Public Provident Fund Scheme, Meaning, Eligibility And Details

Public Provident Fund

Public Provident Fund also popularly called as PPF. It's a well-liked investment plan among people because it has many features that are good for investors and comes with benefits. It's liked by many because it's safe, provides good returns, and helps with saving on taxes.

The government introduced the PPF in 1968 through the National Savings Institute. Since then, it has become a strong tool for investors to build wealth over a long time.

People use the PPF to save money regularly, creating a fund for their retirement. The PPF has a maturity period of 15 years, and you can even extend it. Because of its good interest rates and tax advantages, the PPF is a top choice for those who want to save, especially for smaller amounts.

Public Provident Fund Meaning

PPF, which stands for Public Provident Fund, is a way for people to invest money for the long term. It's popular because it offers high and steady returns. The main goal for those who open a PPF account is to keep their initial amount safe.

Here's how it works: when you open a PPF account, you regularly deposit money into it, and the interest on that money grows over time.

Why a PPF Account is Important

Importance of PPF Account: A PPF account is a safe and government-backed savings option for people who don't want to take big financial risks. The government ensures guaranteed returns, and unlike other investments, it's not affected by the ups and downs of the stock market. This makes it a stable choice for many in India.

You can start saving with a minimum deposit of ₹500 and go up to ₹1,50,000 in a year. You can take a loan from the 3rd year to the 6th year, and from the 7th year, you can withdraw money every year. The account matures after fifteen full years, and you can extend it for five more years with additional deposits. After maturity, you can keep the account without adding more money, and the interest earned is not taxed. Also, the money in the account is safe from court orders. Plus, your deposit qualifies for a tax deduction under Section 80-C of the Income Tax Act.

Why a PPF so Popular

Key Features of a PPF Account

• Tax Benefits: You can save on taxes by investing up to Rs. 1.5 lakh under Section 80C.
• Risk Profile: It provides guaranteed and risk-free returns, ensuring the safety of your money.
• Minimum Investment: You can start with just Rs. 500.
• Maximum Investment: The most you can invest in a year is Rs. 1.5 lakh.
• Investment Tenure: Your money is locked in for 15 years, and you can extend it by 5 years if needed.

Public Provident Fund Investment Details

• You can invest a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh annually.
• This investment can be made at once or in installments, but only 12 installments are allowed per year.
• You need to invest every year to keep the account active.

Public Provident Fund Loan Option

• You can take a loan against your PPF investment, but only between the 3rd and 6th year of account activation.
• The loan tenure is a maximum of 36 months, and only up to 25% of the total amount can be claimed.

Who Can Open a PPF Account

• Indian citizens and minors (operated by parents) are eligible.
• Non-residential Indians can't open new accounts, but existing ones remain active until maturity.

Interest on PPF

The interest rate is set by the Central Government (currently 7.1%) and is updated quarterly.

How to Open a PPF Account

• You can open it online or offline by meeting eligibility criteria.
• Documents required include KYC, PAN card, address proof, nominee declaration, and a passport-sized photograph.

Public Provident Fund Tax Benefits

• The principal amount is tax-exempt under Section 80C, up to Rs. 1.5 lakh per year.
• The interest earned is also tax-free.

Public Provident Fund Withdrawal Rules

• The principal amount is locked for 15 years, but partial withdrawal is allowed after 5 years.
• Up to 50% of the total balance can be withdrawn annually from the 4th year onwards.

Public Provident Fund Loan Against PPF

• Between the 3rd and 5th years, you can take a loan up to 25% of the balance of the 2nd year.
• If the first loan is repaid, a second loan can be taken before the 6th year.

Public Provident Fund Procedure to Withdraw Money

• Fill out Form C with necessary details.
• Submit the form to the bank branch where your PPF account is located.

Public Provident Fund Form C Sections