Public Provident Fund Rules
1. The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
2. The Scheme is for 15 years.
3. Public Provident Fund Interest Rate is fixed by the Ministry of Finance, Government of India, annually, and at present is 8.7% compounded annually (as of April 1st 2015 – March 31st 2016).
4. The minimum deposit is 500/- and maximum is Rs. 1,50,000/- in a financial year.
5. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
6. The deposit can be in lumpsum or in convenient instalments, not more than 12 Instalments in a year or two instalments in a month subject to total deposit of Rs.1,50,000/- per Financial Year.
8. The account in which deposits are not made for any reasons is treated as discontinued account and such account cannot be closed before maturity.
9. The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
10. Account can be opened by an individual or a minor through the guardian.
11. Joint account is not permissible.
12. Those who are contributing to GPF Fund or CPF/PF account can also open a PPF account.
13. A Power of attorney holder can neither open nor operate a PPF account.
14. The grand father/mother cannot open a PPF account on behalf of their minor grand son/daughter.
15. The deposits shall be in multiple of Rs.100/- subject to minimum amount of Rs.500/-.
16. The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit of Rs.1,50,000/-.
17. No age is prescribed for opening a PPF account.
18. According to Public Provident Fund Scheme 1968, the facility of loan against the PPF deposits is available from 4th to 6th year of deposit to the extent of 25 % of the amount deposited as at the end of the last financial year. The loan is repayable in 36 months. There is a lock-in period of 15 years and the money can be withdrawn in whole after its maturity period. However, pre-mature withdrawals can be made from the end of the sixth financial year from when the commenced. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.
19. Public Provident Fund Withdrawal or Pre-mature closure of a PPF Account is not permissible except in case of death
20. Nominee/legal heir of PPF Account holder on death of the account holder cannot continue the account, but account has to be closed.
21. The account holder has an option to extend the PPF account for any period in a block of 5 years on each time.
22. The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.
23. One withdrawal in each financial year is also admissible in such account held beyond 15 years subject to a ceiling of 60% of the balance at the end of the 15 year term.
24. The PPF scheme is operated through Post Office and Nationalized banks through its authorized branches as per GOI notification.
25. Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office.
26. Account is transferable from one Bank to another bank as well as within the bank to any branch.
27. Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
28. The interest on deposits is totally tax free.
29. Deposits are exempt from wealth tax.
30. The balance amount in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
31. More than one person nomination facility available.
32. Best for long term investment.
33. The best time for deposit in the PPF a/c is between 1st to 5th of the month as any amount deposited upto 5th of the month ( Interest is calculated on the balance between 5th and last day of the month)
Documents Required for PPF Account
Documents for the PPF account are similar to the any other account in banks.
1. A recent passport size photograph.
2. Identity Proof copy with original to verify (Even PAN Card may be accepted as all tax payers are having it).
3. Address Proof copy with original to verify.