Returns
Interest 8.6% p.a. (compounded annually), w.e.f. 01-Dec-2011, is credited to the PPF account at the end of each financial year.
Investment Limitation
Min Amount :Rs. 500/- and additional investment in multiples of Rs 5/-
Max Amount Rs. 1,00,000/-
Scheme Availability
A PPF account can be opened at anytime during the year. It is open all through the year.
Mode of Operation
* Single
* Joint (Two or more)
* Minor with parent/guardian
An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
Nomination Timing
Nomination can be done at the time of opening the account or during the tenor of the account.
Tenure of Investment
15 years from the date of initial investment with a block of 5 years there-after upto a max of 30 years incl. 15 years.
Maturity
The PPF account matures after 15 years. One can then exercise on option of continuing the account for an additional block of 5 years or close it.
Loans
The first loan can be taken in the 3rd financial year from the date of opening of the account, or upto 25% of the amount at credit at the end of the first financial year. The facility can be availed of any before expiry of 5 years from the end of the year in which the initial subscription was made. The loan is repayable either in lumpsum or in convenient installments numbering not more than 36. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
Withdrawal
A withdrawal is permissible every year from the 7th financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any.
Tax Benefits
Tax benefits can be availed under sections 88 for the amount invested. Interest accrued is Tax free.
Tips for Investing
* Apart from a Post Office, a PPF account can also be opened in SBI & its associates and other select nationalized banks. Now you can open a PPF account in ICICI bank (a private sector bank).
* The most popular tax saving instrument which gives a rebate under section 88.
* A PPF account cannot be attached by the Govt. or any court of law or through any decree.
Terms
Who can open a PPF account ?
A PPF account can be opened by an individual on his own behalf or on behalf of a minor of whom he is the guardian or on behalf of an association of persons or a body of individuals. An individual can open only one account for himself.
Transfer
The account can be transferred at the request of the subscriber from one office to another, including from Bank to Post Office and vice- versa all over the country.
Nomination
A subscriber may nominate one or more persons to receive the amount standing to his credit in the event of his death. No nomination can, however, be made in respect of an account opened on behalf of a minor.
In the event of the death of the subscriber, the amount standing to his credit can be repaid to his nominee or legal heir, as the case may be, even before the expiry of fifteen years. Legal hairs can claim the amount upto Rupees One Lakh without production of succession certificate after observing certain formalities.
Payment Default
If the PPF account-holder fails to deposit the minimum Rs 500 in a given financial year, the account is considered as discontinued but the interest will continue to accrue and be paid at the end of the term. Loans and withdrawals are not allowed. This account can be revived on payment of a fee of Rs 50 for each year of default, along with the arrears of subscription of Rs 500 for each such year
Termination of an Account
No PPF account can be terminated before its completion. However, if requests for premature closure of PPF accounts and refund of deposits from the subscribers are genuine in nature, such cases can be dealt with under Rule 13 of the scheme.
Since no withdrawal is permissible before the expiry of four years from the end of the year in which the account was opened vide para 9 (withdrawal) of the scheme, the request for termination or closure of accounts can be considered only after the expiry of the said period.
For example, the request for premature closure of accounts opened in 1988-89 can be considered only after 1.4.1994.
Such requests may, therefore, be forwarded to the Ministry of Finance alongwith the following information -
* Name and address of the account holder
* Account number
* Date on which the account was opened
* Loans availed of if any from the account with dates and position regarding repayment
* Satisfactory reasons given for the request and evidence in support thereof
* Designation and address of the income tax authority under whose jurisdiction the subscriber falls
* Any other information relevant to the request.
Free from any Attachment
A PPF account is free from any attachment under any order or decree of a court in respect of any debt or other liability incurred by him
PPF for NRIs
Non Resident Indians may also open a PPF account out of the funds in the applicant's non-resident account in India in banks subject to the following conditions -
* The account is marked as non-resident account
* All credits therein or debits thereto are made subject to the same regulations as are applicable to non-resident account.
Coutesy: The Economics Times
