Public Provident Funds is a long term government-backed scheme for 15 years. To invest your savings in PPF scheme, you need to deposit a minimum balance of Rs. 500 and the maximum investment cap for the deposit is Rs. 1.5 Lakhs in a financial year. The biggest attraction of Public Provident Funds is that the scheme is EEE ( Exemption-Exemption-Exemption) which means that amount deposited, interest earned and the amount received at the time of maturity is exempted from the taxes. The investment scheme is free of market risks, and the interest rates are fixed by the finance minister every quarter.
Rules for opening an account in PPF Scheme: Opening a PPF account is secure, and anyone can easily open a PPF account unlike Provident Fund that requires employment and has different implications.
Who can open a PPF account:
- Any Indian resident can open the PPF account if they have reached the age of 18 years.
- According to the PPF rules, residents are permitted to open only one account per person.
- Parents can open a PPF account for their children who are still minors. However, the grandparents are not permitted to open a PPF account.
- It is not permissible for the non-residents of India to open a PPF account, but they can continue their PPF accounts if they had a statement when they were still the residents of India.
- If anyone wishes to open a joint account with someone, it is not permissible.
- Under PPF rules, Hindu Undivided Family cannot open PPF accounts; however, they can continue their account if they already have an account.
How to open a PPF account: PPF account can be opened easily visiting any nearest bank or post office. You need to submit the necessary documents such as proof of identity( Aadhar Card, Pan Card, Passport, etc.), Address proof and signature proof. On submission of these documents, you need to make a minimum deposit of Rs. 500 in the PPF account. PPF accounts can also be opened, and money can be deposited in the PPF account online.
Withdrawal of funds from PPF account:
- The maturity period of PPF accounts is 15 years and funds can be withdrawn after the maturity period.
- However, in case of any emergency like treatment of any ailment or for the education of the minor, the premature closure of PPF account after five years is possible. The required documents, such as a medical bill or admission fee document, is to be submitted as proof.
- The depositors can also partially withdraw funds at the end of 7th year from the time of depositing the funds in the PPF account. You can withdraw 50% of the total funds deposited.
- A loan against PPF account can also be taken at the end of 3rd financial year; however, funds need to be returned at the end of 6th year.
- On the death of the depositor before the maturity period, the amount of returns can be claimed by the legal heirs of the depositors. They can claim after submitting the death proof.
Rules for depositing and withdrawing money in PPF account after a tenure of 15 years:
Public Provident Fund is a long term investment scheme for a period of 15 years. However, if one wishes to continue their account, they can do so with a block of 5 years and can earn tax-free interest as well. It is not mandatory to contribute to the account to keep the account open, however making contributions can provide you with high tax-free returns on the amount invested. People can make use of an online PPF Calculator also for better results.
Withdrawal after 15 years: If one wishes to keep their account open but wants to withdraw some funds for usage after 15 years they can do so once a financial year. There is no cap for the amount you can withdraw during this time. In cases where individuals invest for an extended period of 5 years after the maturity period of 15 years can withdraw the funds once every financial year. Still, the total amount of funds that are withdrawn should not exceed 60% of the value of balance at the end of 15 years.