Introduction of PPF

A great product for safe, government backed and tax beneficial investment. Current interest rate is 8.80% compounding annually. Tenure is 15 years with a minimum investment of Rs.500 .

What are the tax benefits?

» The PPF corpus is tax-free at all three stages. The investment is eligible for tax deduction under Section 80C. The interest earned is also tax-free, and so are withdrawals and maturity.

What is the minimum investment?

» An investor has to put in at least Rs 500 in his PPF account in a year. You will be levied a penalty of Rs 50 if you fail to do so.

What is the maximum investment?

» The investment limit is Rs 1 lakh a year through a maximum of 12 instalments. If the minor child has a PPF account, the combined limit for both accounts will be Rs 1 lakh. If one invests more than the Rs 1 lakh in a year, any interest earned by the excess amount will be reversed. Amount invested more than Rs.1,00,000 will not be eligible for interest and for tax benefit under Sec 80C.

What are the Operational Features?

• PPF account can be opened at Post Office or select nationalized banks.
• You are eligible to open only one PPF account in your name. But if found to be you have more than one account then your second account will be deactivated. You will receive only principal of what you paid.
• You can’t open PPF in Joint Holding.
• But you can open PPF account in your spouse or minor child name.
• You can’t invest more than 12 installments in a year.
• This account can’t be attached for your debt or liability. So this is totally safest form of investment.


» NRIs can’t open account. But they can continue their existing account till it maturity only. No extension is possible for them.

Account Transferable?

• PPF can be transferred from one place to another place or among the PPF service providing institution.
• But can’t be transferred from one name to another.

Once your account completes 15 years then what options do you?

a) You can withdraw your complete amount.
b) You can extend for a 5 years block as many times as you wish.
c) You can continue earning interest without contributing or extending the term.