What is a PPF account?

What is a PPF account?

Public Provident Fund (PPF) is the scheme floated under the PPF Act 1968 by central government. PPF is one of the safest investment product backed by Government of India and also gives tax benefit under section 80(c) of the Income tax act.

Features of Public Provident Fund

a. PPF account can be opened with minimum Rs. 100 in a post office, any SBI branch and other authorized offices like ICICI bank and Union bank of India. You can now open an online ppf account with ICICI.

b. Minimum investment in a financial year is Rs. 500 and maximum is Rs. 1,00,000. This investment up to 1,00,000 is eligible for rebate under section 80 C of the IT Act. Deposit in PPF account can be made in either one go or in installments. But you can not deposit more than 12 times in a year.

c. If you forget to contribute the minimum amount in any year then the account will be deactivated. To activate you need to pay Rs.50 as penalty for each inactive year also you need to pay Rs.500 for each inactive year’s contribution.

d. Maximum tenure for PPF account is 15 years. Post 15 years you can extend your account in block of 5 years.

e. Loan facility available from 3rd financial year upto 5th financial year. 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. Loans could be taken from the third year onwards till the sixth year. Up to a maximum of 25 per cent of the balance at the end of the 2nd immediately preceding year would be allowed as loan. Such withdrawals are to be repaid within 24 months.

f. Withdrawal permitted from 7th financial year. You can withdraw only once a year and such amount should not exceed 50% of the balance at the end of 4th year or 50% at the end of immediately preceding year, whichever is lower. Premature closure of PPF account is possible in case of death of the individual.

g. Interest is paid on lowest amount between 5th and 30th of each month, so you should try to deposit in PPF between these 1st and 5th of the month. Interest is compounded annually and credited on March 31 each year.

PPF Interest Rate

Reserve Bank of India from time to time specifies the rate applicable to the PPF account. Rate of interest w.e.f. 01.04.2013 is 8.7% p.a. You can check the latest notifications by RBI about changes in PPF interest rates here.

Comparison between historical PPF interest rate and Fixed Deposit interest rates:

		Bank Deposit (avg.)
Year/Rate	PPF	Before Tax	After Tax
2000	12.0%	10.0%	7.0%
2001	11.0%	9.0%	6.3%
2002	9.5%	8.0%	5.6%
2003	9.0%	7.0%	4.9%
2011	8.0%	8.8%	6.1%
2012	8.6%	9.0%	6.3%
2013	8.7%	9.0%	6.3%

It is clearly evident that PPF account gives considerably higher return than bank deposit rates

When should you open a PPF account?

a. You should open a PPF account as early as possible. Even when you are a student, you should open a PPF account with min. Rs. 500 deposit. This is helpful as you can see that withdrawal is allowed only 7th year onwards and if you open an account early, you will be able to pass the block period in initial years only.

b. You should also consider your future cash requirement before blocking large sums in PPF account as withdrawals have restrictions.

How to open PPF Account

a. To open PPF account, first you need to open a saving bank account in the designated branch of SBI or other approved banks.

b. Following documents are required to open PPF Account:

i. Account opening form duly filled (this can be taken from the designated bank branch)

ii. ID proof – PAN Card, Passport, Driving license (as per bank KYC norms)

iii. Address proof – utility bills

iv. Two recent photographs

v. All documents should be self attested

c. It is preferable to open a PPF account with a bank then post office as with banks you can deposit money in your PPF account online. This is really helpful if you have relocated from the city of your home branch.

How to open PPF Account Online?

a. First condition is same in this case as well. You will need to open a saving banks account.

b. Then you need to login to your saving bank account online panel and apply from there. Below is a online application form for ICICI bank:

This article has been shared by Ketan Sardana.

Tags: PPF, Public Provident Fund, Income Tax,

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Seven facts we Must Know about PPF accounts

The key to wealth creation lies in the practice of saving regularly and systematically. The public provident fund (PPF) is one such long-term investment option that would suit investors of all types. Scoring high on safety, by virtue of it being government backed, this wonderful option comes with tax benefits, loan options and a low maintenance cost. Investment Yogi explains seven must-know facts of a PPF account to make it more profitable for you.

1.    It requires just Rs. 100 to start a PPF account: PPF accounts could be opened by individuals, whether salaried or self-employed, with a minimum initial deposit of just Rs. 100. Accounts could be opened at any branch of the State Bank of India (SBI) or branches of its associated banks. Other nationalised banks which offer this service are Bank of India, Central Bank of India and Bank of Baroda. The general post office too allows opening of a PPF account. Individuals may also open a PPF account on behalf of a minor child of whom they are the guardian.

