PPF - Public Provident Fund Account
If you're searching for a long-term investment strategy, consider the Public Provident Fund (PPF), which provides tax relief on the principal amount and accrues interest. The benefits of investing in a PPF include appealing interest rates with minimal risk. Additionally, it offers the convenience of loan options and partial withdrawals. The facility to check your balance, transfer funds, and access mini statements online allows you to manage your account conveniently anytime and anywhere.
The Public Provident Fund (PPF) is a government-backed small-savings scheme, which offers long-term savings and tax-saving benefits. To invest in it, one has to open a Public Provident Fund account.
PPF has a 15-year maturity period. Once the lock-in period is over, the subscriber can also extend the tenure for periods of 5 years. One can also open a PPF account online
Features and Benefits
Attractive Interest rate
Interest payable on PPF is determined on quarterly basis by Ministry of Finance. Interest is calculated on the lowest closing balance from the fifth day to the last day of every month. The interest is compounded annually and paid at end of the financial year. The Current rate of interest is 7.1%
Invest with minimal risks
Extremely low-risk with long term investment backed by the Government of India.
Avail tax benefits
Investments (under section 80C) made under PPF scheme fall under triple E regime i.e. Principal, Interest and Withdrawal which are all tax exempted.
Enjoy loan facilities and partial withdrawals
- Loan facility can be availed any time between third financial year to sixth financial year i.e. From third financial year up to end of fifth financial year
PPF Account - Eligibility & Documentation
To enjoy low risk investments for long term, do check if you are eligible for Public Provident Fund as mentioned below:
How to Apply For PPF Account
All you need is your Aadhaar number. Click here proceed
If you want to visit the branch
To open your PPF account you will need to submit a filled in application form A along with your KYC documents and the initial contribution at an Axis Bank Branch.
Visit any Axis Bank branch with the following documents
Step 1
1 passport size photograph
Step 2
Address proof
Step 3
Identity proof
Step 4
Birth Certificate in the case of minor
Step 5
Initial contribution (of Rs 500 minimum)
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Importance of Public Provident Fund account
A PPF account helps long-term investors make an investment for various purposes, such as retirement savings. Given the long tenure of the investment (15-year maturity period), the PPF account helps ensure a disciplined approach to savings. Other than that, a PPF investment is safe because the Government of India guarantees the safety of this scheme. Since the interest rate is fixed quarterly, returns on the PPF are secured. This makes it a risk-free investment option for long-term investors seeking assured returns. Another one of the PPF benefits is that you can avail of a loan facility against your PPF account, after the expiry of one year from the end of the year in which the initial subscription was made, but before the end of five years from the end of the year in which the initial subscription was made. For instance, if you opened your PPF account in 2020 December, you can avail a loan between 1 April, 2022 and 31 March, 2026. The repayment of the loan starts from the first day of the month from when the loan was taken and can be repaid over a period of 36 months.
What is the interest rate on PPF?
The PPF interest rates are revised and set by the government in each quarter. The interest on PPF is compounded on an annual basis. Hence, the interest is received on the PPF balance from the previous year and is added to the principal amount. The Current rate of interest is 7.1%
Tax benefits of Public Provident Fund
The biggest advantage of Public Provident Fund is that it offers tax benefits at three stages, which almost no other investment product offers. The investment, interest earned and maturity amount on the Public Provident Fund balance are eligible for PPF tax exemption, which puts this savings-cum-investment option under the EEE (Exempt Exempt Exempt) status.
Contributions made towards the PPF account of up to ₹1.5 lakh are tax-deductible under Section 80C of the Income Tax Act, 1961, while the interest paid out as well as the PPF maturity amount is exempt from taxes.
This contribution can be made for self or for one’s child and still be eligible for the PPF tax exemption benefits. While the EEE status makes the PPF a popular tax-efficient investment scheme, the long-term lock-in period fixed and secured returns make it suitable for planning for long-term goals such as retirement.
