PPF account in India – Basicofinvesting

Opening PPF account Online

Public provident funds can be opened Online or Via Bank Branch or Post office.
At the end you can find a Blog link which has explained exact process of opening a PPF account online with screenshots.

But before opening the PPF account you may also like to know the Benefits, Features and Interest calculation of Public provident funds.

What are major benefits OF PPF

Well, you would be shocked to know that PPF is highest paying investment in zero risk investment category.
PPF has EEE advantage (Exempt, Exempt and Exempt)
- E: Contribution or Deposits are non-taxable U/s 80 C of The Income Tax Act.
- E: Interest accrued is Tax free.
- E: Maturity/Withdrawal amount is non-taxable.
PPF is mentioned under Section 80C of the Income Tax Act. In terms of income tax implications, PPF accounts also qualify for EEE (exempt, exempt, exempt) tax category, which means you are not liable to pay tax at all three levels – investment, earning and withdrawal.
Instant loans can be availed from all the major leading banks with your PPF investment. PPF allows this benefits from 3rd financial year of your investment.
If you are in need of urgent money, you are allowed to do partial withdrawal from your PPF investment. This benefit starts from the 7th financial year of your investment.
You can continue your PPF investment even after the maturity date. Additional contribution is also allowed after the maturity. Read more

Interest calculation of PPF investment.

Minimum amount maintained in the PPF account (From 5th day of a Month till end of the month) is considered as principal amount on which credit interest is calculated.

With the below example let’s see how Interest calculation changes if you deposit amount on or before 5th day of a month and after 5th day of a month

Let’s say your Account balance on 1st June is Rs.10000.

You deposit Rs.5000 to your PPF account on 5th June. The interest for the month of June will be calculated on total amount of Rs.15000 (balance as on 5th October).
You deposit Rs.5000 after 5th October, say on 6th June, the interest for June will be calculated on Rs.10000 which is the balance on 5th October EOD. The additional Rs.5000 shall be considered for interest calculation in the next month i.e. July.

Hence, it will be beneficial if you deposit amount in your PPF account on or before 5th day of a month to get extra accrued interest.

Best and instant way to open PPF account online:

I have created my new online PPF account literary within 5 minutes. HDFC and AXIS bank is providing instant PPF account creation service.

And i preferred HDFC bank, so let’s see the steps in opening PPF account.

Step 1.

First Login into your HDFC net banking and browse to your left then click on “Offers” tab.

Step 2.

Second select the offer names as “Experience the convenient way to Save Tax!” and fill you details.
You should note that Minimum amount for initial payin is RS. 500 and Maximum is RS. 150000.

Step 3.

Click on the “Submit” button and you will receive the successful message and in case you already have an existing account you will see the below message.

Furthermore, If AADHAAR is linked to bank account already, PPF account opening form will be submitted, and you will receive a message that your account will be opened in one working day.
Online Public provident fund account opening is allowed only for customers having Linked AADHAAR card to the Bank account.

Is PPF investment worth it?

YES, PPF is a life saver especially for employees newly crossing Taxable income slab (RS. 250000 per annum). Further it is an efficient tax saving instrument to enjoy tax free returns and to build a good corpus at maturity with no risk

Loan on PPF

This post tries to answer any query which you have regarding loan on Public Provident fund

When Can I apply For a PPF Loan?

A PPF subscriber is allowed to take a loan from the third financial year. And this loan facility against the PPF account is available only till the end of the sixth financial year. For example, if a PPF account was opened in 2017-18, the first loan can be taken only from 2019-20. A PPF subscriber cannot take a new loan until the old loan has been paid off.

How much amount can I get as Quantum of Loan?

But the loan amount cannot exceed 25% of the balance available in the PPF account at the close of two years immediately preceding the year in which the loan is being applied for. For example, if a PPF account has a closing balance of Rs 2,00,000 in 2017-18, The maximum loan quantum can be Rs 50,000 only

How many times can loan facility be availed in a year?

A loan can be taken only once in a year even though the loan taken in the year is repaid in the same year.

What are the documents that are to be submitted for loan and what will be the Interest charged?

A PPF subscriber needs to submit Form D for a loan request. Interest is charged at 2% over the PPF interest rate. And the loan taken from the PPF account has to be repaid within 36 months

Which banks Provide Loan against PPF Facilties?

All Scheduled Commercial banks provide Loan against PPF Facilties. To name a few

State Bank Of India
Punjab National Bank
Bank Of Baroda
HDFC Bank
ICICI Bank

What If my tenure of 6 years of PPF have been completed?

You cannot avail loan facility against PPF any more but you can withdraw the corpus as per existing knorms. To know more about redemption read here.

What is the penalty if i fail to repay PPF loan on time ?

If the loan is not repaid within the prescribed period of thirty six months, interest on the amount of loan outstanding shall be charged at six per cent per annum instead of at two per cent per annum.

My Bank asks me to get personal loan Instead of PPF loan What should I Do?

Most of the bank offer PPF loan always try and get PPF loan as the interest charged against PPF loan is 2-3% less than the Personal loan

Everything you need to know about PPF account

What is the PPF Scheme?

