We tell you all about one of India’s most popular savings instruments in this article.

The PPF or Public Provident Fund is 50 years old, being created by Parliament in 1968, and has long been a popular savings instrument among Indians. We tell you all about this account here,

Quick Facts

  • A PPF account is opened through a Bank or Post Office. Some banks are letting you do this completely online.
  • The interest on the PPF account is fixed by the Government and reset every quarter (currently 7.6%).You can view the latest rate here.
  • You can invest a minimum of Rs 500 and maximum of Rs 1.5 lakh in the PPF per annum.
  • The PPF account has a lock-in of 15 years. You have to keep contributing to the account over this time period.
  • You can continue the PPF account beyond 15 years in batches of 5 years at a time without any time limit.

Who can open a PPF account

The PPF account can be open by a person resident in India. NRIs cannot open a PPF account but they can continue a PPF account opened when they were resident (staying 182 days in India in a year). They can also keep contributing to it till maturity. However they cannot extend it beyond maturity (15 years). There is no minimum or maximum age for opening the account. However, the PPF account for a minor must be operated by a legal guardian till the age of 18.

Tax

Contributions to the PPF are tax-deductible under Section 80C, of the Income Tax Act, 1961. The interest on the PPF and the maturity value are completely tax-free.

Government Guarantee

The PPF account is guaranteed by the Government. The money you contribute goes to the National Small Savings Fund (NSSF) which is held by the Government of India. The interest on the account is paid by the Government and not the bank or post office through which you have opened the account. Hence your risk with the PPF account is negligible.

Protection against Creditors

The PPF account cannot be attached by any creditor such as your bank or even the Income Tax department to meet any liability due to them. This protection was previously guaranteed by Section 10 of the Public Provident Fund Act, 1968 but was briefly in question following the repeal of this Act. However, a new section has been inserted in the Government Savings Banks Act, 1873 which retains this protection. You can read more about this here.

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.