Public Provident Fund (PPF)

What is PPF ?

PPF schemes are very popular among investors. The National Savings Institute established the Public Provident Fund PPF Scheme in 1968. The Indian government supports this scheme. As a result, the returns are guaranteed. Section 80C of the Income Tax Act exempts the investment and interest earned from the PPF scheme. As a result, this scheme is one of India’s most popular tax-saving and money-saving schemes.

What is the Eligibility for PPF accounts?

     A PPF account can be opened by any resident Indian.

     An investor, however, can only have one account in their name and cannot open a second account on behalf of a minor.

     Furthermore, a PPF account cannot be opened jointly. It can only be held in one person’s name.

     In addition, Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not eligible to open a PPF account.

     NRIs, on the other hand, opened PPF accounts as resident Indians and can continue to operate them until maturity. They will not, however, be permitted to seek extensions.

     Furthermore, if an investor opens an account in their name and the name of their child, the total amount that they can invest (in both accounts together) in a fiscal year is Rs.

1.5 lakh.


The PPF account has a 15-year lock-in period that can be extended. If there is no need for funds, it is always a good idea to keep the account open for more than 15 years. The account holder has the option of extending the duration by a 5-year block. Furthermore, there is no limit to how many times an investor can extend their account.

An investor can always keep their account after maturity without making any additional deposits for any period of time. They will continue to earn interest on the account balance until it is closed.


The account holder may nominate multiple people. If they choose to nominate more than one person, the percentage of shares must be specified. Furthermore, all nominees’ shares should total 100%.

Where to start

Anyone can open a PPF at a post office or a partnered bank by submitting the necessary documents.

Account Switching

     Your PPF account can be transferred from a bank to a post office and vice versa.

     Accounts can also be transferred between branches of the same bank/post office.

     You must make a transfer request at your home branch.

     The new branch verifies and notifies the form’s receipt.

In addition to the transfer request, the following documents must be submitted:

     Form for Nomination

     Passbook for the PPF

     Account certification copy

     Original account application form.

     A demand draught or check for the unpaid balance

Why should someone open a PPF account? 

Here are some of the major PPF advantages that can be obtained by investing in PPF.

Tax advantages

The most common reason for opening a PPF account is the substantial tax benefit. The principal amount is exempt from taxation as long as it does not exceed Rs.1.5 lakhs. Section 80C of the Income Tax Act contains the laws that govern this. When the amount is redeemed after maturity, it is still tax-free. As a result, you can invest up to Rs.1.5 lakhs tax-free each year.

     Returns that are consistent and secure

PPFs are stable investments with a lot of certainty and safety for risk-averse investors because they are government-backed schemes. Because it is a government-guaranteed scheme, you can easily build a retirement corpus for yourself with this instrument.

     Long-term commitment

An investor must commit to a PPF account for a period of fifteen years. As a result, you can easily use the funds to plan for your children’s higher education or retirement. Even after the 15-year lock-in period has expired, you can keep the investment going by extending it for five years at a time.

     Partially withdrawn funds

While partial withdrawals from the PPF account are permitted, they are only permitted after the fifth year. The maximum withdrawal amount is equal to 50% of the account balance at the end of the previous year.

     Loans from the PPF

Individuals can borrow against their PPF account between the third and sixth years after opening one. Borrowers will have three years from the date of disbursement to repay the loan amount.

These are some of the significant advantages of opening a PPF account.

PPF New Regulations

To the benefit of account holders, the Government of India recently notified new rules for public provident funds or PPF accounts. PPF is a popular small savings scheme that provides a guaranteed return. PPF accounts have a 15-year maturity period, and the government announces interest rates each quarter. The current annual interest rate on PPF is 7.1%. For a calendar month, interest is calculated on the lowest balance at the credit of an account between the close of the fifth day and the end of the month. At the end of each year, interest is credited to the account.

The new PPF rules are explained in detail below.

According to the new PPF deposit rules, an account holder can make deposits in multiples of Rs. 50 as many times as they want during the fiscal year, with a maximum combined deposit of Rs. 1,50,000. Previously, a maximum of 12 deposits could be made in a single year.

The government allows the premature closure of PPF accounts under certain conditions and only after five years of account opening. Premature closure is permitted under current regulations.

Treatment of a life-threatening disease of the account holder, his spouse, dependent children, or parents, subject to the production of supporting documents and medical reports from the treating medical authority.

Higher education for the account holder or dependent children upon production of documents and fee bills confirming admission to a recognised institute of higher education in India or abroad. The government has now added a new criterion for the premature closure of a PPF account: the account holder’s change in residency status upon production of a copy of their passport and visa or income tax return.

Loans from PPF accounts are available to account holders. The rates at which the account holder can borrow from his account have been reduced from 2% to 1% above the current PPF interest rate under the new rules. In the event of the account holder’s death, the nominee or legal heir is obligated to pay interest on the loan taken out by the account holder but not repaid before his death. The amount of unpaid interest will be adjusted at the time of the account’s final closure.

The previous limit was Rs. 25,000. The same is true for post office recurring deposits, PPF accounts, and Sukanya Samriddhi accounts.

AII POSB cheques issued by any CBS Post Office should be treated as at par cheques and should not be sent for clearing if presented at any CBS Post Office. POSB cheques can be accepted at other SOLs or service outlets (without a limit on the amount) for credit in POSB/RD/PPF/SSA accounts, subject to the scheme’s limits, if any.


The Public Provident Fund PPF scheme is a safe investment instrument for tax savings. Because the PPF scheme is backed by the Government of India, the returns on such investments are guaranteed. As a result, the returns on such investments are guaranteed. PPF is a good option for investors who have a low risk tolerance and want fixed returns. This scheme provides investors with numerous tax advantages. In other words, PPF investments are tax-free for individuals. Individuals can use PPF to get a tax break under Section 80C. More information is available on the PPF’s official website.