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Public Provident Fund (PPF) – Plan Your Retirement and Save Tax

This article illustrates the features of Public Provident Fund (PPF), and explains how it can be used for long term wealth creation.

Public Provident Fund (PPF) is a great instrument for risk-averse investors. It is also a very good instrument for long term wealth creation – mainly for goals that require relatively safe investments. For example, PPF can be a great avenue for investing to achieve a goal like “building retirement corpus”. Here’s why.

Login Required Download the spreadsheet that illustrates the PPF returns for Rs. 5000 deposited for 15 years. You can change the investment amount and rate of returns to find a result of your own!

(Want to know about PF and VPF? Please read “Provident Fund (PF) and Voluntary Provident Fund (VPF)“.)

 

Features and Benefits of Public Provident Fund (PPF)

Long Term Investment

A PPF account is opened for an initial period of 15 years. That is, you make a commitment of 15 years upfront – and as I always say, this means that you can reap the benefits of compounding. (For more on this, please read “Start saving early and gain from Compounding – Early bird gets the worm”)This also means that you would not touch these funds for ad-hoc needs – which makes PPF all the more suitable for goals like retirement planning. (Although, early withdrawals arepossible – more about it later)

Please note that the maturity date of the PPF account depends on the financial year, and not on the date of its opening. Thus, if you have opened the account on 27th August 2007, it would mature on 1st April, 2023 (and not on 27th August, 2022).

Absolute Safety

PPF is a Government scheme – it is backed by the Government of India. Thus, it is among the safest instruments you can invest in India. This guarantees the safety of your principal and the interest earned on it. Again, this makes it suitable for long term goals where safety is very important.

Multiple Income Tax Benefits

This is a very big sweetener for PPF – PPF provides not one, but two tax benefits!

One, the investment made in PPF is deductible from your income under Section 80C of the Income Tax Act. This means that your entire investment in PPF can be tax free, subject to the provisions of Sec 80C. (For a detailed explanation of Section 80C and the income tax benefits that it provides, please read “Saving Income Tax – Understanding Section 80C Deductions”)

And two, the interest earned in a PPF account is tax free! This means that when your PPF account matures, and you withdraw your money, you pay absolutely no income tax on it! Isn’t it fantastic? This compares quite favourably with other instruments like National Savings Certificate (NSC), where the interest is fully taxable.

(Please note that there are talks going on to introduce tax on the interest earned on an EET – Exempt Exempt Taxed – basis. But these talks are at preliminary stages, and there is very little possibility of this being implemented in the foreseeable future)

Great Interest Rate

Unlike NSCs, the interest rate for PPF is not fixed. It can be changed every year by the government.

Having said that, it should be noted that the government doesn’t change the interest rate on PPF drastically since it is held by a very large number of people. Therefore, this interest rate is quite stable.

The current rate of interest on PPF is 8% per annum. And remember, this interest is tax free. If you are in the highest tax bracket of 30%, this is equivalent to receiving 11.43% interest on a bank fixed deposit (FD). Now that’s great, isn’t it?

Example: A deposit of Rs. 5000 per year for 15 years (totaling Rs. 75,000 over the 15 years) grows into a handsome, risk-free Rs. 1,46,621 if the rate of return remains 8% per annum.

Login Required Download the spreadsheet that illustrates the PPF returns for Rs. 5000 deposited for 15 years. You can change the investment amount and rate of returns to find a result of your own!

Low Minimum Investment

The minimum investment in PPF is Rs. 500 per year. This low amount ensures that even people falling in low income groups can save for their retirement using a government backed, safe investment avenue.

The maximum investment allowed in PPF is Rs. 70,000 per year.

It is not necessary to deposit the amount in one go – multiple deposits can be made in a year.

Regular Investments

This is a side effect of the way PPF operates. Since PPF is not a one time lump-sum investment, you have to invest in it every year, year after year, at least for 15 years. This brings in discipline, which many of us lack when it comes to investments!

Facility of Withdrawals

Yes, PPF is meant for long term investments. But there might be times when you need funds for some emergency.To take care of such situations, PPF does allow withdrawals. One withdrawal, once a year, is allowed from 7th year onwards. You can withdraw an amount not exceeding the lower of:

a. 50% of the balance at the end of the 4th immediately preceding year
b. 50% of the balance at the end of the immediately preceding year

(Note: If the PPF account is extended beyond the initial 15 years (in blocks of 5 years as explained later), the amount allowed to be withdrawn is 60% of your balance at the beginning of the extended period)

Example: If the account is opened in 1999-2000, and first withdrawal can be made during 2005-2006. The amount of withdrawal will be the lower of:

a. 50% of the balance as on March 31, 2002
b. 50% of the balance as on March 31, 2005

Please note that this withdrawal facility should be used judiciously. PPF is mean t for long term savings, and utmost care should be exercised while withdrawing money from it. You should withdraw only for emergencies, like a medical emergency. Funds should not be withdrawn for funding purposes, like for buying a car or a house.

Facility of Loan

In case of emergency situations before the 7th year, you can take loans from your PPF account. You can take loans between 3rd and 6th year of opening the PPF account.

The maximum loan amount available will be equal to 25% of the balance at the end of the 2nd immediately preceding year.

Example: In our example, if loan is sought in 2004-2005, the maximum amount of loan available would be 25% of the balance as on March 31, 2003.

The rate of interest on the loan is usually 2% over and above the rate of interest you receive in the PPF account. This loan has to be repaid within a period of 24 months.

Once you repay a loan, another loan can be taken as long as you are within the 3rd and the 6th year of opening the account.

Extension Possible

If you do not need the funds at the time of maturity (after 15 years), or can not find a better investment avenue for these funds, you can opt to continue the PPF account.

You can extend the PPF account for 5 years at a time, and you can have as many extensions as you want.

