PUBLIC PROVIDENT FUND (PPF) Scheme – 1968 of Indian Government...
The Scheme introduced by the National Savings Organization of Indian Government in 1968 to mobilize small savings. The Scheme offers an investment avenue with decent returns coupled with income tax benefits.
Public Provident Fund (PPF) offers best bet for conservative investors good returns and zero risk
Salient features of PPF (Public Provident Fund) Scheme
Eligibility
Individuals in their own name as well as on behalf of a minor can open the account at any Branch. As per extant instructions, opening of PPF accounts in the name of Hindu Undivided Family is not permitted.
Investment Limits
With effect from 01.12.2011, a minimum of Rs.500.00 (thereafter in multiples of Rs.5.00) subject to a maximum of Rs.1 lac per annum may be deposited. The subscriber should not deposit more than Rs.1 lac per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.In case the subscriber is not in a position to invest during a particular year(s), the account may be revived on payment of penalty @ Rs.50.00 per year along with arrears of subscription.
Duration of Scheme
Original duration is 15 years. Thereafter, on application by the subscriber, it can be extended for 1 or more blocks of 5 years each.RATE OF INTEREST- 8.70% per annum with effect from 01.04.2013. Interest will be paid on 31st March every year. Interest is calculated on the minimum balance between 5th day and end of the month.
Loans and Withdrawals
Loans and withdrawals are permitted depending upon the age of the account and balances as on the specified dates. Loans on PPF account can be availed from the third financial year excluding the year of deposit. Amount of such loans must not exceed 25% of the amount that stood to the account holder's credit at the end of the second year immediately preceding the year in which the loan is applied for. A fresh loan is not allowed when a previous loan or interest is outstanding. Interest Rate is 1% if repaid within 36 months and at 6% on the outstanding loan after 36 months. The repayment may be made either in lump-sum or in installments
TAX benefits
Income Tax benefits are available under Sec 88 of IT Act. Interest income is totally exempt from Income Tax. Amount outstanding to the credit is fully exempted from Wealth Tax also.
Nomination
Nomination facility is available in the name of one or more persons. The shares of nominees may also be defined by the subscriber.
Transfer of Account
The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charges.
Important Features of PPF Account
The PPF scheme is operated through Post Office and Nationalized banks. PPF account can be opened either in Post Office or in a Bank. These days even Pvt Banks like ICICI bank offers this account.Account is easily transferable between post offices or banks, even between post office and banks.
Deposits are exempt from wealth tax.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, but it can be attached by the Income Tax and Estate Duty authorities.
The PPF scheme is operated through Post Office and Nationalized banks. PPF account can be opened either in Post Office or in a Bank. These days even Pvt Banks like ICICI bank offers this account.Account is easily transferable between post offices or banks, even between post office and banks.
Deposits are exempt from wealth tax.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, but it can be attached by the Income Tax and Estate Duty authorities.
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