in PPF?

The PPF gives return at the interest rate of 7.8% that is fully exempted from Income Tax under section 80 C. 

As stated above, subscribers can invest as low as Rs 500 and maximum Rs 1,50,000. 

Under PPF, individuals can also avail loan between third to sixth financial year.

However, in 2016, the goverment amended the rule over premature withdrawal, closure of the account. According to the Provident Fund (Amendment Scheme), 2016, account holders can now withdraw money from their PPF account after it has completed atleast five years, to pay for medical treatment or for the purpose of higher education.

PPF accounts have a tenure of 15 years and so far, withdrawal of before maturity wasn't allowed.

Under the amendment, it said, "A subscriber shall be allowed premature closure of his account of the account of a minor of whom he is the guardian, on a written applicationto the Accounts Office, on any of the following grounds"

1) For the treatment of serious ailments or life threatening diseases of the account holder, spouse or dependent children or parents

2) For higher education of the account holder of minor account holder.

A subscriber can also extend his account in a block period of 5 years after the maturity. 

How to open a PPF account? 

Individuals can open the account with the branches of State Bank of India and it subsidiaries or selected branches of designated nationalised banks or at the Post Offices across the India by paying the opening account fee of Rs 100.


What documents you should have in handy? 

Account Opening Form (Form  A), which you can get it from any of the institutions mentioned above. A passport size photograph,  Copy of your PAN card, Residence proof – Passport /  Electricity Bill, Aadhaar Card. 

How many accounts you are eligible to open? 

An individual is allowed to have only one PPF account under his/her name. 

What will happen if you miss out to deposit the minimum subscription? 

In case you fail to deposit the minimum amount Rs 500 in a financial year, your PPF account is marked as de-activated account.  However, you can activate it again by paying a small penalty of Rs 50.   

Also, the individual needs to make a minimum subscription of Rs 500 for each year they have missed.



Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.

Live tv