Nomination Facility Available

You can specify a nominee for your PPF account. The nominee would get the trusteeship of this account in case your death occurs before the closure of the PPF account.

(To know more about nomination, please read “When you aren’t around – Succession Planning – Will and Nomination”)

Others

Default: In case of a default, when even Rs. 500 is not paid in a year, the PPF account can be regularized by depositing Rs. 500 per year of non-payment, along with a penalty of Rs 100 per year of non-payment.

A person can have only one PPF account at any time.

A PPF account can not be opened in joint names. It has to be in one person’s name only.

Deposits in excess of Rs. 70,000 are returned without any interest

 

Great Supplement to Provident Fund (PF)

The benefits of Public Provident Fund are many-fold. Many of these benefits are available through Provident Fund (PF) as well. Still, if you feel the PF deductions alone are not enough, you can open a PPF account.

 

PPF – Excellent tool for Business People

If you are not salaried, there is no provident fund being created for you! For non-salaried people, PPF is an ideal vehicle to safely build the corpus for retirement.

Another factor, especially important for business people, is that PPF cannot be attached under any order or decree of court. This means that even if all your assets are liquidated to fulfill any of your liabilities, the entire amount in a PPF account remains with you. This is an added level of safety, and can prove extremely useful to business people.

 

Where can a Public Provident Fund (PPF) account be opened?

A PPF account can be opened at:

  • Any branch of State Bank of India and its subsidiaries
  • At the head post offices or sub post offices
  • At branches of the nationalized banks engaged in the collection of direct taxes

On opening of a PPF account, a passbook is issued. This passbook is used to record all the transactions for that PPF account – deposits, interest earned, withdrawals and loans.

 

Online PPF Accounts

Like investment in shares and mutual funds, wouldn’t it be nice if we could invest in PPF online? Online PPF account would add so much convenience to this excellent savings vehicle!

The good news is: Some banks do offer online PPF accounts. With these banks, investors can open and maintain their PPF accounts online.

ICICI Bank was the first private sector bank to offer this facility to its customers. ICICI customers can access their internet banking accounts, and transfer money directly from their savings accounts into their PPF account.

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Comments

  1. Hi Tamal,

    I was also going by the press release – thanks for pointing this out.

  2. EXCELLENT article on PPF that i got till now.. one question remains…. 22nd JULY 2008 “Is PPF made EET now?”

  3. Anonymous says:

    Hi Rajani,

    As of now, PPF follows the Exempt-Exempt-Exempt, or EEE pattern.

    This means that there is tax benefit on the sum invested in PPF (u/s 80C), the interest is tax free, and even the withdrawal is tax free.

    There have been talks going on to convert it into Exempt-Exempt-Taxable (EET), but these proposals have not been implemented yet.

    Thanks for raising a very valid point – in the future, I would also write an article explaining the EET and EEE modes of investments.

  4. Saravanan says:

    shall we increase the amount every year if we start the amount
    first year 500
    second year 1000
    third year 1500
    like this

  5. Hi Anbu,

    In the physical world, you fill up the PPF deposit form in triplicate. When you make the deposit, you get one copy of the form with the stamp of the bank, which acts as the proof of PPF investment. Probably, your finance department is looking for this receipt.

    You can try convincing them that since the transaction is online, there is no receipt. The PPF account statement should be accepted in this case. Also, you can show them the passbook of the PPF account, if you have any.

    If the finance department still doesn’t agree, the only choice you would have is to claim the deduction when you fill your income tax return. Since your finance department would not have considered the PPF investment, it would have deducted some extra TDS. So, you would have to claim a refund in this case.

  6. Hi,
    I have opened my PPF account in Chennai (SBI bank). Now I am working in Pune. I do all my PPF deposits through online. I need to submit the proof for Tax exemption. I took the print out of my account stmt which my organization is not ready to accept. Can I get a bank stmt from a bank here which is handling PPF ( SBI branch ).

    Regards
    Anbu.

  7. Anonymous says:

    Dear Sarvanan,

    There is no hard and fast rule that you should increase the amount every year.

    The stipulated minimum is Rs. 100 per year, and the maximum is Rs. 70,000.

    But it would be a good idea to increase your savings as your income grows over the years.

    Of course, you would need to decide if you want to increase your investment in PPF, or would like to invest for the long term in shares.

  8. Hi,

    I do not think ICICI offers an ONLINE PPF account. Though i saw a press release from ICICI on this and it was dated 2005, it seems that the online facility has not been implemented. I myself hold a PPF account in ICICIB and have to go to the branch every year to deposit the amount

  9. Anonymous says:

    I am NRE – I had a PPF account and I was investing regularly in this account. Then investment by NRIs in PPF was banned. I would like to know if I have continued to invest in PPF and if I am not claiming deduction in income tax – what is the risk.

    Also whether investment by NRIs was totally banned or only the exemption from income tax was disallowed?

    Also when the Govt banned PPF for NRis, did they announce any exit plan for NRIs for their existing PPF accounts.

  10. Anonymous says:

    Dear AKumar,

    You have not taken any risk by continuing to invest in your existing PPF account.

    The investment in PPF has been totally banned for Non Resident Indians (NRIs) – it is not just for income tax purposes.

    When the ban was introduced, it was clarified that the accounts can be maintained till their maturity. But they cannot be extended.

    Thus, you can keep investing in your PPF account very legally till it matures. You can make these investments from your NRE or NRO accounts.

    Once the account matures, you can deposit the maturity proceeds in your NRO account.

  11. Anonymous says:

    Dear Sairam,

    The PPF account can be extended indefinitely after the completion of the initial 15 years. Each extension has to be for 5 years.

    Thus, once the initial 15 years are over, you can extend the account by 5 years. After these 5 years get over, you can extend it by another 5 years, and so on.

