In this article we will discuss the important features of Public Provident Fund (PPF) scheme. In our previous article we provide you Introduction of PPF scheme and here we will highlight its important features.
Important features of the PPF Scheme:
- The PPF is a statutory scheme of the Government of India.
- The tenor of PPF Scheme is for 15 years, can be extended to another 5 years after that and so on.
- At present the rate of interest is announced by Government of India quarterly, earlier it was annually.
- At present, the minimum deposit is 500/- and maximum is Rs. 1,50,000/- in a financial year.
- Any resident individual or individual on behalf of minor can open PPF Account.
- No age is prescribed for opening a PPF account.
- A Power of attorney holder can neither open or operate a PPF account.
- Joint account is not permissible.
- One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
- The deposit can be in lumpsum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs.1,50,000/-.
- It is not necessary to make a deposit in every month of the year. The amount of deposit can be varied to suit the convenience of the account holders.
- The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity.
- The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
- Account can be opened by an individual or a minor through the guardian.
- Those who are contributing to GPF Fund or EDF account can also open a PPF account.
- The deposits shall be in multiple of Rs.5/- subject to minimum amount of Rs.500/-.
- The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit of Rs.1,50,000/-.
- Interest is not contractual but rate is notified by Ministry of Finance, Govt. of India, at the end of each year.
- The facility of first withdrawal in the 7th year of the account subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter one Withdrawal in every year is permissible.
- Pre-mature closure of a PPF Account is not permissible except in case of death.
- Nominee/legal heir of PPF Account holder on death of the account holder can not continue the account, but account had to be closed.
- The account holder has an option to extend the PPF account for any period in a block of 5 years on each time.
- The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.
- One withdrawal in each financial year is also admissible in such account.
The PPF scheme is operated through Post Office and Nationalized banks.
Account is transferable from one Post office to another and from Post office to Bank and vice versa.
- Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
- The interest on deposits is totally tax free.
- Deposits are exempt from wealth tax.
- The balance amount in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.