2.    PPF accounts have a minimum and maximum deposit limit: A minimum deposit of Rs. 500 must be made during one whole financial year. The maximum that could be deposited is Rs. 1,00,000 in a financial year. Deposits could be in either one go, or in flexible instalments (in multiples of Rs.10). You could vary the amount and the number of instalments, as per your convenience, provided you do not exceed 12 instalments in one financial year. Failing to deposit the minimum requirement would lead to your account being discontinued. Interest would, however, continue to accrue. You could regularize the account again on paying the prescribed default fee along with subscription arrears.

3.    Interest calculation in PPF account: The interest rate in your PPF account is calculated on the lowest balance between the fifth and the last day of the month. So to maximise your earnings, try making deposits between the 1st and the 5th of the month. Interest is compounded annually and credited on March 31 each year.

4.    Premature withdrawal from PPF: The entire amount in your account could be withdrawn only on maturity. However, in times of financial crises partial withdrawals are permitted subject to certain ceiling limits. You could withdraw once a year, from the 7th year onwards. Such withdrawals must not exceed 50 per cent of the balance at the end of the fourth year, or 50 per cent of the balance at the end of the immediate preceding year, whichever is lower. Premature closure of a PPF account is permissible only in case of death.

5.    PPF offers multiple tax benefits: Deposits in a PPF account qualify for a deduction under section 80C. Furthermore, the entire maturity amount including the interest is non-taxable. Not only is the interest earned tax free, PPF deposits are exempt from wealth tax too.

6.    Need a loan? Use your PPF: You could take a loan on your PPF deposit, subject to certain terms and conditions. Loans could be taken from the third year onwards till the sixth year. Up to a maximum of 25 per cent of the balance at the end of the 2nd immediately preceding year would be allowed as loan. Such withdrawals are to be repaid within 24 months. Rate of interest charged on the loan would be 2 per cent more than the PPF interest rate prevailing then.

A second loan could be availed as long as you are within the 3rd and the 6th year, and only if the first one is fully repaid. Also note that once you become eligible for withdrawals, no loans would be permitted. Inactive accounts or discontinued accounts are not eligible for loan.

7.    Continuing PPF after the 15-year period: PPF account holders have an option of extending their accounts after the 15 year tenure with or without further subscription, for any period in a block of five years. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed. In case the account is extended without contribution, any amount can be withdrawn without restrictions. However, only one withdrawal is allowed per year.

If you continue the account after 15 years, with continued deposit, withdrawal up to 60 per cent of the balance at the beginning of each extended period (block of five years) is permitted.

NDTV

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Procedure to take loan against your PPF Account

 Things to know about the PPF

Public Provident Fund (PPF) may be one of the most popular tax-saving schemes, which can be opened in a post office or designated bank branches.It also serves as a retirement-planning tool for many of those who do not have any structured pension plan covering them.

How to take loan against PPF Account?
Public Provident Fund is one of the best investment options under section 80C. The benefit is not confined to the contribution towards your PPF account but also for the contribution made towards your spouse and children.

One more advantage of PPF is you can avail loan against the balance lying on your PPF Account but only after fulfilling few conditions mentioned hereunder:

When Loan against PPF can be taken?

Loan against PPF account can only be availed after completion of one financial year from the time the first subscription is made i.e. 3rd year from the year your account has opened. For example, your first subscription is made on November 2012 (Financial Year 2012-13), then you are eligible to take loan only after March 2014.

Also, the time period in which you can avail loan from your PPF account is from the 3rd year of opening your account to the 6th year i.e. before the expiry of 5 fiscal years. Consider above example, only after March, 2014 and before March, 2018.

Second loan could be taken as long as you are within the 3rd and the 6th year, and only after the first one is fully settled. Also note that no loans would be permitted once you become eligible for withdrawals. Discontinued accounts, dormant or inactive accounts are not eligible for loan.

How much loan can be taken?

The loan can be taken upto a maximum of 25 per cent of the balance lying in your account at the end of the first financial year (if you apply for the loan in the third year). If you apply for a loan in the fourth year, the second year’s balance will be taken in to consideration and so on.

On what Interest rate Loan will be given?The interest rates on loan will be 2% higher than what you are getting on your PPF balance. So, if you are getting 8.5% p.a. on your PPF then the interest rate on loan will be 10.5% p.a.