  12. Hi,

    I would like to know wether the PPT term can be increased beyond 15years? How long we can continue the same?

  13. Hi,

    Unfortunately, I do not know the exact answer to this.

    But going by the principle of restricting NRI investment in PPF, I believe it would not be possible to nominate an NRI for a PPF account as well.

  14. Hello, My dad who is not an NRI (lives in India) wants to open a PPF for my daughter who is NRI. So, he would own the PPF and nominate my daughter. Since NRIs are banned from owning/investing in PPF, would it prohibit nominating an NRI as well?

  15. Hi Sonu,

    A PPF account can not be closed before maturity (that is, before the end of 15 years). Even if you stop making payments, the balance in the account would continue earning interest. You can withdraw the full amount (with interest) on maturity.

    Yes, you can deposit in the PPF account every month. It is not necessary to deposit the same amount every time – you can deposit a different amount every time.

    The only condition is that the minimum deposit in a year has to be Rs. 500, and the maximum allowed per year is Rs. 70,000.

  16. Hi Ramashankar,

    I do not know of any facility wherein you can have a deposit in the PPF account from your salary account.

    Having said that, ICICI bank does have its online PPF – here, you can deposit money to your PPF account from another ICICI Bank account online. So, it does give a lot of convenience!

    Transfer of PPF account:

    Yes, it is possible to transfer the PPF account. You can transfer the account from one branch of the bank to another, from a bank to a post office, and from a post office to a bank.

    You would need to fill up a PPF account transfer application form for this. You need to submit it at the branch where you have your PPF account.

    On getting this, the branch would issue you an account payee cheque / draft for your account balance, along with some original documents.

    You need to submit these at the branch you want to open the account – the procedure would be the same as if you are opening a new PPF account.

  17. Hi ,

    Can i deposit 70K in PPf this year & next year 10K

    Regards
    Durga

  18. rama shankar varma says:

    HI,
    i wanted to know,is there any plan in PPF to pay the deposit directly from my salary account?
    suppose i have opened PPF in post office in some place and after some time i got transfered to some other location, in this case how can i deposite my money.

  19. Hi Durga,

    Yes, you can reduce or increase the amount that you deposit every year. There is no restriction on this.

    The only restriction is that the minimum deposit in a year has to be Rs. 500, and the maximum allowed per year is Rs. 70,000.

  20. Sonu Rauthan says:

    Please explain,

    Can I deposit the money in PPF account every month, is it necessary that the amount which I am depositing it should be same, if I have deposited 500/- in Jan so I have to deposit 500/- every month or I can deposit the amount according to my savings.

  21. Sonu Rauthan says:

    Suppose I have got opened a PPF account and after three years I am not interested to continue it so shall I get all the money which I have deposited with interest or I have to pay some penalty over it.

    Please explain.

    Regards,

    Sonu

  22. Anonymous says:

    Hi Balachandar,

    Thanks!

  23. Anonymous says:

    Hi Vini,

    I believe we would have to go with the banks policy on this one.

    However, I am sure SBI would give you a facility to easily deposit money in your Bangalore PPF account from Pune.

  24. Balachandar says:

    Hi,

    Good one. Helpful to all who want to invest in PPF.

    Thanks,
    Bala

  25. Hi,

    I have a ppf account opened in sbi(bangalore) in the year 2006. I shifted my job to pune in that year itself. Now I want my ppf account to be transfered to pune sbi. When i went to a nearby sbi bank in pune they informed that the transfer application has to be done at the banglore sbi. Is this true? if not let me know the correct procedure

    Thanks
    vini

  26. other than ppf passbook of post office , what is the proof we should maintain for withdrawl of amt. on maturity?
    my passbook is not showing me interest for every year
    only deposits r there ? what should i do in this case.

  27. Hello,

    I think it is a matter of personal preference – a blanket comparison between services offered by a post office and banks would not be possible, as different banks also offer different facilities.

    You would need to evaluate various facilities, and would have to decide based on the factors that are more important to you.

  28. Anonymous says:

    Hi Roshan,

    The PPF passbook is the only proof required.

    The PPF passbook contains entries for both deposits and interest. Please check with your post office, and rectify this.

  29. thanks.
    i had talked to my post office ppf agent he agreed to
    update my passbook with interest in it.

    thanks.

  30. g c chowdary says:

    Hi ,

    Which is the Best way to open a PPF a/c in Post office or Bank in terms of facilities. like providing statement of investments at the end of the year or when we required.
    and also for depositing the amount ( Cash deposit in bank/Online deposit without going to bank/electronic clearence-ECS on monthly basis)

    Please advise.

    Thanks
    G C CHOWDARY

  31. Hi Uday,

    You can not have two PPF accounts in your name.

    You could have transferred your post office PPF account to SBI in Bangalore.

    Now you can not transfer the money from your post office PPF account to your SBI PPF account in Bangalore. You would need to close one of the accounts – and you would only get your principal back for that account.

    Thus, I recommend that you close your newer account (that is only 1 year old), and then, transfer your post office PPF account to SBI Bangalore.

  32. Hi,
    I have a PPF account with post office opened in 1999-2000 at my native place. As I don’t stay there I opened a PPF account with SBI in Bangalore last year. Can I transfer the amount from post office PPF to SBI PPf and close the earlier one.

  33. I have SBI local account which I had opend 7 years back before becoming NRI. Now I am NRI and still has this local SBI account open and active. Does this qualify me to open PPF account.
    Thanks

  34. Neil Rodrigues says:

    What is the current Rate of Interest on PPF, What would be the right place to check? Any links / references / websites online etc?

  35. Neil Rodrigues says:

    Fantastic article on PPF. Very informative and clear !!

