8 Things You Must Know About Public Provident Fund

Public Provident Fund or PPF is one of the safest investment instruments in India through which not only savings but tax-savings too can be done. PPF was introduced by National Savings Institute of the Ministry of Finance in the year 1968. The scheme was introduced to mobilize savings and provide benefits in terms of returns and tax savings to Indian citizens. It is a long term scheme and is supported by the Government of India. If you are delving on saving in a PPF, here are some facts and features of Public Provident Fund that you must know:

1. Opening a PPF

The PPF account can be opened by any citizen of India and in name of minors too. The scheme is not open for Non Resident Indians; thereby NRIs cannot open a PPF account in India.

2. Investment

The deposits in PPF can be made in the form of 12 monthly installments or in lump sum amount as a whole, every year. However, the minimum amount is ₹500 whereas the maximum amount for investment is set to ₹1,50,000 for a given fiscal year.

3. Loans and Rules

A person can also take loan from the PPF account from the 3rd year of investment but the facility is available only till the sixth year.

4. Withdrawals

The withdrawals are allowed for the account holder from the 7th year of opening the PPF.

5. Tax Benefits

The Tax Benefits are available under Section 88 of the Income Tax Act. The income which is accrued as interest, is totally tax free. There are benefits provided in wealth tax too.

6. Account Transfer

The facility of transferring the account is also provided and one can transfer the account from one post office to another post office.

7. Opening through Banks

You can open a PPF account through the help of banks where you can get additional benefits such as Transferring funds online, viewing the status of account through the online banking, among other things.

8. Closure of PPF Account

Premature closure of PPF account is not allowed generally; however one can avail closure of account in specific situations like, Medical treatment of the account holder after completion of five years of account opening, also for the higher studies after completion of five years, etc.