Public Provident Fund (PPF) is an investment scheme which is managed by the government of India. It offers assured fixed returns. You can build a long-term corpus by investing regularly in your PPF account over a period of 15 years.
People are interested in investing in a PPF account because it is considered the best combination of security of funds, assured returns and EEE tax benefit.
Also read How to Transfer Money to PPF account Using BHIM App?
As it offers guaranteed returns, people want to invest more funds in it even if it has a lock-in period of 15 years. But the fact is that a person cannot deposit more than Rs 1.50 lakhs in his/ her PPF account in a financial year i.e. between Apr 1 and Mar 31.
Minimum & Maximum Investment Cap
PPF account can be opened with just Rs. 100. You can deposit a minimum of Rs. 500 and a maximum of Rs. 1,50,000 in a financial year.
Modes of Deposit
You can also choose to deposit the money in following modes:
- As a Lump sum Investment
- In Installments: Total number of installments should not exceed the limit of 12 instalments per financial year
What Happens If You Deposit More Than Rs 1.50 Lakhs in PPF?
Suppose, intentionally or unintentionally, you have deposited an amount of more than Rs. 1.50 lakhs in your PPF account in a single financial year then the transaction will get rejected subsequently at the time of transfer as now submission of PAN has become mandatory for such investments and hence tracking is now easily possible.
Additionally, while opening your PPF Account there is a declaration in PPF Account Opening Form where you need to declare that you will adhere to the ceiling on deposits as provided for by Central Government from time to time which is Rs. 1.50 Lakhs in a financial year at present for yourself and to any such account(s) where you are the guardian. No interest shall be payable to you/ the subscriber on the amount of deposit in excess of the prescribed limit.
In case, you somehow manage to deposit more than Rs. 1.50 lakhs by some way, you must remember that the excess amount will not any interest during that financial year or in any future year as you have already signed such declaration.
Further, you cannot claim any income tax rebate under section 80C of the Income Tax Act for more than Rs 1.50 lakhs in a financial year.
Many people deposit money in the Public Provident Fund (PPF) accounts in their name as well as in their minor child's name. They are not aware of the fact that despite having two different accounts (one in own name & another in minor child's name), the combined total investment in both the PPF accounts cannot exceed Rs 1.50 lakhs in a financial year.
Related topic How to Make Online Payment to Your PPF Account?
Our Remarks
You should always be careful that you deposit maximum of Rs 1.50 lakhs in your PPF Account in any financial year as depositing more than that ceiling, the excess amount will not attract any interest income for you.
In case, you have opened a PPF account in your name as well as in your minor child's name then it is suggested to distribute the total amount to be deposited in such a way that the maximum amount deposited in a Financial Year does not cross the limit mandated for that year by PPF rules which presently is Rs 1.50 lakhs.