    Just one question: My PPF account has been opened in a branch that is quite some distance from where I stay.
    Is there any way I can schedule a payment / transfer it online. I do have an ICICI Net and Mobile banking enabled account.

  36. Anonymous says:

    Hi Neil,

    If you have an ICICI internet enabled account, and you also have PPF account with ICICI, I am sure you would be able to transfer amount from your savings account to your PPF account online. I think it would be best to check with the bank.

  37. Anonymous says:

    Hi Neil,

    The current rate of return on PPF is 8%. You can check it at: http://www.alpbachat.org/ppf.htm

  38. Anonymous says:

    Hi Nick,

    Unfortunately, you would not be qualified to open a PPF account as NRIs can not open a new PPF account – even if they have an existing bank account.

  39. any scheme it will provide monthly income after retirement,in stead of lump sum,i would like to pay premium on monthly base

  40. Hi Sunny,

    Thanks for the nice feedback…. I am glad I could help!

  41. Hi Vijay,

    The maximum you can put in any PPF account is Rs. 70,000 per year. Thus, you can deposit upto Rs. 70,000 in each PPF account.

    However, the maximum deduction you can claim from PPF investments is also Rs. 70,000 per year. So, although all the investments would be eligible for deduction u/s 80C, the deduction would be capped at Rs. 70,000 per year (even if your investment is more than Rs. 70,000 across the PPF accounts)

  42. This is really good article on PPF.

    Thanx Guys :)

  43. Hi Ramk,

    Pension Schemes should be best suited for your purpose – you would get a monthly pension from these schemes after your retirement.

    Also, investment in these schemes gives you tax benefit under section 80CCC – amount invested in these funds upto Rs. 10,000 is deductible from your income.

    For more, please read “Saving Income Tax – Understanding Section 80C Deductions“.

  44. I have ppf account in my name , my wife’s name and my children name ( 2 ). The deposit made in these accounts are thru my source of income. How much max. can I put into 1 account and how much max can I put into all 4 accounts during a financial year.

  45. sir, is it beneficiary to invest directly in february or march at year ending only, means can we get the full years interest?
    or whether it is calculated for 2 months only?
    Or we need to deposit money in april only to get full years interest?
    so when to deposit money to get max. benefit?

  46. Hi Rose,

    The interest on the amount in your PPF account is calculated every month. Interest is paid on the lowest amount in the account between the 5th and the last day of the month.

    Thus, to earn the maximum interest, you should deposit the money between the 1st & 5th of any month.

    Of course, if you deposit the amount at the beginning of a financial year (say in April), you would earn the interest for the whole year. If you invest in later months, you would earn interest only for the remaining months.

    So, the earlier you invest, the more interest you earn.

  47. Anonymous says:

    I find it quite interesting that an individual can take loan against PPF between 1-5 years; and the rate of interest is just 1% if it is paid after the tenure of loan (36 months); but if loan is repaid within tenure, the rate of interest is 6% interest. Please clarify and further at which interval interest will be compounded (Monthly/ Quarterly/ Semi-annually/ Annually)

  48. Anonymous says:

    Hi Rishav,

    You have done a slight mix-up: The rate of interest on the PPF loan is 1% if the loan is repaid within 36 monhts. It increases to 6% if the loan is not repaid within this period.

    The extra interest is to penalize late payers.

    The interest is calculated starting from the first day of the month following the month in which the loan is taken, and is calculated till the last day of the month in which the final instalment of the loan is paid.

    I am not quite sure about the compounding frequency.

    Readers: Please leave a comment if you know how the interest is calculated / compounded.

  49. NARAYANAN says:

    Hi

    Since when the ban for NRI investing in PPF was introduced. I opened PPF accounts in my name and other family members in 2004 and I was NRI even at that time. If it was banned at that time I dont know how this was accepted by SBI with whom I opened the account. Secondly, what are all the implications. The accounts are kept active with minimum contribution as of now…

  50. Anonymous says:

    Hi Narayanan,

    The ban on NRI investment in PPF was introduced through circular GSR 585(E) dated 25.7.03.

    Thus, your bank should not have allowed you to open the PPF accounts. Please discuss with the bank about the future course of action.

    Note: If you open a PPF account and subsequently become an NRI, you can continue operating the account and making deposits (upto the ceiling of Rs. 70,000 per year). These deposits would be on a non-repatriation basis. Such accounts, however, can not be extended once they mature.

  51. PPF account was taken in the name of my daughter by my husband . My husband is no more now . I already have taken a PPF account in the name of my son. SO now i want to know if the PPF account in the name of my daughter can be continued by me by paying 70000 on a yearly basis .
    If so will both the PPF amount will be tax free (interest is tax free ) at the end of 15 yrs.
    Please suggest the process i need to follow

  52. Anonymous says:

    I was planning to open a new PPF account . as in my job i may get frequent transfers and onsite oppurtunities , is it possible tht i can continue my account in my home town itself , where i can make paymetns through my parents … will they allow this ?

  53. Neelesh G Ankola says:

    Thanks…

    Thanks for the answer.

  54. Anonymous says:

    Hi Appaso,

    Please check out the article “Post Office Schemes: Downloadable Forms“.

    You would get the relevant forms there. Also, in the comments section, you would get valuable information about transferring a PPF account.

  55. Anonymous says:

    Hi MA,

    Yes, you can continue the PPF account in your daughter’s name by paying Rs. 70,000 every year. You can do this while paying Rs. 70,000 in your son’s account simultaneously.

    The maturity amounts in both these accounts would be tax free.

    However, you can claim deduction of a maximum of Rs. 70,000 under section 80C (even if you are actually paying a total of Rs. 1.4 Lakhs between the two accounts).

  56. Neelesh G A says:

    Hi,

    I have my PPF account in SBI Margao branch. I opened it in the year of 2006. I have deposited amount for the first 2 years and in 2008 there was no transaction.

