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PPF (Public Provident Fund): Features & Eligibility

Hiral Vakil

2019-03-05 11:40:59

PPF

PPF Features

Section 80C

Warren Buffett once said, ‘Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.’ Regular and systematic savings is the key to wealth creation. Public Provident Fund is a long term investment option for investors searching for safe financial instruments. It comes with the dual benefit of tax saving and wealth accumulation. PPF is backed by the government and hence scores high on safety.

Want to know what other tax deductions you can claim?

Read our article to understand the different types of tax deductions available to you and how to avail them.

Want to know what other tax deductions you can claim?

Read our article to understand the different types of tax deductions available to you and how to avail them.

The investments can either be made in 12 instalments or in lump-sum. The minimum number of instalments in a year is 1 and the maximum number of instalments cannot exceed 12.
Investments can be made in cash or cheque. In case of cheque, the date of realization of a cheque in Govt. account shall be the date of opening of an account.
PPF account gives a benefit of a tax deduction on deposit, assured returns on investments and tax-free withdrawal on maturity.
Maturity period is 15 years but the same can be extended within one year of maturity for a further 5 years.
An account can be opened for a minor as well. One condition for this is that the maximum investment limit should be the addition of balance in all accounts. There is no facility for opening a joint account.
A nominee can be added at any time i.e at the time of opening and also after the opening of an account. An account can be transferred from one post office to another.
Premature closure is not allowed before 15 years i.e. you are not allowed to close your PPF account until it matures.
Loan facility is available from a 3rd financial year from the year of opening account.
Partial withdrawal facility can be availed from 7th financial year onwards

Want to open a PPF account?

Here is a step by step guide on how to open a PPF account.

Want to open a PPF account?

Here is a step by step guide on how to open a PPF account.

Who can invest in PPF?

An individual can invest in PPF. The minimum investment amount is Rs 500/- and the maximum amount is Rs 1,50,000/- for a year. It is suitable for freelancers and proprietors. Deposits made under PPF qualify for deductions under Sec. 80C and interest earned are tax-free.

Want to know what 80C covers?

Read our article here to see all the deductions you can claim under this section and reduce your tax liability.

Want to know what 80C covers?

Read our article here to see all the deductions you can claim under this section and reduce your tax liability.

FAQs

Is interest on PPF taxable?

No. The deposits fall under the EEE (Exempt, Exempt, Exempt) tax category. This means that:
– Deposits made under PPF scheme are allowed as deduction under section 80C.
– Interest earned on these deposits in exempt from tax; &
– Amount withdrawn from the PPF account is also exempt from any tax.

How many PPF account can I open?

You can open one PPF account every 15 years. However, at any given time, you can only have one account in your name.

Can I have both EPF and PPF account?

Yes. It is plausible for an Individual to have an EPF and a PPF account at the same time.

Got Questions? Ask Away!

Ridhima_Sharma says:

09/02/2021

sushil_verma:

Can I save more than Rs 1.5 Lakh in Taxes through deductions?

Hey @sushil_verma

There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.
Maharshi_Shah1 says:

03/04/2021
Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

For eg,
- Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
- Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
- Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.
Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.