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Personal Finance Blog India –

ALL ABOUT PPF:


PPF – Public Provident Fund is the most favorable Saving Cum Tax Saving Scheme.Overview of PPF have taken on this page.

  1. Where One Can Open PPF Account : PPF account can be opened at any branch of Post-Office as well designated branch of State Bank Of India (SBI) & other selected nationalized banks.Account can be opened through private bank like ICICI.
  2. What is Max limit of investment in PPF: Its Rs.1.5 Lakh per individual including minor kids account.
  3. What is minimum amount of investment required in PPF: Its Rs.500/- per year
  4. Who Can Open PPF Account: Any individual can open the PPF account..its volunteer account .Account can be opened in name of  Minor..but subject to overall limit of investment.
  5. What if I miss investment in any year: If investment in PPF is missed in any financial year,then partial withdrawals and loans are not permitted.As well subscriber need to pay fine of Rs.50/- per annum alongwith min investment amount of Rs.500/- to revive the account.
  6. Can NRI open PPF acount: No.But if PPF subscriber turned into NRI can continue to invest in PPF until its maturity & on non-repatriation basis.
  7. PPF Tax concessions : Investment made in PPF is eligible u/s 80C & maturity amount is tax free as well.Investment made in the account of minor kids & spouse as well attracts 80C benefit.
  8. Loan facility on PPF: Loan facility is available from 03rd  year of subscription.
  9. What happens after PPF account maturity: Maturity period is 15 years but same can be extended within one year of maturity for further five years.It can be extended multiple times in future.Maturity value can be as well retained without extension & further deposits  as well.
  10. Premature Account closure : Premature PPF account closure is permitted under certain conditions like serious ailments or higher education of children.Further said PPF account should have completed 05 years & it will be permitted with a penalty of 1% reduction in interest payable on the whole deposit.
  11. How can I pay for PPF: One can pay through cash/Cheque/internet banking transfer.
  12. Interest rate on PPF: w.e.f 01st April 2016, interest rate will reset quarterly. PPF rates will be benchmaked against corresponding G-Sec yield. PPF will earn additional interest of 0.25% above G-Sec yield of last quarter..Here is how interest rates have changed in the past:
    Period PPF Interest Rate
       
    April 01, 1986 – Jan 14, 2000 12%
       
    Jan 15, 2000 – Feb 28, 2001 11%
       
    March 01, 2001 – Feb 28, 2002 9.5%
       
    March 01, 2002 – Feb 28, 2003 9%
       
    March 01, 2003  – Nov 30, 2011 8%
       
    Dec 01, 2011 – March 31, 2012 8.6%
       
    April 01, 2012 – March 31, 2013 8.8%
     April 01, 2013 – March 2016  8.7%
    April 01, 2016 – June30,2016 8.1%
    July 01, 2016 – Sept30,2016 8.1%
    OCT 01, 2016 – March 31,2017 8.00%
    April 01, 2017 – 7.9%

     Or in grahical form as below:

dyerware.com

What are the disadvantages of the PPF account:

  • Liquidity is the main disadvantage as lock in period is 15 years.
  • PPF is not as much useful investment for no or low tax bracket individuals.
  • PPF carries interest rate risk.PPF interest rates are based on Variable Interest rate mehods.If PPF rates goes down further interest added will be changed. This is not case for fixed deposits where interest rate will be fixed for the complete tenure.

Comparison Of PPF Vs FIxed deposit:

For comparison one can view following posts:

PPF or Tax Saver deposits-which is better for tax benefits.

Cumulative flow of PPF & Fixed Deposits After Paying Off The Taxes.

Comparison of PPF Vs NSC:

National Saving Certificates are issued by post offices as well.But its have totally different features as compared to NSC:

  1. Interest reinvested & declared under NSC eligible for 80C benefits.
  2. NSC can be purchased jointly unlike to PPF where joint account is not possible.
  3. NSC is like one time bond & interest rates are fixed for complete tenure.

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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