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Public Provident Fund (PPF) Account: Revised Interest Rates & Tax Benefits

Income tax savings is one of the major concerns of every salaried and non-salaried individual. No matter how much you earn, only a proper saving could save your hard earned money from income tax and help you building a secure future for you and your family. You can maximize your tax saving by planning a systematic investment to allocate your hard earned money. In India, a large portion of tax-paying individuals relies on safe and public investment and savings scheme, among which the Public Provident fund scheme provides one of the best income tax saving instruments for tax payers. PPF schemes meet dual purposes – income tax saving and corpus building.

PPF scheme qualifies for EEE tax status, where EEE stands for Exempt which means complete tax exemption on the amount you invest, the interest you earn and the maturity amount you receive on the completion of the term of the scheme. Know your PPF account details online to avail maximum tax benefit from the scheme.

Important Facts about PPF Account Details

Public Provident Fund savings scheme is the most preferred investment instrument in India. It is a public sector savings scheme that guarantees the safety of your invested sum, tax deduction benefits and at the same time promises growth of wealth for the future. It is important to know PPF account details before saving money in this scheme. Some of the most important facts about PPF account details are discussed below:

  • The Amount of Contribution –Public provident fund scheme allows a minimum amount of contribution to be Rs. 500 every year. PPF account details specify the upper limit of contribution to be Rs. 1lakh and 50 thousand each year. These limits are applicable to all sorts of account holders. Be it an adult or minor account holder. These limits remain unchanged. Moreover, you may choose to pay a specific sum in PPF account either in a lump sum amount or in monthly installments as well.
  • Number of Deposits – PPF account details show that 16 annual deposits can be made during the term of the PPF tax saving scheme. Provident fund account starts counting the tenure of the scheme from the closure of the fiscal year. Therefore, the total number of deposits becomes 16 instead of 15 in the 15year lock-in period of the scheme. As per PPF account details the same rule is applied for the calculation of monthly deposits. This Means you can make 12 monthly deposits in a financial year which makes the total number of deposit during the tenure to be 192.
  • Scheme Tenure – Public Provident Fund tax saving scheme comes along with 15 year lock period. It provides one of the best long-term tax saving and savings plan to both salaried and non salaried individuals. However, the date of maturity of the scheme does not depend upon the date of inception of the PPF scheme. PPF account details show that the date of maturity of the scheme is not calculated from the date of inception instead, PPF account maturity is calculated from the closure of the financial year till the closure of the 15th financial year of the scheme. PPF account details allow multiple deposits during a year and during the term of the scheme.
  • The rate of Interest Received in PPF Scheme –As per the PPF account details government has predetermined the rate of interest for the quarter of October to December at 7.8 percent for this financial year. Moreover, the interest calculation of PPF depends mostly on a certain specific time of year, if deposited yearly and specific date of a month, if deposited on a monthly basis.Since the interest is calculated on the amount available in your PPF account on 31st March of every year; it is recommended to deposit the amount by 5th of April of every PPF term and by 5th of every month in case of monthly deposits.
  • Liquidity of Money – PPF account details allow liquidity of cash to the account holder. The scheme allows the liquidity of money through partial withdrawal or througha loan. However, there are certain conditions associated with the withdrawal of money from the PPF account and availability of loan amount.The loan can be availed as per the PPF account details but at the cost of higher interest rate. The intended rate applied on the loan amount is 2 percent greater than the interest you receive in the scheme. While the principal amount repaid is transferred to the account, the amount paid for the repayment of interest is paid back to the government.Besides, PPF account details also specify the certainperiod during the term of the scheme for seeking partial withdrawal from the account. Withdrawal of money is only possible after the completion of 6term years of the scheme. You can withdraw money from the 7th term year of the scheme. However, only one withdrawal can be availed by the account holder if no loan has been previously taken against the same account.
  • Eligibility Criteria – PPF account details allow every citizen of India to open a PPF account. Irrespective of age, PPF account can be opened by both adults and for minors. However, PPF does not allow joint accounts. PPF account details should be in the name of an individual whether or not the account holder is the depositor.

As for minor account holders, only either of the guardians of a child is allowed to open a PPF account for the child. This suggests, you can open an account for a minor only if you are the minor’s father or mother or legal guardian, only if declared by the court. Any other relatives or grandparents are not eligible for opening PPF account details of a minor.

Every individual can hold only one PPF account details at a time. You cannot have multiple PPF schemes in your name. However, if an individual pays for the PPF account details of a minor, that is possible. As per the norms of this scheme, HUF or non-residents of India cannot invest in public provident fund scheme. Those who hold PPF account details just before leaving the country, they may continue for a certain time span until they get the NRI status.

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Written by Alok Kumar

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