    By paying penalty of Rs. 100 I can regularize the amount. But is it mean that every coming year I should pay penalty (for the next 13 years) ? or penalty is only for one year?

    Please help me.

    Thanks

    Neelesh

  57. bnbahadur@gmail.com says:

    When an is extended beyond 15 yrs for 5 yrs, does it not imply that 40 percent of outstanding balance becomes frozen(interest given, though), for the next 5 years…. Or is withdrawal permit in part after one year (beyond the 15)….if yes at what formula….Kindly elucidate on the point of extended PPF>>>>>BNB

  58. Anonymous says:

    Hi Neelesh,

    The penalty is a one-time penalty payable at the time of revival / regularization only – you do not have to pay it every year.

  59. Anonymous says:

    Hi,

    If the PPF account is extended beyond the initial 15 years, the amount allowed to be withdrawn in the extended period of 5 years is 60% of your balance at the beginning of the extended period.

    This is an additional facility – when you extend your PPF account for 5 years, you are locking or freezing the full amount for 5 years. This facility gives you the flexibility to withdraw some of the amount that you had agreed to lock-in.

    So, I believe the answer to your question is that yes, 40% amount remains not withdrawable – only 60% can be withdrawn at any time during the 5 years.

  60. Anonymous says:

    Hi Shanmugam,

    Yes, there is no problem with this arrangement.

    If you are planning to take advantage of this investment to save income tax through section 80C, it would be good if you transfer the amount to your parents’ account (maybe through an online transfer) before they deposit it in your PPF account.

    If asked by the assessing officer (AO), this would help you prove that the amount deposited in the PPF account is indeed yours, and therefore, you would be able to get the tax benefit.

  61. Hi

    I had my PPF account from the last 15 years and when it matured, I withdrew the corpus and closed the account. I have heard that PPF is taxable once withdrawal is done on maturity.

    Please advise …

    Kind Regards
    Ashwin

  62. Anonymous says:

    Hi Ashwin,

    No need to worry – the PPF withdrawal is not taxable. Not yet – there have been talks of making it taxable, but as of now, the withdrawals are tax free. In any case, even if they are made taxable, in all likelihood, it would only be for new accounts or new deposits.

  63. Giriraj Sharma says:

    Dear friends,

    I have ppf accounts in the name of myself, wife and two children. In each account i can deposit upto 70,000 per year from my income.

    If i deposit 70,000 in my ppf account , 70,000 in my wife’s account and 70,000 each in my children’s account. I know that I can claim a tax rebate under 80C on my account only. But in this way i will earn a tax free interest on all the remaining 03 account (wife and 02 children).

    My question is that “IS IT LEGAL?”

    If so this is a extremely good instrument to earn tax free interest.

  64. Anonymous says:

    Hi Dheeraj,

    1. I am not sure whether Bank of Baroda (BoB) offers this facility. It would be better if you check with the bank.

    2. I believe you need to make a deposit in the same branch where you have the PPF account. But again, the bank would be in a better position to guide you.

    3. You can not deposit money in your PPF account through another bank of post office.

    4. You can shift your PPF account from one bank to another.

    (However, I am not sure if many banks offer online facility for PPF accounts. You can check with ICICI bank – I believe they do offer this).

  65. Dheeraj says:

    Hi Raagvamdatt,

    I have PPF account with BoB since last many years. I have no other accounts with BoB.

    Want to know the following:

    1) Is there a way to track the PPF account online.

    2) Do I need to make deposit in the same BoB branch where i opened the account or I can deposit at any BoB branches.

    3) Can I also deposit money in my PPF account through other banks or post office.

    4) If BoB does not offer online tracking, can i switch the account to other bank that offers online tracking of the account.

    Basically just want to have the convenience of viewing the PPF account like savings account.

    Thanks in advance

    regards
    Dheeraj

  66. Anonymous says:

    Hello Giriraj,

    Yes, this is legal.

    The restrictions on PPF are:

    - You can invest a maximum of Rs. 70,000 per year in any PPF account
    - Maximu section 80C deduction that you can claim for PPF investment is Rs. 70,000

    What you have mentioned complies with both these rules, and is therefore legal.

    In fact, it is a great strategy to earn tax-free interest!

  67. Anonymous says:

    Hi Bvijay,

    You can download all post-office related forms from “Post Office Schemes: Downloadable Forms“.

  68. Anonymous says:

    I want to transfer my PPF Account from post office to SBI Bank.from where to download form for this?
    please provide me information
    -Bvijay

  69. Hello,
    I have an PPF account in SBI mumbai, branch . Now Iam getting shifted to Pune, can I transfer my account to Pune branch, for further transactions. What could be the procedure for this.

  70. surendra sai says:

    i have opened ppf A/C at Lucknow in Jan.2009.Now i want to know that for getting Rs.4 lacks after 15 years,how much Rs.i have to deposite per year?

  71. Kishore says:

    Dear Raag,

    Thank you very much for the clarification.

    Regards,

    Yadu Kishore
    Manager – HR
    BioGenex Life Sciences Pvt Ltd

  72. KALPES says:

    I have a/c in mumbai in BOI is is possible to transfer ppf a/c in borivali in SBI Bank

  73. Anonymous says:

    Hi Sashi,

    It is up to you – you get an option of continuing the account with or without contributions.

    If you want to invest during the extension period, you would need to submit Form H.

    You would keep earning interest in your PPF balance – it would get deposited in your PPF account as usual.

  74. Ropa Bhattacharya says:

    May 03, 2009

    I am tired to find out the extension form for submiituing to my Banker (SBI) for extending five years of my PPF A/c with them.
    As usual bank does not have the above form and I have to wait for getting it.
    Kindly include this form for the benefit of us.
    Regards.