Offline Withdrawal Process
Here is how you can go about the offline process:
- Visit your bank, which is linked to your PPF account.
- Collect the Form C, fill it up correctly and submit it.
How do you withdraw funds from your Public Provident Fund account before maturity?
This is how you can opt for a partial withdrawal of your PPF balance:
1. Download Form C from your bank’s official website or procure the same from the branch office. On the form, there will be three sections, namely:
- Declaration: Fill in your PPF number and the withdrawal amount here. Also, mention the period for which the account has been active.
- Office-use: Mention the details such as the account opening date, the date of any previous withdrawal, current total balance, and total withdrawals made and so on.
- Bank details: This section will carry your bank account number and any other account details where the withdrawal amount will be credited.
Next, attach a copy of your PPF passbook with Form C.
Submit this bunch of documents at your bank branch Once the application is processed, the withdrawal amount will be credited to your account. Alternatively, you can also get a demand draft (DD) offline. How you want to receive the amount should be mentioned on the form with your signature and a revenue stamp.
How to transfer a PPF Account?
These are the steps to follow to transfer a PPF account from one bank to another:
1. Go to the bank branch of your current bank and make a transfer application. Be sure to mention the complete and correct address of the new bank account branch where you want to transfer the PPF account.
2. Surrender your old bank passbook to your existing bank. Your PPF account here will be closed, and the following documents will have to be sent to the new bank:
- A certified copy of the PPF account
- Existing PPF passbook
- The application form of the original account opening
- A cheque/demand draft (DD) of the account balance
- The nomination form
- A sample of your signatures
- A PPF transfer request letter from your end with an acknowledgement from the bank
Your new bank will inform you once they have all these documents, and you will have to submit a new account opening form along with your Know Your Customer (KYC) documentation, after which you will get a new passbook.
How to activate an inactive PPF Account?
To revive or activate your PPF account, here is what you need to do:
- First, send a written application to your bank/institution/post office where your PPF account has been opened.
- Make a deposit of ₹ 500 for each year that the account has been dormant along with the current year’s deposit. Hence, if the account has been inactive for 2 years, you will need to pay ₹1000 along with another ₹ 500 for the current year to activate the PPF account.
- Apart from this amount, you will also be charged a penalty of ₹50 for each inactive year. This amount has to be paid along with the written application at the bank or institution where the account has been opened.
- Once this step is complete, your application and your record will be examined. If the investment has already reached its maturity of 15 years, you cannot reactivate the account.
It is also important to remember that you cannot have a new PPF account in your name even if your existing account is inactive. This is because, at any point in time, one individual can only have one PPF account.
PPF Account - Terms of Subscription
Investment Amount
- Minimum Investment of Rs. 500 and maximum Investment of Rs. 1,50,000 per Financial Year (subject to change as per notification issued by Central Government)
- You can deposit the amount in one go or in different instalments.
- Instalments can be for a period of monthly, quarterly, half yearly or yearly
- Amount deposited in excess of Rs.1,50,000/- shall neither be entitled to interest under PPF scheme nor be eligible for Tax Benefits
Period of Investment
The original tenure of the PPF account is 15 years , which can be extended further in blocks of 5 years each for any number of blocks. The extension can be with or without contribution.
Withdrawal from PPF account is allowed after completion of 5 years for the amount not exceeding 50% of the amount that stood to his credit at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower
- In the case of the death of a customer, their nominee /legal heir can close the account by submitting the required documents
- Premature closure of PPF account is allowed on any of the following grounds provided that an account shall not be closed before the expiry of five years from the end of the year in which the account was opened
- treatment of life threatening disease of the account holder, his spouse or dependent children or parents
- higher education of the account holder or dependent children
- on change in residency status of the account holder
On such premature closure, interest in the account shall be allowed at a rate which shall be lower by 1% than the rate at which interest has been credited in the account
Access investments online
Activation Benefit
Enjoy loan facilities and partial withdrawals
Frequently Asked Questions
PPF or Public Provident Fund is a long-term fixed income savings scheme offered by the Government of India. It offers tax benefits as well as fixed and guaranteed returns. It is one of the tax-saving instruments under Section 80C of the old regime of Income Tax Act. The PPF tenure is 15 years and the account cannot be closed prematurely except on certain grounds. However, the subscriber or depositor is allowed to withdraw part of the money after five years. You can withdraw 50% of your balance as at the end of the preceding financial year. Any resident Indian can open a PPF account.
