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5 Things To Remember About Ppf Scheme

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By Author: neha sharma
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"Introduced in 1968, the public provident fund is a savings-cum-tax saving investment vehicle. The scheme is one of the most sought-after investment plans to park your savings for retirement. PPF is a 15-year plan, which can be extended for a block of 5 years. You can open the account in a designated post office or a bank branch. One can open a PPF account in almost all Indian nationalised banks like SBI, Bank of India, and Central Bank of India as well as private sector banks like HDFC Bank, ICICI Bank and Axis Bank.

Therefore, if you are looking for a safe investment option, you should consider opening a PPF account and earn guaranteed returns. Here are few details on the scheme:

1) Tenure:

The PPF scheme is a 15-year scheme. As per rules, the Public Provident Fund (PPF) account gets matured only after the completion of 15 years. However, on maturity, the tenure can be extended for a block period of 5 years. It can be done by submitting the Form H within one year from the date of maturity.

2) Interest:

The interest rates on the PPF scheme returns are set by government every quarter based on the yield (profits) of government securities.

3) Investment limits:

The minimum annual amount needed to keep the public provident fund account active is Rs.500, while the maximum amount deposited in a financial year is up to Rs.1.5 lakh. If the contributions made in a year exceed Rs.1.5 lakh, the excess deposits will be treated as an irregular amount and won’t be eligible for tax benefits. The excess amount will be settled back to the subscriber without any interest.

4) Tax benefits

Under Section 80C of the Income Tax Act, 1961, PPF contributions made every year are eligible for tax deductions. The tax deductions are eligible only for PPF contributions up to Rs 1.5 lakh in a financial year. Interests earned on PPF deposits are tax-free, while wealth tax is not applicable on PPF accounts. Therefore, these accounts offer you triple exemption benefits – the deduction on deposits, tax-free returns and no wealth tax. To claim these benefits on your public provident fund account, you need to submit the details of the PPF investments made in a year in your income tax returns.

5) Premature closure of PPF account:

The PPF scheme allows withdrawals from the account only if it has completed five financial years. The retreats are also allowed on specific grounds such as treatment of serious ailment or life-threatening disease of the applicant, spouse or dependent children or parents, only after producing supporting documents from official medical authorities.


Author Bio:- Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching on public provident fund account. Through her work, she provides details about the government investment scheme.

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