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Public Provident Fund (PPF) - Best way to avail tax benefits along with disciplined savings

  • Posted On 20 August 2013
  • By Admin
  • In Money

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IMinfo.in - Public Provident Fund Information

PUBLIC PROVIDENT FUND

Public Provident Fund (PPF) is a scheme of the Central Government, framed under the PPF Act of 1968. Briefly, the PPF is a government supported, long term small savings scheme which was primarily started by the Government because it wanted to provide retirement security to self-employed individuals and workers in the unorganized sector but now one of the favourite way to avail tax benefit along with savings as it enables the members of the public to make contributions to the Fund and obtain Income Tax rebate under the relevant provisions of the Income Tax.


Eligibility


  • Individual (Salaried or Self-Employed or any other category)
  • Individual on behalf of a minor

Minimum / Maximum Investment ( w.e.f. 01-12-2011 )


  • Minimum Rs.500/- per annum in multiples of Rs.5/- .
  • Maximum Rs.100,000/- per annum.

Duration


  • 15 years.
  • Can be extended for one or more blocks of 5 years.
  • Account can be discontinued but repayment of subscriptions along with interest only after 15 years.

Rate of Interest

8.7% (w.e.f. 01-04-2013) per annum credited in account on 31st March every year calculated on the minimum balance between 5th day and end of the month.


Loans Availability

Loan upto 25% of balance at the end of first financial year from third to sixth year. Second loan can be taken on full payment of first loan.


Withdrawals

Only one withdrawal allowed during any one year from sixth year. Withdrawal limited to 50% of the balance at the credit at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower.

The account extended beyond 15 years; partial withdrawal allowed up to 60% of the balance to the credit at the commencement of the extended period.


Tax Benefits


  • Benefit available u/s 88 of the I.T. Act.
  • Interest totally exempt from Income Tax.
  • Amount standing to the credit is fully exempted from Wealth Tax.

Other Facilities


  • Subscription in one or more maximum 12 instalments.
  • Nomination available in the name of one or more persons.
  • Nominee cannot continue account of the deceased subscriber in his/ her own name.
  • An account may be transferred at the request of the subscriber free of charge by one branch of State Bank of India or its Associates to Head Post Office or vice versa.
  • Premature closure of a PPF account on grounds of genuine hardship could be considered only after the expiry of five years from the end of the year in which the account was opened.
  • The subscriber may discontinue his account any time after joining the fund. The repayment of the subscription with interest will be made only after 15 years form the end of the financial year in which the account was opened.
  • Discontinued account can be revived on payment of Rs.50/- per year along with arrears of subscription of Rs.500/- per year.

Hope you all like this post about PPF A/C.


Click here to read step by step guide to open PPF A/C in State bank of india.


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