PPF offers fixed and guaranteed returns and has a long-term maturity period. This makes it is a suitable savings tool for financial goals that have a longer time horizon. Hence, PPF is a must for your retirement portfolio. You can invest up to Rs 1,50,000 per year in PPF and get tax exemption on that. The interest earned on the deposit is not taxed. The entire amount can be withdrawn on maturity and is tax-free in the hands of the subscriber. For self-employed people, who don’t get a salary and hence don’t enjoy the benefits of Employee Provident Fund, PPF is an extremely useful tax-saving instrument.
The interest rate on PPF is announced by the government every quarter. It is linked to the rates on government securities and changes accordingly. The interest on the PPF is calculated based on your balance in your account before the fifth of every month. So ideally, make your deposit before the fifth of the month to get maximum benefit. Any deposit made after that will not earn interest for that particular month.
The minimum amount that must be invested in a PPF account is Rs 500 and the maximum is Rs 1, 50,000 in a year. On maturity, the account can be extended for a 5-year period. There is no limit to the number of times the account can be extended. An individual can have only one PPF account in their name. However you can open a PPF account in your minor child’s name. When doing this please remember that the total investment in both PPF accounts should not exceed Rs 1,50,000 in a year. You can also invest in your PPF account online through internet banking!
The tenure of your Public Provident Fund is 15 years, after which you can extend the investment for a tenure of 5 years periodically. Therefore, you can extend the account after the 15-year tenure by another 5 years, i.e., 20 years, 25 years and so on.
Your PPF account will remain active as long as you continue to deposit a minimum amount of ₹500 in each financial year. In case you do not deposit this minimum amount, your account will be inactive, and there will be a penalty charge for each financial year that the account has been inactive. But if there is already some balance in your PPF account, it will continue accruing interest until maturity.
Yes, even if your PPF account is inactive, the existing amount in your account will continue earning interest until the scheme reaches maturity.
As per the PPF rules, you cannot have more than one PPF account in your name. However, you can increase the contribution amount each year to avail of better PPF benefits on maturity.
Yes, when you make a PPF contribution for yourself or on behalf of your child, contributions of up to ₹1.5 lakh will be eligible for tax deductions under Section 80C of the Income Tax Act when you file your tax returns. However, you can only claim the tax benefits as long as you are making the contributions.
At present, the PPF rules do not allow for an investment of more than ₹1.5 lakh for every financial year.
The interest is calculated on the lowest balance in the PPF account between the 5th and the last day of the month (as per the calendar month). This interest is credited to the account at the end of the financial year and will always be credited to the account even if it is inactive but has some balance amount.
No, you need not withdraw the entire amount when your PPF account reaches maturity at the end of 15 years. Instead, you can simply extend the tenure by 5 years at a time until you want to close the account.
A PPF investment does not continue once the account holder passes away. Instead, either your legal heir or an appointed nominee will be given the amount already deposited in the account as no interest will accrue on the account’s funds.
If the PPF account holder passes away, the legal heir can claim the PPF amount of up to ₹1 lakh without a succession certificate by filling and submitting Form G. They can find and download this form on the website of their bank or collect it at the post office where the PPF account was opened.
There is no limit on how many times you want to extend the tenure of your PPF account in periods of 5 years each. This can be done even without making any further contributions towards the investment as the existing amount will continue earning compound interest.
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