Introduction
PPF is money that will
be yours forever.
Knowledge of the
different features of the PPF account will help you when you want to take a
loan against the account, withdraw from the account, re-activate a discontinued
account etc.
Here an attempt is made
to introduce you all features of PPF.
What is PPF?
Public Provident Fund
(PPF) is a scheme of the Central Government, framed under the PPF Act of 1968.
Briefly, PPF is a government backed, long-term small savings scheme which was
initially started by the Government in order to provide retirement security to
self-employed individuals and workers in the unorganized sector. Today the PPF
is the Indian citizens’ darling investment avenue.
But keep in mind, you
need to be disciplined to make the most of the PPF investments, and also meet
your liquidity needs elsewhere; because under this investment avenue your money
is blocked for 15 years.
Main Features
Eligibility
|
You need to be a Resident Indian Individual
|
Entry Age
|
No age is specified(Minor is allowed through
guardian)
|
Interest rate
|
8.70% p.a. compounded annually*
|
Tenure
|
15 complete financial yearsplus the first year
of investment means total your fund will get blocked for minimum 16 years
|
Extension in tenure
|
On completion of 15 years, the account can be
extended in a block of 5 years. However there is no restriction on no. of
extension an invester can availed.
|
Minimum Investment
|
Rs 500 p.a.
|
Maximum Investment
|
Rs 1,50,000 p.a.
|
Limit over no of deposits in a financial year
|
A maximum of 12 deposits allowed in a
financial year
|
Tax Benefit
|
Up to Rs 1,50,000 under Section 80C;
|
Interest exemption under EEE model
|
Interest earned is exempt from tax and so are
the maturity proceeds
|
Can be opened at
|
Any Post Office and Authorized branches of
Banks
|
Who cannot invest
|
Hindu Undivided Family (HUF’s);Non Resident
Indian’s (NRI’s); andPerson of Foreign Origin
|
Mode of Payment
|
Cash Crossed Cheque Demand DraftPay Order
Online Transfer in favour of the Accounts Officer
|
Nomination
|
Nomination facility is available
|
Interest rate
|
Declared annually.The interest rate is
currently 8.70% p.a.- This is subject to change.
|
Change in interest rates over year
PPF interest rate has
steadily dropped over the years, and can be expected to slowly fall as the
years proceed. Here’s a look at what rates used to be:
Period
|
Interest Rate p.a.
|
01 April 1986 – 14 Jan 2000
|
12%
|
15 Jan 2000 – 28 Feb 2001
|
11%
|
01 March 2001 – 28 Feb 2002
|
9.50%
|
01 March 2002 – 28 Feb 2003
|
9.00%
|
01 March 2003 – 30 Nov 2011
|
8.00%
|
01 Dec 2011 – 31 March 2012
|
8.60%
|
01 April 2012 – 31 March 2013
|
8.80%
|
01 April 2013 – till date
|
8.70%
|
It
is noteworthy that the interest rate on PPF is benchmarked against the 10-year
G-Sec yield and is usually 0.25% higher than the average yield on G-Secs. The
interest rates on PPF are announced every year by the Reserve Bank of India
(RBI) for the upcoming financial Year.
Now
let’s see the PPF Withdrawal Rules in SBI. According to PPF Rules in India
In
the above case a user can withdraw money from his / her PPF Account only at the
end of 6th Year of operation, so its ideally 7th year beginning. The PPF
Withdrawal Rules in SBI states that the maximum amount of withdrawal from PPF
Account is 50% of the amount retained / remaining in the ppf account in the end
of 4th year. In the above example its 3,55,293.45 INR and 50% of this amount is
1,77,646.73 INR and so the Withdrawal Rules in SBI PPF continues till the end of
12th year of which the amount can be withdrawn during the 15 year end. So
ideally in PPF Withdrawal Rules in SBI is valid from 7th year end to 15th year
end. This amount can be used for any emergency purpose or for higher studies.
