Learning

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 What is PPF Interest Rate in India and what

are the benefits of Investing in this
Instrument?
In this Learning Curve weve tried to explain
the basics and the benefits of investing in this
form of Tax-Saving Instrument.

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PPF
PPF Account refers to Public Provident Fund
Account
Any Individual in India (whether Salaried or
Self-Employed or any other category) can
invest.

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Where to Open
PPF may be opened in any Post Office and some
authorized branches of Banks. Banks permit
online deposits whereas Post Offices don't have
this facility.
NRIs are not allowed to subscribe to PPF A/c. If
NRI opened a PPF A/c while he was a Resident of
India, he/she shall be allowed to continue
investing in the account.

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Who can Open

Any individual can open a PPF Account in his
own name.
He can also open an additional account on
behalf of a minor of whom he is guardian.
The contribution made for his account +
Minor should not exceed 1 lakh.

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Is Joint Account Possible

PPF is an individual account and joint accounts
are not possible.
You may nominate one or more as
beneficiaries.

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How much can we invest

As per the Public PPF Scheme a Maximum of Rs.
1,00,000 and the Minimum of Rs 500 may be
invested per annum
Subscription may be by Cash/ Draft/ Crossed
Cheque/ Draft/Pay Order/Online Transfer in lump
sum or may be in 12 monthly installments as per
the option of the Account Holder.

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Interest Rate
GoI and has increased the PPF Interest Rate
from 8% to 8.6% in Nov. 2011, and once again
from 8.6% to 8.8% w.e.f 1st April 2012.
The Interest Rate is computed for a calendar
month on the basis of the lowest balance in
an account between the close of the 5th day
and the end of the month and the Interest on
PPF Account is credited to the account at the
end of the year.
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Tenure
PPF in India can be closed after the expiry of
15 financial years from the date of opening
The whole amount in this account can be
withdrawn at the time of Closure.

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Extension
After the expiry it can be extended for a block
of 5 years.
After the expiry one can opt for 60% of the
balance in his account for withdrawals at the
time of extension.
The 5 year extension offer is not available to
NRIs.

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Pre-Mature Withdrawal
There is a lock-in period of 5 years
One can withdraw 50% of the amount that stood
in the account (whichever is lower amongst the
following two):
a) At the end of 4th year (or)
b) At the end of the previous year in which
withdrawal is sought to be made.
Note: Any Loan against this amount, shall also
deducted from the above computed figure.

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Pre-Mature Closing

Premature closure or encashment of a PPF

Account is not allowed except in the case of
death of the account holder.

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Loans
Loans can be availed from the 3rd financial
year excluding the year of deposit. Amount of
such loans must not exceed 25 percent of the
amount that stood to the account holders
credit at the end of the second year
immediately preceding the year in which the
loan is applied for.

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Loans
A fresh loan is not allowed when a previous
loan or interest is outstanding.
Interest Rate is 1% if repaid within 36 months
and at 6% on the outstanding loan after 36
months.
The repayment may be made either in lumpsum or in Installments.

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Benefits
Benefit u/s 80C The Investments made in
PPF Account in India are eligible for deduction
u/s 80C.
Tax Free Interest No Tax is payable on the
Interest Earned on this form of Investment.

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Can we Transfer
PPF account are transferable among any
nationalized bank and Post offices across
India.
A PPF account cannot be transferred from one
person to another.

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Sample Calculation

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