Public provident fund

Public Provident

FundEVERYTHING ABOUT IT

Features

1. The Public Provident Fund Scheme is a statutory scheme of the

Central Government of India.

2. This account can be opened in the name of any individual or

minor under guardianship.

3.Account can be opened by residents only.

4.HUF cannot open PPF account effective 13th May, 2005.

5. No age is prescribed for opening a PPF account.

6.After 15 years, this account can be extended for 1 or more

block of 5 years.

7.Rate of Interest on PPF varies from 8% to 9%. This rate every

year is decided by the Govt. and at present is 8.7%

compounded annually (as of April 1st 2015 – March 31st 2016).

8. Nomination facility is also available.

9. One deposit with a minimum amount of Rs.500/- is mandatory

in each financial year. Minimum Investment to be done is INR 500 and maximum permitted investment is INR 1,50,000 in an

year effective Aug, 2014. Only 12 deposits can be made in an

year. The deposits shall be in multiple of Rs.100/- subject to

minimum amount of Rs.500/-.

10.Tax benefit is available for invested amount u/s 80C.

11.This account can be opened in Authorised Banks and Post

Offices only.

12.Interest on maturity is fully tax exempt.

13.Deposits are exempt from wealth tax.

14.The balance amount in PPF account is not subject to

attachment under any order or decree of court in respect of

any debt or liability.

15.Joint account is not permissible.

16.Those who are contributing to GPF Fund or CPF/PF account

can also open a PPF account.

17.A Power of attorney holder can neither open nor operate a

PPF account.

18.The grand father/mother cannot open a PPF account on

behalf of their minor grand son/daughter.

19.This account can be transferred from one bank to another

bank/ post office and vice versa.

20.Loan and withdrawal facility is also available on the basis of

age and deposit amount.

21.One person can have only one PPF account at any point of

time.

22.Best for long term investment.

23.The best time for deposit in the PPF a/c is between 1st to 5th

of the month as any amount deposited upto 5th of the month

( Interest is calculated on the balance between 5th and last

day of the month)

24.Nominee/legal heir of PPF Account holder on death of the

account holder cannot continue the account, but account

has to be closed.

Documents Required forOpening PPF Account

1. A recent passport size photograph.

2. Identity Proof copy with original to verify (Even PAN Card may

be accepted as all tax payers are having it).

3. Address Proof copy with original to verify.

Loan Facility from PPF

1. One can avail loan from 3rd Financial Year to 5th Financial

Year.

2. Interest rate charged is 2% more than the prevailing interest

year.

3. Loan is to be repaid within 36 months.

4. Maximum 2 times loans can be availed.

5. Second loan can be availed only if 1st loan is fully repaid.

6. Maximum of 25 % of the balance at the end of the 2nd

immediately preceding year can be taken as loan.

7. Loan facility is not available for inactive or discontinued

accounts.

8. After individual become eligible for withdrawal, loan facility

cannot be availed.

Withdrawal from PPF

1. Withdrawal can be from the end of 6th Financial Year.

2. Maximum amount which can be withdrawn is limited to 50%

of the amount appearing 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.

3. After 15 year, full amount can be withdrawn if the same is not

carried forward to another block of 5 years.

4. One withdrawal can be made every year starting from the

7th Financial Year.

5. There is difference between loan and withdrawal. Loan

amount is repayable whereas amount withdrawn is not

repayable.

What will happen after 15 years

After 15 year, following options are available to the subscriber

(account holder):

1. Individual can withdraw 100% of amount including interest

and close this account. Amount received will be 100% tax

free including interest amount.

2. Individual can extend the PPF account by another 5 years for

unlimited number of times.

There are two options available in case of extension:

1. PPF account extended with fresh contribution every year. In

this case, 60% of the balance amount at the end of 15 years

can be withdrawn. Only one withdrawal per year is allowed.

In total, only 60% of the amount can be withdrawn.

2. PPF account extended without fresh contribution every year.

In this case, any amount can be withdrawn of the balance

amount at the end of 15 years but once per year.

Consequences of default in depositing PPF

1. If anyone makes default in depositing minimum contribution

amount (INR 500 every year), account become inactive.

2. To activate the account, that person needs to deposit INR 50

as fine and INR 500 as subscription amount for every year for

which that person has made default.

3. Please note deactivated accounts do not earn any interest.

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Managed by: Vineet Goyal HUF

Contact us for any tax or finance related queries. We have a team of experienced professionals to handle your

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Website: http://www.financeandtaxhub.in

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Our Services1. New company registration

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