At present, the rate on interest on PPF balance is 8.7% p.a., so the interest rate on loan against PPF shall be 10.7% p.a.

How to apply for loan?The application to apply for the loan can be downloaded from
http://www.indiapost.gov.in/pdfForms/PPFLoan.pdf

The application should be addressed to the manager stating your PPF Account number.

It should also include the time period for which you are taking loan and repayment tenor. The application should also contain details about your previous loans. Your PPF account passbook has to be enclosed and you must sign the requisite form.

What is the repayment tenure?The repayment of the loan shall be made within 36 months. Principal amount and interest amount can be paid separately but before expiry of 36 months.

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What is PPF?? Things to know about PPF

The Public Provident Fund (PPF) is one of the most popular tax-saving schemes, which can be opened in a post office or designated bank branches. But do we know all about PPF??

Here are the things you should know about PPF:-

1.       Where to Open PPF Account?

PPF Account can be opened in post office or in selected bank branches. Documents need to be submitted for opening a PPF account.

2.       How much is the Interest Rate?

The interest rate offered on the PPF is no longer fixed, but linked to the market. This does not mean that the rate will change on a day-to-day basis. It will be announced every year in April, based on the average bond yield in the previous year. For the current financial year, it is 8.8%.

3.       How does the Interest accrue?

The interest on your PPF balance is compounded annually, but the calculation is done every month. The interest is calculated on the lowest balance between the fifth and last day of every month.

If your contribution to PPF account is credited on or before 5^th of that month, then that contribution will bear interest for that month too. If it credited after 5^th of the month, you will get interest only from the subsequent month.

4.       What is the minimum and maximum investment?

The investment limit is Rs 1 lakh in a year through a maximum of 12 instalments. If your minor child has a PPF account, the combined limit for both accounts will be Rs 1 lakh. Don't invest more than the Rs 1 lakh in a year, because if it is discovered, any interest earned by the excess amount will be reversed. There is also a minimum investment required. An investor has to put in at least Rs 500 in his PPF account in a year.

5.       What are the Tax benefits?

The investment is eligible for tax deduction under Section 80C. The interest earned is also tax-free, and so are withdrawals.

6.       When does it mature?

A PPF account matures in 15 years, but you can extend the tenure in blocks of five years after maturity. The balance continues to earn interest at the normal rate. The minimum investment of Rs 500 has to be maintained even for accounts extended beyond 15 years.

7.       What happens if PPF account holder dies?

On the death of a subscriber, the balance in the PPF account is paid on demand to his nominee or successor. However, the balance, if not withdrawn, continues to earn tax-free interest. The nominee or legal heir is not allowed to continue the PPF account by making fresh contributions to it.

This Article has been Shared by Student of ICAI Palak Aggarwal. She can be reached at aggarwal.palak2809@gmail.com

Tags: what is PPF, Things to Know About PPF, Public Provident Fund,

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THINGS YOU SHOULD KNOW ABOUT PPF FOR A SECURED FUTURE

 Things to know about the PPF

Public Provident Fund (PPF) may be one of the most popular tax-saving schemes, which can be opened in a post office or designated bank branches.It also serves as a retirement-planning tool for many of those who do not have any structured pension plan covering them.

Individuals who are residents of India are eligible to open an account under the Public Provident Fund scheme. A PPF account may be opened under the name of a minor by his/her legal guardian. However, each person is eligible for only one account under his/her name.

Non-resident Indians (NRIs) are not eligible to open an account under the Public Provident Fund Scheme. However a resident who becomes an NRI during the 15 years' tenure prescribed under Public Provident Fund Scheme, may continue to subscribe to the fund until its maturity on a non-repatriation basis..

 Here's how to familiarise yourself with this investment option.

1) How much is the interest rate?

The interest rate offered on the PPF is no longer fixed, but linked to the market. It is 0.25% above the 10-year government bond yield. This does not mean that the rate will change on a day-to-day basis. It will be announced every year in April, based on the average bond yield in the previous year.

• 01.04.1986 to 14.01.2000                              12%
• 15.01.2000 to 28.02.2001                              11%
• 01.03.2001 to 28.02.2002                              9.5%
• 01.03.2002 to 28.02.2003                              9%
• 01.03.2003 to 30.11.2011                              8%
• 01.12.2011 to 31.03.2012                              8.6%
• 01.04.2012 to 31.03.2013                              8.8%
• 01.04.2013 onward                                        8.7%

 2) How does the interest accrue?

