Public Provident Fund - PPF Account - Attractive Long Term Investment Choice; PPF account cannot be attached by decree of a Court

For tax saving and Investment with regular growth Public Provident Fund Account-PPF is a preferred investment choice. The following are the main benefits of investing in PPF Accounts.
Interest income from PPF account is exempted from Income Tax


PPF account amount is exempted from Wealth Tax
Amount Deposited in Public Provident Fund Account is eligible for relief under section 80C of the Income Tax Act, 1961 up to a fixed amount.


A Public Provident Fund Account cannot be attached by a Court Decree
PPF Account can be opened at any designated Nationalised Banks, Designated branches of State Bank of India, Head post offices and other designated post offices.


Interest income in PPF Account better in comparison to other investment option

Who can invest in Public Provident Fund -Eligibility for Investment
PPF account can be opened in the name of any adult in his / her name or in minor's name in the capacity of guardian of the minor.

Minimum amount of investment in PPF
The minimum amount specified is Rs. 500/- per year. If deposits are not made in any particular account that account is treated ad discontinued account and that account cannot be closed before maturity. A discontinued account can be activated by depositing minimum of Rs. 500/- and default fee of Rs. 50 per year for each default.

Maximum amount of Deposit in PPF
As per the latest provision the Maximum amount of investment is Rs. 1,00,000/- per year. Any extra amount deposited in the PPF account will be refunded to the account holder. The amount can be deposited in a maximum of 12 installments in a year.

Maturity period and Extension of period
Maturity period for PPF Account is 15 years but it can be extended for a further period of 5 years with the request of the account holder.

Interest Rate in Public Provident Fund (PPF) Account
Current interest rate with effect from 1.4.2012 in PPF Account is 8.8% p.a. The amount of interest will be compounded annually. The interest is calculating on the minimum balance available in the account from 5th of every month to the last date.

Transfer of PPF Account
The Public Provident Fund Account can be transferred from one Branch to another Branch of State Bank of India, or a nationalised bank to a post office and vice versa. But the PPF account cannot be transferred from one person to another. In case of death of the depositor, the nominee cannot continue to deposit amount in PPF Account.

Loan from PPF Account
From the 3rd financial year from the date of deposit, onwards a depositor can avail loan from PPF account. Application in prescribed format along with PPF Passbook should be submitted to avail loan. To take loan from the account of a minor, the guardian should make a declaration that the money is required for the use and benefit of the minor.

Maximum amount of loan from Public Provident Fund Account -PPF
Maximum amount of loan is 25% of the amount in the account at the end of the second year immediately preceding the year in which the loan is applied for.

Repayment of loan taken from PPF Account
Loan taken from PPF can be repaid in lump sum or in convenient installments.

Interest rate of Loan from PPF Account
If loan is repaid within 36 months the interest is 2% (current Rate) and if not paid within 36 months the interest rate is 6% on the outstanding amount. The interest amount may be paid in not more than two installments after the full payment of loan amount.

Second and Subsequent loan from PPF
If first loan is repaid, second loan can be obtained from PPF account in the same terms. Like that loan can be availed till the end of the 5th financial year.

Withdrawal of Amount from Public Provident Fund (PPF) Account
Amount can be withdrawn partially once in every year from the PPF account, after expiry of five years form the end of the financial year in which the first deposit was made.

Withdrawal of amount from the PPF account of Minor
To withdraw amount from the PPF account of a Minor, the guardian has to make a declaration that the money is required for the benefit and use of the minor.

Limit of withdrawal amount from PPF Account
Withdrawal amount form PPF account is restricted to 50% of the credit balance at the end of the fourth year immediately preceding the year of withdrawal or the year immediately preceding the year of withdrawal which ever is lower. If the account is extended beyond maturity period, partial withdrawals are allowed once in a year with condition that the amount of withdrawal during a five year block period should not exceed 60% of the balance in the account at the beginning of the period.

Premature closure of PPF account
Premature closure and withdrawal is not allowed in PPF account, except in case of death.

PPF account cannot be attached
A Public Provident Fund account cannot be attached by decree of a court and is safe investment option.

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