The Public Provident Fund (PPF), a government of India operated savings and investment scheme, offers investors a great way to build a long-term corpus by investing small amounts regularly over a period of time. A PPF account provides a good combination of safety, returns and tax-saving benefits.
Know more about PPFhere.
If you wish to invest, here are five PPF account rules you should know about-
PPF Account Rules
Who can open an account, where to open an account and how to transfer your account, here are some of the PPF account rules you should know about.
Eligibility:Any Indian citizen can open a PPF account either in his own name or on behalf of a minor. But, you can’t open a joint account or one for a Hindu Undivided Family (HUF). Also, an individual can have only one account in his name.
Where to open:You can open a PPF account at a post-office or a bank like the HDFC Bank, and you can do it online or offline.
Maturity:A PPF account matures in 15 years, and you can extend it in blocks of 5 years each. You must extend the tenure within one year of maturity.
Account transfer:You can transfer your account from one branch to another or from one bank to another and from a post office to a bank and vice versa without any additional charge.
Nomination:While you can’t have a joint account, you can nominate a person of your choice by filling up the ‘Form E’.
PPF Deposit Rules
How much can you invest, how many times can you invest and what is the interest rate. Here are some PPF deposit rules you should know about.
Investment Limit:You can open a PPF account with as little as Rs. 100. However, you must deposit a minimum of Rs. 500 in a financial year, and a maximum of Rs. 1,50,000 per financial year.
Taxation:Your investments up to Rs. 1,50,000 are tax deductible under section 80C of the Income Tax Act (ITA). The returns on your account are also tax-free, making it one of the most tax-efficient investments.
The rateof interest:The government of India sets the interest rate every quarter. At the time of writing, the interest rate is 7.6%.
PPF Withdrawal Rules
Can you take a loan or make a partial withdrawal? Can you close yourPPF accountprematurely? Here are some PPF withdrawal rules you should know.
Loans:You can take a loan on your account between the 3rdand 6thFY of opening the account. You must repay the loan within thirty six months. The rate of interest on the loan is 2% more than the interest you are earning on the account.
Partial withdrawals:From the 7thFY, you can make partial withdrawals, but you cannot take a loan.
Account closure:You can close your account and make a full withdrawal after the 5thFY for medical treatment of severe or life-threatening conditions for yourself and your family or for the purpose of higher education.
Now that you are familiar with the PPF rules learn more about how you can open an account with HDFC Bank.
If you are looking to open a HDFC Bank PPF account, clickhereto start.
* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action.
I've spent quite a bit of time diving into financial instruments, especially those offered in India. The Public Provident Fund (PPF) is a standout in the realm of savings and investment schemes, particularly for its government-backed nature, offering a blend of safety, returns, and tax-saving benefits.
Regarding PPF, eligibility is broad but has some limitations. Any Indian citizen, even on behalf of a minor, can open an account singularly, not jointly or for a Hindu Undivided Family (HUF). The exclusivity of one account per individual is a crucial detail.
Where to open a PPF account is flexible; it can be set up at post offices or authorized banks like HDFC Bank, with options for online and offline processes. The maturity period spans 15 years, extendable in blocks of 5 years, ensuring a long-term investment avenue.
Account transfers come without additional charges, enabling mobility between branches, banks, and post offices, a feature often overlooked but vital for convenience.
Nomination, via 'Form E', allows for the appointment of a nominee despite the absence of joint accounts, offering a level of estate planning and security.
Regarding deposits, the investment limit to open a PPF account is minimal at Rs. 100, with a mandatory minimum deposit of Rs. 500 per financial year and a maximum cap of Rs. 1,50,000 per year.
Tax benefits under Section 80C of the Income Tax Act make PPF an attractive investment option, offering tax deductions on investments and tax-free returns. The government sets the interest rate, currently at 7.6%.
Withdrawal rules include the provision for loans between the 3rd and 6th financial years, with repayment within thirty-six months at an interest rate 2% higher than the account's earnings. Partial withdrawals commence from the 7th financial year, and complete closure is permissible after the 5th financial year under specific circ*mstances, such as medical emergencies or higher education needs.
The specificity of rules, especially concerning deposits, taxation, and withdrawals, makes the PPF a structured yet flexible investment choice catering to long-term financial goals while providing tax efficiency and security.
If exploring the PPF options offered by HDFC Bank, the article's link may provide additional insights into the specifics and procedures associated with opening an account.
Remember, while this information gives a solid overview, seeking tailored financial advice considering individual circ*mstances is always advisable.