The interest on your PPF balance is compounded annually, but the calculation is done every month. The interest is calculated on the lowest balance between the fifth and last day of every month.

So, if you invest before the 5th, the contribution will earn interest for that month too. Otherwise, it's like an interest-free loan to the government for a month. If you are investing through a cheque, make sure you deposit it 3-4 days before the cut-off date. If your bank is lethargic in crediting the amount to your PPF account, your investment might miss the deadline.

3) What are the tax benefits?

The PPF corpus is tax-free at all three stages. The investment is eligible for tax deduction under Section 80C. The interest earned is also tax-free, and so are withdrawals. The original draft Direct Taxes Code, introduced in 2010, had proposed withdrawal of tax benefit. Though it would have been with prospective effect and existing investments would have been exempt, there was strong opposition to the move. The revised draft DTC nixed the proposal. However, with P Chidambaram back as finance minister, the original DTC proposals may come back in some form. Make the most of this tax-free opportunity before the rules change.

4) How much can you invest?

The investment limit is Rs 1 lakh in a year through a maximum of 12 instalments. If your minor child has a PPF account, the combined limit for both accounts will be Rs 1 lakh. Don't invest more than the Rs 1 lakh in a year, because if it is discovered, any interest earned by the excess amount will be reversed. There is also a minimum investment required. An investor has to put in at least Rs 500 in his PPF account in a year. You will be levied a small, but irksome, penalty of Rs 50 if you fail to do so.

5) When does it mature?

A PPF account matures in 15 years, but you can extend the tenure in blocks of five years after maturity. The balance continues to earn interest at the normal rate. The minimum investment of Rs 500 has to be maintained even for accounts extended beyond 15 years. This does not mean your money is locked up for this period. The lock-in period falls with every passing year. In the 14th year, it will only be one year.

If you need money, you can withdraw after the sixth year, but it cannot exceed 50% of the balance at the end of fourth year, or the immediate preceding year, whichever is lower. You can also withdraw only once in a financial year. You can also take a loan against it, but this cannot exceed 25% of the balance in the preceding year. The loan is charged at 2% till 36 months, and 6% for longer tenures. Till a loan is repaid, you can't take more loans.

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How To Check PF Details Online

Dear EPF Members !!

•  Register online to view your EPF Account Passbook.
•  The facility at present is only for the members for whom the employer has uploaded the Electronic Challan Cum Return for the wage
   month of May 2012 onwards.
•  There is no need to create and remember any user id and password. You have to use your mobile number and any of your following
   identification proof number such as PAN, AADHAR, NPR (National Population Register), Bank Account, Voter ID, Passport or Driving
   License to register and thereafter to login.
•  You can add multiple id numbers (one id against each of the listed types) and any one along with the mobile number can be used for
   the login.

Please click here to read FAQ.

Note:

•  One mobile number can be used for one registration only.
•  A registered member can view only one account details under one establishment. In case you are having more than one account under   one establishment, please apply for transfer through the Form 13.
•  One member can view up to a maximum of 10 accounts under different establishments. The 10 accounts can be viewed any number of   times. Get your old accounts transferred to the current one by using the Transfer Form 13.
•  Facility to display the accounts of inoperative accounts will be provided later through a request mode.
•  The facility is not for the current members of establishments having exemption under the EPF Scheme 1952.

Shared by Ca Deepan Bafna.

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E-PASSBOOK SCHEME FOR PF SUBSCRIBERS

E-PASSBOOK SCHEME FOR PF SUBSCRIBERS TO BE LAUNCHED ON FRIDAY Subscribers to the Employees’ Provident Fund Organisation (EPFO) will now be able to download their e-pass book each month, if they are active members and if their electronic challan-cum-return is uploaded. The Central PF Commissioner will launch the facility here on Friday, the Labour Ministry said. In the case of members who are not active (left service) and have not settled their account or have not become inoperative, the facility to download the pass book on request basis shall be available, it said. The facility shall be available onwww.epfindia.gov.in. Once the facility comes into operation, PF members can register on the Member Portal by using his/her photo identification number, such as PAN, Aadhaar, National Population Registry, driving licence, passport, voter ID, ration card and use the mobile number as password. This way, the member will not be required to remember any us

er ID/password, the Ministry said. Once registered, a member can download the pass book by entering his/her account number. If available, the pass book will appear for download. “The e-pass book shall contain the transaction-wise details in the member’s account (all credits and debits) since the month for which the details for the establishment have been processed in the new application software at the field offices,” the Ministry added. The facility, however, will not be available for members under exempted establishments under the EPF Scheme 1952 (as the fund details are maintained by the Trust), inoperative members (i.e. in accounts where no contribution has been received during preceding 36 months). However, there will be some restrictions, as only one registration will be allowed against one mobile number, and a member can download the passbook for only one account number under one establishment. –Hindubusinessline.

