PPF Full form-
PPF is one of the best long term financial schemes/instruments available with an assured but not fixed rate of return. PPF full form is Public Provident Fund and being a government bond not having a market exposure, it is one of the most secure investment instruments. Conventionally, the bonds extend over 15 years worth of lock-in period before maturity. The investment and the returns earned on investment are deductible under Sec 80C of the Income Tax Act.
PPF investment plans have a fixed framework across the majority of banks, where-in an individual would be required to contribute a minimum of Rs. 500 a year and a maximum of Rs. 1.5 Lakhs per annum. One would have to keep investing money every year for a maximum of 12 installments or in lump-sum, failing which the account becomes dormant and a fine would be levied to reactivate the same.
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PPF Locking Period-
The minimum PPF locking period is 15 years, with an option to either withdraw the entire balance upon maturity or extend the lock-in period in multiples of 5 years.
PPF account rules-
The PPF account rules are as follows-
An individual can open a PPF account with a post office or any nationalized bank in India, with the minimum requirement to deposit Rs. 500 annually. The maximum amount that can be deposited is Rs. 1.5 Lakhs, with an option to pay a lump-sum amount or a maximum of 12 installments. The deposits earn compounding interest rates annually, which are calculated monthly.
Any deposits exceeding Rs. 1.5 Lakhs do not earn any interest, even if it is credited by accident.
PPF withdrawal rules-
The withdrawal rules are as follows-
PPF withdrawals are not completely disallowed but are restricted to specific conditions. Partial withdrawals of 50% of the balance available at the end of the 4th year (either the preceding year in which the amount is withdrawn or the end of the preceding year, lower of the two). This is allowed after the completion of the 6th year/beginning of the 7th year of the policy term.
The withdrawal rules applicable to loans against PPFs are-
A loan against the PPF can be availed, summing up to 25% of the account balance at the end of the previous year. The PPF loans are available between the 3rd year and the 6th year of the term, calculated from the date of opening.
PPF online schemes are available across major nationalized banks and post offices, such as SBI PPF, HDFC PPF, Axis PPF, Bank of Baroda/BOB PPF, etc.
SBI PPF- SBI PPF interest rate offered is 7.90%, as of the latest quarterly revision. The SBI PPF calculator can be accessed on their website. SBI PPF calculator helps individuals calculate returns on the amount invested across various tenures.
HDFC PPF- HDFC PPF interest rate offered is 7.1%, fully exempt from tax under Section 80C of the Income Tax Act. HDFC PPF accounts can be opened by Indian Residents on their behalf or on the behalf of a minor, provided he is the guardian.
AXIS PPF- AXIS PPF interest rate offered is 7.1% as of the revised rate for the quarter ending June 2020. Any Indian resident can open a PPF account in his name or on the behalf of a minor, provided he is the guardian.
Bank Of Baroda/ BOB PPF- BOB PPF offered is 7.9% as of the latest quarterly revision. Any Indian resident can open a PPF account in his name or on the behalf of a minor, provided he is the guardian.
Post Office PPF scheme- Post Office PPF schemes offer an annual interest rate of 7.1%, compounded annually. The Post Office PPF account can be opened across all post office branches in India. Only Indian citizens can open a post office PPF account, either for themselves or on the behalf of minors provided they are the guardian.
PPF New Rules-
PPF New rules are as follows-
- The PPF subscription plans have changed to multiples of Rs. 50 with a minimum of Rs. 500. It was initially multiples of Rs. 5.
- The opening of a PPF account requires one to fill out Form 1 instead of Form A.
- The updated set of rules state that after the 15-year tenure period, the PPF account and the balance can be retained after maturity without further deposits. The account would still continue to earn interest without any deposits.
- One person can have only 1 PPF account and 1 minor PPF account (of which the said person is the guardian).
- PPF account cannot be closed before 5 years of opening the account, in the circumstance that one’s residential address has been changed.
- PPF loan rates have effectively reduced from 2% to 1%, in addition to the interest rate earned.
You can use our PPF calculator to calculate your returns based on the principle amount, interest rate, and tenure here