Deposit Limit for Public Provident Fund

The Ministry of Finance devised the PPF Scheme in 1968. It’s an opportunity for tax-free savings as the interest accrued on deposits in a Public Provident Fund account are exempt from tax. Any deposits you make towards your Public Provident Fund account are also eligible for tax deductions, making the scheme very efficient for Indians. In fact, the scheme was launched to promote savings among people in the country, especially to prepare for retirement.

PPF Accounts

Individuals can deposit money into the PPF accounts on a regular basis for a set period of time as doing so will ensure that they earn yields on savings. For 2015-2016, the rate of interest stands at 8.7% per annum. Owing to the fact that the scheme was introduced to promote savings among working class individuals in the country, the requirements for minimum deposit are relatively low, making it affordable to people of different classes. The accounts are also tax-free, making them safe and easily accessible. They can be understood with ease and have grown to become one of the biggest investment avenues for a significant part of the Indian population.

Any authorised, nationalised banks and branches or post offices can open Public Provident Fund accounts. These accounts can also be started at certain private banks. The opening of these accounts require applicants to fill out specific forms and submit the required documents before making the minimum deposit at the authorised offices or branches. The government of India is responsible for determining and announcing the rates of income for Public Provident Fund accounts, and the calculation of interest for each financial year is based on the rate set by the government.

Interest rates and deposits

PPF accounts work conversely in comparison with bank FDs in the sense that rates are subject to change during the tenure of the scheme. The maximum deposit amount can also change over a period of time. The tenure of a PPF scheme is usually 15 years and individuals can continue to use their accounts for five years post maturity. Customers have the option to decide whether or not they wish to make extra deposit during each renewal. The initial deposit to open a PPF account is Rs. 100 and the annual deposit to be made by customers ranges from Rs. 500 to Rs. 1.5 lacs per annum but is subject to change from the government.