Public Provident Fund (PPF) scheme is a long term investment scheme backed by the Government of India, framed under the Public Provident Fund Act, 1968. It offers safety with attractive interest rate and returns that are fully exempted from Tax.

Who can open account under PPF scheme?

a. Individual or individual as guardian of a minor can open the account. (account cannot be opened in Joint names).

b. Only one account can be opened by an individual in his/her own name.

What is the Limit of Subscription to a PPF account?

Minimum subscription of Rs.500/- and maximum of Rs.1, 50,000/- can be made in lumpsum or in 12 installments per financial year.

(The subscription limits stands enhanced to Rs. 1,50, 000/ per year w.e.f. 23.08.2014)

When does a PPF account mature and can PPF account continue with deposits after maturity?

The duration of the account is 15 years and the account can be continued for one or more blocks of 5 years without loss of interest on written request within 1 year from the date of maturity.

When is an account treated as Discontinued?

Where subscribers fail to subscribe the minimum amount Rs 500/- in a financial year, the account will be treated as discontinued. The subscriber in such cases will not be entitled to obtain a loan or make a partial withdrawal unless the account is revived. The subscriber cannot open another PPF account in addition to the discontinued one.

How can a Discontinued Account be revived?

A subscriber to a discontinued account may revive the discontinued account by payment of Rs. 50/- as penalty for each year of default along with arrears subscription of Rs. 500/- for each year.

What is the Rate of Interest under PPF ?

Interest rate is notified by the Central Government in official gazette from time to time. Currently it is 8.0% per annum.

Is nomination facility available under the scheme ?

Yes, the PPF scheme facilitates nominations of one or more persons. However, no nomination(s) is possible in case of minor account.

Can there be a change in nominations ?

Yes, changes to previous nomination(s) are possible by applying a fresh nomination(s).

Can a PPF account be transferred ?

Yes, the account is transferable to and from permitted branches of nationalized or private sector banks or Post Offices by submitting a request letter by the PPF A/c Holder to the existing Accounts Office.

Whether Loan facility or partial withdrawal is available under the PPF scheme ?

Yes, the depositor is eligible for a loan in the third financial year from the financial year in which the account was opened. Loan up to 25% of the balance amount standing at the credit of the account at the end of first financial year can be availed. Loan is repayable in 36 months. The rate of interest on the loan shall be at 2% per annum above the PPF interest rate.

The repayment of loan may be made either in one lump sum or in two or more monthly installments within the prescribed period of thirty six months. The repayment is credited to the subscriber’s account. After the principal of the loan is fully repaid, the subscriber shall pay interest thereon in not more than two monthly installments

The amount is limited to 50% of the account balance at the end of 4th year immediately preceding the year of withdrawal or at the end of the preceding year whichever is lower less the amount of loan if any drawn by him which is unpaid. If any account is continued after maturity, a partial withdrawal up to 60% of the balance of credit at the commencement of the extended period is permitted during the 5 years block period.

Can a PPF account continue with Deposits after maturity?

Yes, a subscriber may, after maturity of the PPF account, continue the account for one or more blocks of 5 years without loss of interest on written request within 1 year from the date of maturity.

Can a PPF account continue without deposits after maturity?

Yes, PPF account can be continued after maturity without making any further deposits. The balance will continue to earn interest at the notified rates. The subscriber can make one withdrawal of any amount in each financial year.

Can name of the account be changed on account of marriage of a female subscriber?

Yes, In the event of her marriage, a female subscriber may request for change in name of the account by submitting documentary evidence for the same.

How is the repayment of balance in the PPF account done after the death of the subscriber?

Upon death of the subscriber, repayment of the balance in the PPF account will be made to the Nominee or to the Legal heirs after submission of necessary documents.

Does the PPF account earn interest after the death of the subscriber?

Yes, the PPF account continues to earn interest at the notified rate even after the death of the subscriber.

Whether premature closure of the PPF account is allowed?

Not allowed except in case of death of the subscriber.

In what banks can I open the PPF account?

Public Provident Fund or PPF account can be opened at any of the nationalized banks like SBI, BoB etc and also at private sector banks like ICICI, Kotak etc.

U can also open PPF account at Post Offices also, But I would suggest you to stick to either nationalized banks or Private banks. Private Banks is much better because you would have that account as a salary account, which can also be used for investments like PPF, Insurance, Mutual funds investing through SIP, Trading account with Demat account, Gold investments and locker facility.

In that way, you can have only one account which can provide all services and also, since you are using all services you get extra facilities and discounts for many sites, shopping, travel etc. It becomes easier to keep a track of your earnings and expenses, so that you can plan your financial budgets better.

What are the income tax benefits available under PPF scheme?

Tax benefits under section 80C of Income Tax Act are available. Interest income is also totally exempt from income tax. Amount outstanding to the credit of PPF account is fully exempt from wealth tax. You will have to provide all the proof of 80C investments to your auditor at the time of filing your income tax returns.

If you are a salaried employee, your company has taken the proof of PPF and other income tax savings schemes to give you tax exemption in the current financial year. Your company is going to submit the same to income tax stating that you have shown PPF as proof of 80C investments. Hence it should be backed up with proof when filing returns also