Public Provident Fund (PPF) in Post Office
Introduced in the year 1968 by the Ministry of Finance, the PPF is a savings instrument that comes with tax benefits. All citizens of India above the age of 18 are eligible to open a PPF Account. Coming with a lock-in period of 15 years, customers can make contributions towards the PPF - with the minimum being Rs.500 per year and a maximum of Rs.1.5 lakh per year. A maximum of 12 contributions can be made into a PPF Account in a year. Citizens of the India can open PPF accounts either at any nationalized bank in the country or at any post office.
Eligibility to open PPF Account in Post Office
- Any Indian citizen whether a salaried employee or self-employed is eligible to open a PPF account in a post office.
- In the case of minors, the parents or guardian of the minor can open a PPF account in a post office on behalf of the minor.
- For NRIs that have moved abroad: After opening a PPF account can continue holding the account and make contributions towards it till the account reaches maturity.
Procedure to Open PPF Account in Post Office
The procedure to open a PPF account in a post office is simple and the steps are mentioned below:
- You must visit the nearest post office or sub-post office to receive an application form. The application form can also be downloaded from the India Post website (https://www.indiapost.gov.in/VAS/DOP_PDFFiles/form/PPFActOpening.pdf).
- You must fill the form and submit it at the post office with the relevant KYC documents and a passport size photograph.
- Initially, the minimum amount that is required to open an account is Rs.100. The maximum amount that can be initially deposited is Rs.70,000. However, the minimum and maximum amounts that can be deposited in a financial year are Rs.500 and Rs.1.5 lakh.
- You will receive a passbook after the initial payment is made and all the documents are submitted. Name of the account holder, branch name, PPF account number etc., will be mentioned on the passbook.
In case you do not want to invest your money in the risky and volatile market, investing in a PPF account is safe. The process to transfer funds easily through online access makes it a convenient scheme to invest in. The interest that is earned on maturity is also tax-free.
Documents required to open PPF account in Post Office
When applying for a PPF account, applicants are required to submit the below listed documents.
- Identity proof - Passport, Voter’s ID, Driver’s license, licence, etc.
- Address proof - Passport, Voter’s ID, Driver’s license, licence, etc.
- PAN card
- 2 passport size photographs
Features & Benefits of Post Office PPF
For those wishing to open a PPF account, listed below are the features and benefit of a Post Office PPF Account:
- Post office PPF account come with a lock-in period of 15 years. Upon maturity, PPF account holders have the option of either extending the account tenure for a period of 5 years or making a complete withdrawal from the scheme.
- No premature closure is allowed before the lock-in period of 15 years.
- All deposits are entitled to tax deductions under Section 80C of the Income Tax Act.
- The minimum deposit amount for a year is Rs.500 while the maximum is Rs.1.5 lakh. PPF account holders can make a maximum of 12 deposits in a year. Deposits can be made via cash, cheque, or online.
- Parents and guardians can open PPF accounts on behalf of minors.
- The interest rates on PPF deposits are revised every quarter. Currently, the interest rate on deposits is 8.0%, which came into effect in 1 Oct 2018 and will be effective till 31 Dec 2018.
- Partial PPF withdrawals can be made from the commencement of the 7th year of the scheme.
- Deposits made in a PPF account can be at no point attached under a court decree, thus enhancing the safety of one’s savings.
- When opening the PPF account, account holders can make nominations. The nominee will receive the deposits in case of untimely death of the account holder.
- Applicants cannot open joint accounts in the PPF scheme.
- From the commencement of the third year onwards, PPF account holders can attach a loan against the PPF deposits. The loan amount attached is subject to a maximum of 25% of the savings in the PPF account.
Post Office PPF Calculator
Using the Post Office PPF calculator, PPF account holders can make calculations of the interest earned over the lock-in period and the final maturity amount. To make the calculations, PPF account holders have to enter the following information:
- Year of joining,
- Current interest rate on PPF deposits
- The deposit amount at the start of the year.
The tool uses this information to display the approximate interest one will earn and the total maturity value of the PPF account at the end of 15 years.
Interest rate for Post Office PPF
The interest rate for the Post Office PPF is revised every quarter of the financial year. The current rate of interest applicable on PPf accounts is 8.0%, which came into effect in 1 Oct 2018 and will be effective till 31 Dec 2018. With effect from 1 January 2019, the rate of interest is 8.0% p.a. and it is compounded yearly. According to the post office website, the interest that is earned is tax-free.
