PPF Account

Public Provident Fund Scheme (PPF Account)

by Ankit Jaiswal on Basic Finance, Investing Basics
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What is the Public Provident Fund Scheme?

Public Provident Fund Scheme (PPF Account) is a popular investment option introduced by the ministry of finance, which offers attractive return (which is completely exempted from tax) along with a reasonable safety.

An investor can start with a minimum investment of Rs 500 to a maximum of Rs 1,50,000 in a financial year and can avail other facilities like withdrawal, loan, and extension of account.

The goal is to mobilize savings by offering an investment with a decent return along with income tax benefits.

To start investing to get decent return along with income tax benefits you can take help of Kredent Money App.

Moreover, it aims to encourage savings amongst the masses and motivate them to create a retirement corpus.

Also Read7 Government of India Schemes to Invest for Social Security

 What is the Eligibility for opening PPF Account?

a. An individual, being an Indian resident and above 18 years can open only one account in his/her name. However, there is no upper age for opening the account.

b. A minor can also open a PPF Account but the maximum limit of Rs 1,50,000 per year applies collectively to minor and his guardian.

You can also read: How and where to Invest for your Minor Child?

c. HUF, NRI and Foreigners cannot open the account.


What are the Key Features of PPF Scheme?

Some of the key features of PPF schemes are as follows-

1. Attractive Rate of Interest

It offers an interest rate of 7.6% which is fully exempted from tax.

2. Long-term investment

One has to be invested for a time period of 15 years and it helps individual to accumulate a lump sum amount for the retirement.

3. Low investment

You can start your investment from as low as Rs 500 and this encourages especially the poor masses to develop a habit of savings.

4. Withdrawal facility

Partial withdrawal option can be availed only from 7th year onwards.

5. Availability of loan

The facility of loan can be availed between the 3rd and 6th financial year of opening the account.

6. Extension of Account

One can extend his/her account in a block period of 5 years after the maturity.

What are the Benefits of investing in PPF Scheme?

1. Tax-free return

Investment in Public Provident fund (PPF) is completely exempted from tax.

2. Attractive long-term investment

It helps in fulfilling long-term goals with a deposit period of 15 years and lock in period of 7 years.

Moreover, it offers effective return as compared to bank FDs and the interest rate is also compounded annually.

3. Easy accessibility

The account can be opened at post offices, public banks or selected private banks.

Moreover, you can open the account online as well.

4. Lower risk

There is a very low risk of default since it is government backed.

5. Suitable for retirement planning

It is suitable for building a retirement corpus due to features like long-term tenure, tax-free return, compounding benefit and a better interest rate vis-a-vis bank FD.

Know MoreWhy is Retirement Planning Important?

6. No attachment

PPF funds can’t be attached under court order or laid claim to by creditors.

How to open a PPF Account?

One has to show KYC documents like address proof, identity proof, and signature proof.

You will need the following things to open the account-

i. PAN Card, Passport, Aadhar Card, Voter’s ID, Driving License, Employer’s letter, Utility Bill, Rental/Lease Agreement, Ration Cards.

ii. Signed Cheque

iii. Bank Account Statements

iv. Photographs

v. Account opening form along with nomination form

vi. Other necessary documents like minors birth certificate in case of minors

Forms for PPF Account

There are various forms from A to H pertaining to PPF account, which are issued for some specific purpose.

Form A– This form is issued to open a new Public Provident Fund account.

It requires key detail of the account holder like name, address, PAN card details etc.

Moreover, you need to specify the amount to be deposited.

Form B– This form is used to deposit or repay loans taken against PPF account.

These pay-ins or deposits may be repayments, investments, loan taken against the account or penalties.

One can deposit the amount through cheque, cash, internet banking, DD or PO.

Form C– This form is an application to withdraw a partial amount from PPF account.

The applicant is required to fill in the amount to be withdrawn and the account number.

Form D– The account holder can request a loan against PPF account from year 3 to 6 of an active account.

However, you need to mention the PPF account number, the amount to be borrowed along with an undertaking that you will repay the amount along with interest within 3 years according to the rules.

Form E – This form is filled to add a nominee to the account and you can add more than one nominee for a single account.

You have to mention the name of such persons, address and the relation you share with them.

Form F– It helps in making changes to the nomination information in the PPF account.

You can add or delete nominee from the PPF account any time during the entire tenure.

Moreover, you can also alter the percentage allocated to each nominee.

Form G– This form is used to claim funds in a PPF account by a nominee.

In case of demise of the account holder, the nominee or the account holder can claim the funds in their respective PPF account.

This form is to be filled along with details like the name of the legal heir/ nominee of the holder.

Moreover, it also asks for confirmation from the claimant about the attachment of the death certificate of the holder.

Form H– It is used to extend the time period for a PPF account beyond the maturity of 15 years.

Say if the holder wishes to extend the tenure beyond 15 years, the individual can do so for another 15 years by submitting this form.

However, you need to specify the date of account opening and the account number.

How to calculate PPF interest?

A PPF calculator is a free tool offered online and it’s a great tool for those investing in Public Provident Fund scheme.

It is often seen on the website of bank, post-office or third party service providers.

How to renew the PPF account?

The account holder has an option to extend the tenure beyond 15 years and it can be extended to a 5-year block with or without further investment.

1. Without fresh investment

The account holder will continue to earn interest on the accrued sum after the maturity.

Moreover, the individual is free to withdraw the sum freely once, every financial year.

2. With fresh investment

The additional investment made will be added to the overall fund and the interest calculation will be made on the total funds.

But the individual is restricted to withdraw a maximum of 60% of the funds held at the start of each 5-year period of extension.

How to withdraw PPF amount?

An individual cannot close the PPF account before maturity i.e. 15 years.

You cannot withdraw the funds before maturity even though the account becomes inactive.

The account can be closed and the entire sum can be withdrawn along with the interest accrued on completion of 15 years.

There is an option of partial withdrawal of funds from the 7th year but however, the amount to be withdrawn is lower of –

a.50% of the overall balance at the end of the fourth year, counting from the year of withdrawal or

b.50% of the total balance at the end of the year, before the year of withdrawal. However, withdrawals are to be made only once in a financial year.

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FAQs on PPF Accounts

1. How to apply for this scheme through SBI?

You can apply for PPF by filling up Form A and then submit it to any SBI branch with the documents mentioned above. You need to mention the name of the branch where you wish to open PPF account in Form A.

2. Can somebody maintain more than 1 PPF account under his/her name?

No, an individual can maintain only one PPF Account except in cases where the account is opened on behalf of a minor.

3. What are the minimum and maximum amounts that can be maintained under this scheme?

The minimum amount to be maintained is Rs. 500 per annum and the maximum amount is Rs. 1.50,000 per annum.

4. Is there is any penalty when someone fails to deposit any amount in one or more financial years?

Yes, there is. A penalty of Rs. 15 is levied per year.

5. Can somebody extend the tenure of PPF beyond the maturity period?

By submitting form H, one can extend the tenure for 5 years beyond the maturity.

6. Can  I transfer PPF Account?

An individual has the option to transfer his/her PPF account from post office to any bank account and vice versa.

7. Is PPF account exempted from wealth tax?

Yes, it is exempted from wealth tax.


Investment in Public Provident Fund is a great way of investment for long-term and also motivates individual to create a retirement corpus.

Similarly, there is another tax savings fund called Equity Linked Savings Scheme (ELSS), which is also exempted like PPF.

You can check out a free ebook on Equity Linked Saving Schemes (ELSS) here.

It can generate higher returns as compared to Public Provident Fund but it’s a risky affair due to equity feature attached to it.

Take care and keep learning!!

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