1 week Ago By TOI Business Desk
The Public Provident Fund ( PPF ) is a widely used fixed-income investment option due to its long-term assured returns and tax advantages , which allows individuals to create a fund that matches their financial goals by making small, consistent contributions. The PPF offers an interest rate of 7.1% for the July-September 2024 quarter, which is completely tax-exempt under Section 80C.
The minimum investment required in a PPF account is Rs. 500 per financial year, while the maximum investment allowed is Rs. 1,50,000 per financial year.
Failing to deposit the minimum amount of Rs. 500 annually will result in the PPF account becoming inoperative. Additionally, any Indian resident can open a PPF account and also on behalf of minor persons.
According to the SBI website, "A Public Provident Fund (PPF) account can be opened by resident Indian Individuals and individuals on behalf of Minors or a person of unsound mind. Only one Public Provident Fund (PPF) account can be maintained by an Individual, except an account that is opened on behalf of a Minor / a person of unsound mind. A Public Provident Fund (PPF) account can be opened either by the Mother or Father on behalf of their Minor Son or Daughter.
However, the Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same Minor." Meanwhile, if a PPF account holder becomes a Non-Resident Indian (NRI) during the maturity period specified under the Public Provident Fund Scheme, they may continue to contribute to the fund until its maturity on a non-repatriation basis. However, these accounts cannot be further extended.
Transferring a PPF account from one bank or post office to another is possible, and the account will be treated as a continuous account. The account holder must submit a transfer request to the current bank or post office where the account is maintained. The old bank/post office will deliver the relevant documentation, including a cheque/DD for the outstanding balance, to the customer's new branch address.
Individuals can also take loans against a PPF account but if the loan is not fully repaid within a period of thirty-six months, the interest rate on the outstanding loan amount will increase from one percent to six percent per annum. This higher interest rate will be applicable from the first day of the month following the month in which the loan was taken until the last day of the month in which the loan is completely repaid. After the maturity of a PPF account, the subscriber has the option to continue the account without making any additional deposits.
The existing balance will keep earning interest at the rates notified by the government. Furthermore, the subscriber is allowed to make one withdrawal of any amount within the available balance in each financial year during the extended period..