  75. Hi RaagVamdatt,

    If i want to extend PPF after 15 years for a block of 5 years, do i need to invest during these 5 years? I mean can i extend without paying? Will i get interest annually on this? It would be great if you can take an example and explain. Thanks

  76. Kishore says:

    Hi,

    I have a query:

    I am saving in Public Provident Fund account for Tax saving purposes. I am crediting the PPF account via Internet Banking. While filing returns, does the IT dept. accept the Bank Statement as a valid proof of saving? Kindly reply.

    Thanks & regards,

    Kishore

  77. Raghunathan says:

    Dear Raag,

    Thanks for the prompt response.

    Excellent site , I really liked it, I will egt all my people into this. Superb…….

    Still Iam not convinced that I can continue after the expiry of 5 year term. If the provision says that account has to be closed means withdrawal of the amount is the only solution.

    Could you please confirm on this point

    Thanks and regards

    Raghunathan

  78. Anonymous says:

    Hi Raghunathan,

    Thanks a ton – spreading the word is the best compensation for me :-)

    And yes, you are right. The rule says that the account can not be extended once it reaches maturity. (My earlier interpretation was that no fresh contributions can be made once it reaches maturity).

    Even when the account is kept inoperative after maturity, it means “continuing the account without subscription”, which means extending the account! Since this is not legal, you should not leave the balance in the PPF account after the end of the 5 years.

    My apologies for the misunderstanding, and thanks once again…

  79. Anonymous says:

    If I do FD every month for my child of Rs.5,000 then after 1.5 to 2 years bank will deduct TDS as interest will go beyond Rs. 10,000. But if I deposit the same amount to PPF in name of my child then there would not be any TDS as returns are tax free even interest earned is more than Rs. 10,000. Is my understanding correct?

  80. RAGHUNATHAN says:

    I am having ppf a/c which i extened for 5 years. I am an NRI now. after the expiry of extened priod, I can not continue beacuse it is not allowed.
    my question is

    Can i leave the balance in the account as such with out closing the account, will it continue to earn interest.
    can I close the account and withdraw fully when I need the money.
    Could u please clarify on all these
    Thanks

  81. Anonymous says:

    Hi Kalpes,

    Yes, it should be possible.

  82. Anonymous says:

    Hi Raghunathan,

    Interesting question!

    I think you should be able to leave the balance in the account without any extra investment after the end of the 5 years.

    It would be treated as “continuing the account without subscription”, and the amount would continue to earn the interest.

    You should get the amount with interest when you close the account.

  83. Anonymous says:

    Hi,

    Yes, your understanding is right. A slight correction, though.

    Interest earned on bank FD is taxable, whether the bank deducts the TDS or not. The bank is mandated to deduct TDS only when interest is more than Rs. 10,000.

    But even if the interest is less than that, YOU need to pay tax on it even when the bank has not deducted the TDS.

    On the other hand, the interest earned on PPF is fully tax free.

    So, in summary, your conclusion is correct.

  84. Anonymous says:

    Hi Ropa,

    I am sorry, but the PPF extension form is not available online. You would need to rely on your bank!!

    A tip: Have you checked with the main branch of SBI in your city? They usually have copies of all forms.

    All the best!

  85. Anonymous says:

    Hi Surendra,

    A yearly deposit of Rs. 13,650 would earn you Rs. 4,00,000 after 15 years in PPF at 8% interest rate.

  86. Anonymous says:

    Hi Kishore,

    These days, we do not need to file any proof of investment along with our IT returns. So, don’t worry about it.

    In case you are called for scrutiny by the assessing officer (AO), you can show him / her the bank account statement and the PPF account statement / passbook.

  87. Hi,
    Is PAN no. Compulsory for opening a PPF account. I have a PPF account of mine and want to open the same on my wife & daughters name. Could you please let me know about the procedure to open the same without PAN no?

    Also pls let me know wehter to open the PPF account in a bank or post office?which is more advatageous

    Thanks
    Sai

  88. can father get tax redemption from his major sons ppf account?

  89. Can i open PPF account of my child name.

  90. Anonymous says:

    Hi Sai,

    Yes, mentioning the PAN number is mandatory for opening a PPF account.

    You need to first obtain a PAN number for your wife before opening the PPF account.

    If your daughter is a minor, you can provide your PAN number, or can apply for and use her own PAN number.

    There is no difference in the features of the PPF account – it is the same whether it is opened in a bank or in a post office.

    The only difference may be in the level of service. So, choose post office / bank accordingly.

  91. Anonymous says:

    Hi Subrat,

    Yes, he can if he deposits the money in the PPF account.

  92. Anonymous says:

    Hi Yogesh,

    Yes, you can.

  93. Kishore Jethanandani says:

    I m interested to open PPF account for myself, my wife (LIC Agent – for her name) and for my son (2 year old minor). Is it possible to open 3 PPF accounts in SBI Bank?

    I want to open Rs. 1000/- monthly for each mine and my wife and Rs. 500/- monthly for my son in PPF account. Is it possible that I have to open my account, my wife open for her name a ppf account and for my minor child I can open the PPF account… Please clarify…

  94. Praveena NP says:

    Hello Sir

    I was working in Bhilai for one year. That time i opened PPF account in post office for 15 years in Bhilai. Now i have been transferred to Tamilnadu. So i wish to change the account from post office to nearest SBI bank. Is it possible and what is the procedure to do the same.

  95. Anonymous says:

    Hi Kishore,

    The PPF accounts for the three of you can be opened in each person’s respective names.

  96. Anonymous says:

    Hi Praveena,

    Yes, it is possible.

    For the procedure, please check out the comments on this article. For the forms, please check out the article “Post Office Schemes: Downloadable Forms“.

