Everything You Need to Know About PPF Account
1. What is the Public Provident Fund (PPF) Scheme?
2. Who can open a PPF account?
Any individual can open a PPF account in their own name or on behalf of a minor or a person of unsound mind for whom they are the guardian.
3. How many PPF accounts can an individual open?
An individual can open only one PPF account in their own name. They can also open one account on behalf of each minor or person of unsound mind for whom they are the guardian.
4. Can a joint PPF account be opened?
No, joint accounts are not allowed under the PPF Scheme.
5. What is the minimum deposit required to open a PPF account?
The minimum deposit required to open a PPF account is ₹500.
6. What is the maximum deposit limit for a PPF account in a financial year?
The maximum deposit limit is ₹1,50,000 in a financial year, inclusive of deposits made in the individual’s own account and in accounts opened on behalf of minors.
7. Can deposits be made in installments?
Yes, deposits can be made in installments, provided each deposit is a multiple of ₹50.
8. What happens if the minimum deposit is not made in a financial year?
If the minimum deposit of ₹500 is not made in a financial year, the account will be treated as discontinued.
9. How can a discontinued PPF account be revived?
A discontinued account can be revived by paying a fee of ₹50 per year of default along with the minimum deposit of ₹500 for each year of default.
10. Can a loan be taken against a PPF account?
Yes, loans can be taken against a PPF account from the third to the sixth year of the account’s operation.
11. What is the maximum loan amount that can be taken against a PPF account?
The maximum loan amount is 25% of the balance at the end of the second year immediately preceding the year in which the loan is applied for.
12. What is the interest rate on loans taken against a PPF account?
The interest rate on loans is 1% per annum on the principal amount for the duration of the loan.
13. What happens if the loan is not repaid within 36 months?
If the loan is not repaid within 36 months, the interest rate increases to 6% per annum on the outstanding amount.
14. Can partial withdrawals be made from a PPF account?
Yes, partial withdrawals can be made from a PPF account after the expiry of five years from the end of the year in which the account was opened.
15. What is the maximum amount that can be withdrawn as a partial withdrawal?
The maximum amount that can be withdrawn is 50% of the balance at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower.
16. When does a PPF account mature?
A PPF account matures 15 years after the end of the financial year in which it was opened.
17. Can a PPF account be extended after maturity?
Yes, a PPF account can be extended in blocks of 5 years, with or without making further deposits.
18. How can a PPF account be closed prematurely?
Premature closure is allowed after five years for specific reasons such as treatment of life-threatening diseases, higher education, or change in residency status.
19. What are the consequences of premature closure of a PPF account?
On premature closure, interest is paid at 1% less than the applicable rate from the date of account opening or extension.
20. What happens to a PPF account in the event of the account holder’s death?
In case of the account holder’s death, the account is closed, and the balance is paid to the nominee or legal heir.
21. Can a nominee or legal heir continue a PPF account after the account holder’s death?
No, the nominee or legal heir cannot continue the PPF account after the account holder’s death.
22. Is the PPF account balance protected from attachment by court orders?
Yes, the PPF account balance is protected from attachment under any court order in respect of any debt or liability.
23. What is the interest rate on PPF deposits?
The interest rate on PPF deposits is determined by the government and is subject to change.
24. How is interest calculated on a PPF account?
Interest is calculated on the lowest balance in the account between the 5th and the last day of the month and is credited at the end of the financial year.
25. Is the interest earned on PPF taxable?
No, the interest earned on a PPF account is exempt from tax under Section 10 of the Income Tax Act, 1961.
26. Can a PPF account be transferred from one post office or bank to another?
Yes, a PPF account can be transferred from one post office or bank to another without losing benefits.
27. What forms are required for various PPF transactions?
Different forms are required for different transactions, such as Form-1 for account opening, Form-2 for loans and withdrawals, Form-3 for account closure, and Form-4 for account extension.
28. What is the procedure for opening a PPF account?
To open a PPF account, an individual must submit Form-1 along with the required documents and initial deposit at a designated post office or bank.
29. Can NRIs open a PPF account?
No, Non-Resident Indians (NRIs) are not eligible to open a PPF account.
30. What happens if an account holder becomes an NRI after opening a PPF account?
If an account holder becomes an NRI after opening a PPF account, they can continue the account until maturity but cannot extend it further.
31. Is it possible to nominate someone for a PPF account?
Yes, the account holder can nominate one or more persons for their PPF account.
32. Can a PPF account be operated online?
Yes, many banks offer the facility to operate a PPF account online, including making deposits and viewing account statements.
33. What are the tax benefits of investing in PPF?
Investments in PPF are eligible for tax deduction under Section 80C of the Income Tax Act, 1961, subject to a maximum of ₹1.5 lakh per annum.
34. Is the maturity amount of PPF taxable?
No, the maturity amount of a PPF account, including the principal and interest, is completely tax-free.
35. Can the PPF account be transferred to another person?
No, a PPF account cannot be transferred from one person to another, except in the case of the death of the account holder.
36. Can a minor operate their PPF account after becoming an adult?
Yes, once a minor account holder attains majority, they can operate the account by submitting the necessary documents.
37. Is there a penalty for failing to make a deposit in a PPF account?
Yes, a penalty of ₹50 per year of default is charged if the minimum deposit is not made in any financial year.
38. What is the tenure for loan repayment under PPF?
The tenure for loan repayment under PPF is 36 months from the first day of the month following the month in which the loan was sanctioned.
39. Can partial withdrawals be made during the extension period of a PPF account?
Yes, partial withdrawals can be made during the extension period, but the total withdrawal during the block period should not exceed 60% of the balance at the beginning of the block period.
40. Is there any lock-in period for the PPF account?
Yes, the PPF account has a lock-in period of 15 years, after which the account can be closed or extended.
41. What happens if excess deposits are made in a PPF account?
If excess deposits are made in a PPF account beyond the limit of ₹1.5 lakh in a financial year, the excess amount is refunded without interest.
42. Can one avail of the loan facility during the extended period of a PPF account?
No, the loan facility is not available during the extended period of a PPF account.
43. Can a PPF account be transferred from a minor to an adult?
No, a PPF account in the name of a minor cannot be transferred to another person. However, the minor can operate the account after becoming an adult.
44. How often can withdrawals be made from a matured PPF account without deposits?
The account holder can make one withdrawal per year from a matured PPF account without deposits during the extension period.
45. Can a PPF account be opened in the name of a Hindu Undivided Family (HUF)?
No, PPF accounts cannot be opened in the name of a Hindu Undivided Family (HUF).
46. What is the impact of a change in the interest rate on existing PPF accounts?
The interest rate applicable to PPF accounts is subject to change and is applied to all existing accounts.
47. What happens to the PPF account if the account holder does not close it after maturity?
48. Can the PPF account be pledged as security?
Yes, a PPF account can be pledged as security for loans from banks or financial institutions, subject to their terms.
49. Is it mandatory to close a PPF account after 15 years?
50. Can a PPF account be converted to a savings account?
No, a PPF account cannot be converted to a savings account. It is a separate, long-term savings scheme with specific rules and benefits.