1. Can you tell me what the lock-in period is for a Post Office PPF account? Does this mean I can’t make withdrawals from the PPF deposits?
The Post Office PPF account has a lock-in period of 15 years. Once a customer enrolls into it, it cannot be closed before the completion of the lock-in period. PPF account holders can make partial withdrawals from the beginning of the 7th year of the scheme. These partial withdrawals can be made only up to 50% of the PPF savings accumulated.
2. Can I avail an extension in the account tenure after the 15 year lock-in period?
PPF account holders can make an extension of 5 years after the 15 year lock-in period.
3. Will tax be added on the interest accrued in a PPF account?
All deposits as well as the interest earned is exempted from tax.
4. What if I relocate? Will I have to close my PPF account?
No, all you have to do is apply for a transfer from one post office to the post office now close to you. This can be done by filing for a transfer via the form, submitting your KYC documents, current passbook and so on.
5. How accurate is the PPF calculator?
The PPF calculator makes an estimate - just to give you an idea of how much you can save. It cannot be completely accurate as the PPF interest rates are revised every quarter.
6. What is the minimum and the maximum amount that can be deposited in a post office PPF account in a year?
Account holders can make deposits of as low as Rs.500 into their PPF account in a year. The maximum amount that can be deposited into a PPF account is capped at Rs.1.5 lakh.
7. Is there any limit on the number of times an account holder can make deposits into their PPF account?
Yes, as per the rules laid down, an account holder can only make 12 deposits into their account in a year.
8. Is the PPF facility only offered at post offices?
No, customers can also open a PPF account at any nationalised bank that offers the facility. Some nationalised banks that offer PPF accounts are State Bank of India (SBI), Canara Bank, Punjab National Bank, Corporation Bank, Bank of Baroda, among many others. The facility is also offered by major private banks such as ICICI Bank, Axis Bank, and HDFC Bank.
9. I am a self-employed individual. Can I open a PPF account?
Yes, a PPF account is not only available to salaried employees but also self-employed individuals.
10. I have a 10-year old child for whom I would like to open a PPF account. Can I do so?
Yes, you can certainly do so. In case of minor children, the PPF account opening guidelines allow parents or guardians of minors to open a PPF account on behalf of the latter.
11. If a non-resident Indian ,who had opened a PPF account in India but migrated abroad while the account was in the lock-in period, still make deposits to the account?
Yes, NRIs who have moved abroad while their PPF account was in the lock-in stage can still make contributions to the account.
12. Can I get a PPF account opening form online or do I have to visit a post office to procure the same?
The PPF account opening form is available not only at the post office but also online. To download the form online, you must visit the India Post website. On the bottom portion of the website’s main page you can find several tabs, one of which is labelled ‘Forms’. Clicking on that tab will lead you to a new page which will contain 5 different sections, one of which is ‘Saving Bank’. Under this section, you can find the downloadable PDF format of the PPF account opening application form.
13. Can a resident-turned-NRI PPF account holder avail the account tenure extension of 5 years?
No, the facility of deposit tenure extension is not provided to those individuals who may have opened
an account and then migrated abroad and achieved the status of NRIs.
14. Is there any online tool using which i can calculate the interest that i will earn in my PPF account?
Yes, there is a special online tool known as a ‘PPF Calculator’ which will help you do just that. This tool is available on the websites of several leading banks that offer the PPF account facility, and also on some third-party websites like Bankbazaar.
15. What information will I need to provide in order to calculate the interest using the PPF Calculator?
To calculate the interest that you will earn, you must provide some account-related information like the year in which you started your PPF account, the amount that you have deposited into the account at the start of the year, and the interest rate currently applicable for PPF accounts.
16. What is the procedure to open a PPF account with a post office?
To open a PPF account with a post office, you must first gather all the necessary documents. Obtain the form from the post office and fill it up correctly. You will need to provide the details of the nominee that you will be choosing for this account. Also make sure to take some original identity proof with you for the purpose of verification. To open the account, you will require to provide the signature of one witness after which the account opening formalities will be complete. You can open your PPF account with a minimum initial deposit of Rs.100.
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