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How to Open a PPF account?

Most of us want to open a PPF account, but keep postponing it just because we don’t know the requirement of doing so? It seen that majority people open their PPF account with State Bank of India. Let us see 3 easy steps of opening a PPF account in SBI branch.  The whole process does not take more than 30-45 minutes if you prepared in advance and go with all the documents that are required and there are no road blocks in between. The biggest advantage of opening the PPF account with SBI is the online transaction facility you can use to deposit in your PPF account online and dont have to rush to the branch every now and then.

3 Steps of Opening a PPF Account in SBI Bank

1) Choose a SBI branch which is authorized to go government business.

Usually any ‘large’ branch with lots of customers should be able to this! Usually newer and smaller branches may not have this clearance facility. One doesn’t need to have a Saving Bank  account in that branch. 

2) Procure and submit PPF account opening form and Identity/address Proofs

It would only 3 minutes to fill. Choose a nominee and get a witness signature. Now you have to submit anyone of following Proofs.

·                      Passport

·                      Pan card

·                      Driving license

·                      Voter id

·                      Ration card

·                      Two Passport Size Photographs

Any government issued identity card or address proof should work. Keep originals for proof in hand to simplify the verification if needed. That’s it. The bank should now be able to open the account. Usually it may take about 20 minutes or so.

3) Get PPF Passbook

A pay-in slip needs to be filled and the initial subscription needs to be credited into your account. A passbook similar to a Saving Book passbook will be issued with your photo affixed and the nominee’s name stated.  PPF rules can be found on the back. This is all, your PPF account in SBI is opened now.

How to Link your Online SBI Account to SBI PPF account for Online Transaction

If you have an online SBI account, you can add the PPF account as a third party accountfor transferring money directly. As mentioned above the PPF account can be in any SBI branch. There are no processing charges for doing this transfer. When you do this online for the first time, go to the bank and update your PPF passbook and check if the transaction has occurred correctly. This has to be done since you cannot look at the amount in the PPF account as yet in SBI. This is a major drawback of SBI-PPF (and post office) accounts.

A standing instruction maybe issued from your online account for auto-credit to PPF. However there are two disadvantages

·  Rarely there maybe system failures and the standing instruction may not get honoured. So you need to check if it has occurred.

·  You cannot subscribe a lower amount if you need the cash for emergency use (this situation wont arise if you had an emergency fund )

·   You need to go to the bank to cancel the standing instruction .

There are only 12 credit transaction allowed per year. So take care of this before issuing a standing instruction.

How to Transfer your PPF account from One Bank to Another

   Go to the branch where you want to transfer your PPF account and deposit an application with your PPF passbook takes 10-15 minutes

Other points to Consider

Subscriptions must be made before the 5th of every month for the amount to taken into account for interest calculation for that month. If you want to open a PPF account in the name of a minor in addition to yours, the total PPF investment limit is Rs. 1,00,000. The total tax benefit is also the same. 

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Interest Rate On PPF, Post Office Savings Hiked

Government on Friday hiked interest rates on deposits under the public provident fund (PPF) scheme to 8.6 percent from 8 percent and maximum deposit limit in a PPF account has been raised to Rs.1 lakh in a financial year from the earlier Rs.70,000. 

Following decisions also have been taken:-

1. Interest rates on post office savings deposits hiked to 4 percent from 3.5 percent.

2. Kisan Vikas Patras discontinued.

3. Maturity period of National Savings Scheme cut to 5 years from 6 years. 

4. A new NSC instrument, with maturity period of 10 years, would be introduced.

5. Interest on loans obtained from PPF will be increased to 2% p.a. from existing 1% p.a.

FOR FURTHER DETAIL, CHECK FOLLOWING LINK FOR OFFICE MEMORANDUM ISSUED BY MINISTRY OF FINANCE IN RESPECT OF ABOVE 

http://fnpo.org/yahoo_site_admin/assets/docs/interest_hike_committee_decision_NSSF.314225242.pdf

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