  97. Aneesha nath says:

    Hi,

    I have a PPF account in SBI,New Delhi. All I want to know is that is it possible to transfer funds in my PPF account online every month?

  98. Hi,

    I have a PPF account with SBI. can this be transferred to a new online ICICI PPF account

  99. Anonymous says:

    Hi Vidhya,

    Yes, you can do this.

  100. Anonymous says:

    Hi Aneesha,

    It really depends on the bank. You would need to check with your bank.

  101. HI Raag,
    i have applied for a PPF account in my name in nearest SBI Bank, i do my business, but i also work partly for a private bank, who would be shortlyl opening a ppf account for me.. can i maintain simulatenously my own PPF a/c aswell the new account which they are going to open for me. Is it going to cause some problem in future, even if i leave the job would that Pf would continue, or it gets closed?
    Another are PPF or the anothere PF which is maintained by the empolyers for its employess both the same? Please answer!

  102. Hi Vikram,

    You are getting confused between PF and PPF.

    A PF account is opened by your employer, and PPF is opened by you.

    Both are separate, and can be maintained at the same time. There is no issue with it.

  103. I opened PPF Account in Sept 89 and got renewed in Sep 2004. Extended 5 years term has expired now.I requested the bank to renew it for another 5 years but the bank says that it will be renewed after 31.3.2010. whereas it was renewed earlier in Sept.2004. If the rules have been amended for renewal.Kindly advise if the renewal for another 5 years is beneficial keeping in view the proposed new finance bill which is effective from 1.4.2011.

  104. HI Raag!!!!!!!!!!!,
    You are just great, i appreciate the valuable advice that u provide, i sincerly thank u for your generous reply…I had been waiting for your reply, but it came almost more than 1 month, just see if you can make it lilttle early……
    Thanks Vikram!!!!!!!!

  105. Hi Vikram,

    Thanks a lot… I am glad I could be of help.

    I know it took a lot of time – my apologies.

    I am not sure if you know, but the website had faced technical issues, and was down for about 10 days. I couldn’t reply to anyone in those 10 days, plus a lot of work had piled up. Thats why the delay in the reply.

    But no excuses – I usually reply within a week, and thats what you would see going forward!

    Thanks again.

  106. Anonymous says:

    Hello R K Lall,

    I am not sure why the bank is saying it would be renewed after 6 years – have you asked for the reason?

    I believe renewing PPF is a good choice. In any case, the new tax code that you are talking about is only in a draft stage, and many changes are likely. So, please don’t base your investment decisions based on it as yet.

  107. I recently become US citizen. I have income from PPF interest. Is there any treaty that allows me from taking exemption of this interest from my global income?

  108. Anonymous says:

    Hi Maverick,

    I don’t think there would be any exception in your case. If your total income for the year in India in above the taxable thresholds, you would have file a return a pay taxes as per the prevailing rates.

    For current threshold and rates, please see Income Tax (IT) Slabs / Brackets and rates

  109. Anonymous says:

    Hi Satya,

    I do not believe the rules have changed lately – it definitely appears to be a mistake on SBI’s part.

    I would recommend talking to them and double checking with them, and following the course of action they recommend.

  110. Hi,

    My PPF account matured on 1st april this year and since I had become NRI during its currency I went to my bank, SBI, to withdraw the same in June this year. I told them verbally about the reasons for withdrawl. I was verbally advised by SBI staff that I can continue further extension for 5 years notwithstanding being NRI now. I signed their form and got the passbook with extension details. I did not made any contribution so far in the current year and after reading some discussion here, I think SBI did mistake in extending PPF. Now how can i withdraw entire amount or I have to wait for maturity of 5 years without making any contribution ?

  111. Hi,
    My 2yr old son was born in US and holds US citizenship. Last yr we returned and now staying in india. Can i open a PPF account in my son’s name?

    Thanks,

  112. I am planning to produce proof of investment in PPF for 40,000. SBI informed me that only a maximum of 20,000 can be deposited in a PPF account on a day, if paid by cash. So is it ok if I make two such deposits of 20,000 each on separate days? It shouldn’t matter as long as both the deposits are done withing this financial year right?(Apr 2009 to March 2010)

  113. Hi,

    I want to open new ppf account.

    Apart from SBI, which other banks open new ppf account.

    Also if i want to open ppf account in post office, then what are the documents required.

    Thanks.

  114. There is some confusion on tax implication towards interest on PF (retrospective from 1st April). Is it applicable on interest on GPF or PPF or EPF?

  115. can the account opened once be transfered form one barnch to another of the same bank.

  116. Helloo,

    I have an online PPF account. If i transfer the money online to this account what can i show as proof of this investment while filing my returns?

  117. Dear Sir,

    I have a PPF account in SBI bank. I have deposited some amount in PPF. But I will get the statement, because it is through cash deposite.

    But my question is ….now i have added my PPf account as Beneficiary account(third party transfer) as suggested by bank. but now i want to get the statement for this online transfer.
    please can anybody suggest me…

    regards,
    satish

  118. K.R.SIVAKUMAR says:

    My PPF got matured on 1st April 2010. I want to take the money only in October 2010. will I get interest till then as the amount is about 20 lakhs

  119. Hi, I started PPF with SBI last year and submitted some more money this year, other than that I do not have any account with SBI. I want an address proof for Passport. Can the PPF that I opened last year with SBI serve as the address proof?

    If no, what all documenst I require to open an account with SBI?

    If yes, can i submit the PPF acount statement photocopy as the address proof?

  120. Hi,

    Can we deposit amount 2 times in a month into PPF account?

    Thanks

  121. dear sir,

    Firstly i have opened PPF account and after a week i have opened sbi account (savings), is there any possibility of linking the PPf account to the savings account.

