PPF Account online

Invest in a long term savings instrument offering tax exemption on both, principal as well as interest

PPF - Public Provident Fund Account

If you're searching for a long-term investment strategy, consider the Public Provident Fund (PPF), which provides tax relief on the principal amount and accrues interest. The benefits of investing in a PPF include appealing interest rates with minimal risk. Additionally, it offers the convenience of loan options and partial withdrawals. The facility to check your balance, transfer funds, and access mini statements online allows you to manage your account conveniently anytime and anywhere.

The Public Provident Fund (PPF) is a government-backed small-savings scheme, which offers long-term savings and tax-saving benefits. To invest in it, one has to open a Public Provident Fund account.

PPF has a 15-year maturity period. Once the lock-in period is over, the subscriber can also extend the tenure for periods of 5 years. One can also open a PPF account online.

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Importance of Public Provident Fund account

A PPF account helps long-term investors make an investment for various purposes, such as retirement savings. Given the long tenure of the investment (15-year maturity period), the PPF account helps ensure a disciplined approach to savings. Other than that, a PPF investment is safe because the Government of India guarantees the safety of this scheme. Since the interest rate is fixed quarterly, returns on the PPF are secured. This makes it a risk-free investment option for long-term investors seeking assured returns.

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Another one of the PPF benefits is that you can avail of a loan facility against your PPF account, after the expiry of one year from the end of the year in which the initial subscription was made, but before the end of five years from the end of the year in which the initial subscription was made. For instance, if you opened your PPF account in 2020 December, you can avail a loan between 1 April, 2022 and 31 March, 2026. The repayment of the loan starts from the first day of the month from when the loan was taken and can be repaid over a period of 36 months.

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What is the interest rate on PPF?

The PPF interest rates are revised and set by the government in each quarter. The interest on PPF is compounded on an annual basis. Hence, the interest is received on the PPF balance from the previous year and is added to the principal amount. The Current rate of interest is 7.1%

Tax benefits of Public Provident Fund

The biggest advantage of Public Provident Fund is that it offers tax benefits at three stages, which almost no other investment product offers. The investment, interest earned and maturity amount on the Public Provident Fund balance are eligible for PPF tax exemption, which puts this savings-cum-investment option under the EEE (Exempt Exempt Exempt) status.

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Contributions made towards the PPF account of up to ₹1.5 lakh are tax-deductible under Section 80C of the Income Tax Act, 1961, while the interest paid out as well as the PPF maturity amount is exempt from taxes.

This contribution can be made for self or for one’s child and still be eligible for the PPF tax exemption benefits.

While the EEE status makes the PPF a popular tax-efficient investment scheme, the long-term lock-in period fixed and secured returns make it suitable for planning for long-term goals such as retirement.

Offline Withdrawal Process

Here is how you can go about the offline process:

  • Visit your bank, which is linked to your PPF account.
  • Collect the Form C, fill it up correctly and submit it.
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How do you withdraw funds from your Public Provident Fund account before maturity?

This is how you can opt for a partial withdrawal of your PPF balance:

1. Download Form C from your bank’s official website or procure the same from the branch office. On the form, there will be three sections, namely:

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  • Declaration: Fill in your PPF number and the withdrawal amount here. Also, mention the period for which the account has been active.
  • Office-use: Mention the details such as the account opening date, the date of any previous withdrawal, current total balance, and total withdrawals made and so on.
  • Bank details: This section will carry your bank account number and any other account details where the withdrawal amount will be credited.

2. Next, attach a copy of your PPF passbook with Form C.

3. Submit this bunch of documents at your bank branch

Once the application is processed, the withdrawal amount will be credited to your account. Alternatively, you can also get a demand draft (DD) offline. How you want to receive the amount should be mentioned on the form with your signature and a revenue stamp.

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How to transfer a PPF Account?

These are the steps to follow to transfer a PPF account from one bank to another:

1. Go to the bank branch of your current bank and make a transfer application. Be sure to mention the complete and correct address of the new bank account branch where you want to transfer the PPF account.

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2. Surrender your old bank passbook to your existing bank. Your PPF account here will be closed, and the following documents will have to be sent to the new bank:

  • A certified copy of the PPF account
  • Existing PPF passbook
  • The application form of the original account opening
  • A cheque/demand draft (DD) of the account balance
  • The nomination form
  • A sample of your signatures
  • A PPF transfer request letter from your end with an acknowledgement from the bank

3. Your new bank will inform you once they have all these documents, and you will have to submit a new account opening form along with your Know Your Customer (KYC) documentation, after which you will get a new passbook.

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How to activate an inactive PPF Account?

To revive or activate your PPF account, here is what you need to do:

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  • First, send a written application to your bank/institution/post office where your PPF account has been opened.
  • Make a deposit of ₹ 500 for each year that the account has been dormant along with the current year’s deposit. Hence, if the account has been inactive for 2 years, you will need to pay ₹1000 along with another ₹ 500 for the current year to activate the PPF account.
  • Apart from this amount, you will also be charged a penalty of ₹50 for each inactive year. This amount has to be paid along with the written application at the bank or institution where the account has been opened.
  • Once this step is complete, your application and your record will be examined. If the investment has already reached its maturity of 15 years, you cannot reactivate the account.

It is also important to remember that you cannot have a new PPF account in your name even if your existing account is inactive. This is because, at any point in time, one individual can only have one PPF account.

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Frequently Asked Questions

PPF or Public Provident Fund is a long-term fixed income savings scheme offered by the Government of India. It offers tax benefits as well as fixed and guaranteed returns. It is one of the tax-saving instruments under Section 80C of the old regime of Income Tax Act. The PPF tenure is 15 years and the account cannot be closed prematurely except on certain grounds. However, the subscriber or depositor is allowed to withdraw part of the money after five years. You can withdraw 50% of your balance as at the end of the preceding financial year. Any resident Indian can open a PPF account.

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