    Regards,
    arun

  122. dear sir,

    Firstly i have opened PPF account and after a week i have opened sbi account (savings), is there any possibility of linking the PPf account to the savings account.

    Regards,
    arun

  123. My ppf account is matured after 15 years but not renewed. What will happen? will it be extended automatically for 5 year /no interest paid after 15 years maturity period.

  124. Nitesh R says:

    dear sir,
    i want to know, Is there any facility to pay the amount by ECS in PPF on monthly basis.

    thank you

  125. Sivakumar says:

    Dear Sir,
    1.Is it any rule for fixing basic salary.Say in our company the max Basic amount is INR.6,500 for our MD, Director, GM,DGM etc…. The Gross salary for the above is 50000,40000,35000,30000 etc… respectively.Is there any thumb rule for this?
    2.In other categories, they fix up Gross salary as 20000,15000,12,000,10500 the corresponding basic salary is 4000,3000,2500,2000 respectively.
    3.I thought for EPF employer’s contribution they made like this.
    Kindly clarify the above sir.
    Thank you in advance,
    With Kind regards,
    Sivakumar

  126. Anonymous says:

    I have both VPF and PPF options. Which is better?

    Thank you.

  127. Anonymous says:

    I need form to transfer my PPF account from one state to another state

  128. anup acharya says:

    Hi,

    this is a very good article on PPF. I want to transfer money from my HDFC bank a/c to SBI PPF a/c through net banking. can i be able to do that ? i have already registered my SBI ppf /ac as a beneficiary in HDFC neft list. Please reply me ASAP.

  129. Saurav Sinha says:

    Good article on PPF Sir.
    Suppose I open a PPF acc & close it after maturity, can I again open a new PPF account on my name?

  130. S.K.Mondal says:

    I have a Saving and PPF account at Kolkata, West-bengal but right now I am transfer to Bangalore. Now I want use net-banking, so I visited SBI branch in electronic city but they proposed I ahve to contact in Kolkata branch, where my account maintained for Net-banking. Whether is it possible to net-banking facility from Bangalore?

  131. Sir,
    My father had a PPF which is supposed to be renew again in next Dec,2012 as it will reach 15 years and I am the nominee already recorded in SBI.
    However my dad died an untimely death a few days ago and I want to know that whether I can take the interest on March,2012 and then close it by applying form G.
    PLEASE HELP

  132. Can we invest in ppf for more than 15 years…. Such as we deposited up to 15 year and donot withdrawl my amount for next 10 year… After that can we receive my amount with 25 years interest…. Kindly suggest me….

  133. cbmakhija@yahoo.com says:

    The return on a near-maturity PPF account is further great, since the stipulated interest is applicable uniformly even on the deposits made during the recent past also prior to maturity date.

  134. Hi,
    I recently switched from company A to Company B (Both of my employer provide EPF Facility). I don’t required cash at the moment, Can you please let me know what I should do for my EPF amount so that I can get max beneficiary. I was last employer with my last organization with around 4.5+ Year (>5Y).

    1) I heard, sometimes it took more than 1Y to transfer funds from employer A to employer B, some time more than that as have seen that example.
    2) Can I continue my Employer EPF account no issued by A with new employer say B.
    3) If I request to transfer EPF amount from A->B, What will happen with the pension amount means will benefit (after retirement) be the same?
    4) If I opt for withdraw of EPF amount, 10% tax I hv to pay, And wil I also get my pension amount accumulated?
    5) Till what time my account will be active as no money will be deposited now on-wards into that account? (Time for account be dormant)
    5) In next 4-5M, my emp -A EPF account will complete 5Y, if I wait for that time, and request later, So will I get all my money back as a tax free?

    Thank you very much for your help,

    Looking forward positive reply from your side,
    -Mohit

  135. Am retired person
    Question 1: Can i open one PPF account in post office and same time in SBI ?
    Question 2 : can i use my son’s PPF account receipt for showing income for till 70thousand in year ?

  136. Sanjay Kumar says:

    I had leaved UshaMartin Ltd, Ranchi on May 02,2009. And had withdrown my PF amount at that time.
    Now a days I am working with Electrosteel Steels Ltd., Bokaro.
    I want to know, whether I can withdrow the amount deposited under pension scheme (at Usha Martin Ltd.).

    Thanking you,
    Sanjay Kumar

  137. sir.
    i retired from my service during aug. now the meturillty date of ppf remaining another two years. since there is no income of any other source can i withdraw the ppf amount at the end of 14th year itself? is there any option, please calrify me since i am in need of it to earn my monthly income. since the sbi are not willing to close my a/c and return the ppf amount.

  138. Hi Mr Raag,

    Thanks again for a very informative article, I not only read the article but all the comments as well.

    Just correct me in the below scenario, if I am wrong.
    I earn 1,80,000 P.A, so I don’t need to pay tax,
    1) If I earn 2,50,000 P.A, then I need to pay tax on
    2,50,000 – 1,80,000 = 70,000
    2) And if I invest that 70,000 in PPF, then I don’t need to pay tax at all even if earn 2,50,000.

  139. I am agree

  140. Hi All,
    Please see my blog to understand the process of PPF transfer from Post Office to State Bank of India.
    http://binodshankar.blogspot.com/2012/01/transfer-of-ppf-account-from-post.html

    Hope this will be useful for the people seeking to transfer their PPF account from Post Office to SBI.

  141. If I deposited the PPF subsciption f0r 2011-2012 in april 2012 by paying panality of Rs.100,whether I will get income tax rebate for finacial year 2011-2012 ie assessment year 2012-2013

  142. Can panality of Rs.100 for delyed deposit of PPF by 15 days can be waived off ?

  143. My Husband is a NRI, but he has a PPF A/C when he was in India and even i have a PPF A/C when i was in India. Can my husband still continue deposit in his PPF and also in my PPF a/c?

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