The Public Provident Fund (PPF) Scheme, 1968 is a tax-free savings avenue that was introduced by the Ministry of Finance (MoF) in India in the year 1968. Interest earned on deposits in the PPF account are not taxable. Deposits made towards PPF accounts can be claimed as tax deductions.
| List of PPF Forms | Description |
|---|---|
| Form A | To open a Public Provident Fund Account (PPF Account) |
| Form B | To make deposits into / repay loans taken against a PPF account |
| Form C | To make partial withdrawals from a PPF account |
| Form D | To request a loan against a PPF account |
| Form E | To add a nominee to a PPF account |
| Form F | To make changes to PPF account nomination information |
| Form G | To claim funds in a PPF account by a nominee/legal heir |
| Form H | To extend the maturity period of a PPF account |
Key features of PPF Scheme
The main things to note about PPF accounts are outlined below.
| Interest rates | 7.8% |
| Tenure | 15 years |
| Initial investment/deposit | Rs.100 |
| Annual Deposit amount | Rs.500 – Rs.1.5 lakhs per year |
| Deposit frequency | every year, for 15 years |
| Deposit modes | Via cash, cheque,PO, DD, online funds transfer |
| Nomination | Allowed |
| Loan facility | From year 3 to year 6. |
| Renewal | Allowed, for an extra 5 years at a time. |
| Joint accounts | Not allowed. |
| Withdrawals |
|
| Tax advantages |
|
| Fund transfer |
|
- Interest rates: Interest rates are announced by the central government periodically, usually annually. Interest earned is compounded yearly. (The current rate of interest on a PPF account is fixed at 8.1% p.a.)
- Tenure: 15 years; account continuance is allowed beyond maturity for 5 years at every renewal, with or without making additional deposits.
- Initial investment/deposit: Rs.100 to open the account
- Annual Deposit amount: Rs.500 – Rs.1.5 lakhs per year (can be revised as per government directive)
- Deposit frequency: A deposit has to be made every year, for 15 years, to keep the account active. Failure to make the minimum annual investment will render the account inactive.
- Deposit modes: Via cash, cheque,PO, DD, online funds transfer; as a one-time deposit or up to 12 installments.
- Withdrawals: Partial premature withdrawals can be made every year from year 7; withdrawals are subject to conditions. Complete withdrawal of funds can be made only at maturity.
- Tax advantages: Interests are tax-free and deposited amounts are tax deductible U/S 80C of the Income Tax Act. Withdrawals are exempt from wealth tax.
- Nomination: Allowed; on opening the account or after.
- Fund transfer: Funds/accounts cannot be transferred between people but can be easily transferred between bank branches or post offices for free.
- Loan facility: Loans can be availed against funds held in the PPF account from year 3 to year 6.
- Renewal: Renewal or extension of the scheme is allowed, for an extra 5 years at a time.
- Joint accounts: Not allowed.
Benefits of investing in PPF Scheme
Some of the key advantages of PPF accounts are stated below.
- Attractive long-term investments: With a deposit period of 15 years and a lock-in period of 7 years, these accounts serve long-term investment goals. With interest rates compounded annually, effective returns tend to be more attractive vis-a-vis bank FDs.
- Useful for retirement planning: Long-tenures, compounded, tax-free returns and capital protection make this an ideal option for building a retirement corpus.
- Tax-free returns: Tax-free interest and withdrawals and tax-deductible investments.
- Low-risk: Being government-backed, there is low risk of default.
- Easily accessible: PPF accounts can be opened at nationalised, public banks or post offices and select private banks, all of which have wide reach. Accounts can be opened online as well.
- No attachment: PPF funds can’t be attached under court order or laid claim to by creditors.
Eligibility – who can open a PPF Account?
- Only one PPF account can be opened per person. Resident Indians, 18 years or older, can open a Public Provident Fund Account. There is no upper age limit for opening this account.
- Accounts can be opened for minors. Minors are those below the age of 18 years. However, the maximum limit of Rs.1.5 lakhs per year applies to deposits made in the minor and the major’s/guardian’s account, collectively. Grandparents cannot open an account in the names of their minor grandchildren.
- Non-resident Indians (NRIs) cannot open a PPF account. However, account-holders who leave the country and obtain non-resident status after having opened a PPF account can continue to maintain their accounts until it matures i.e. until the end of the account’s 15 year term. NRIs are restricted from extending account tenures at maturity.
- HUFs cannot open a PPF account, effective 2005. Those accounts opened by HUFs before May 13, 2005 can be continued until maturity without further extensions. An individual cannot open an account for an HUF (Hindu Undivided Family).
- Foreigners cannot open a PPF account.
Documents needed to open a Public Provident Fund Account
Documents required to open a PPF account are KYC documents such as identity proof, address proof and signature proof. These commonly include the latest version of a person’s
- Passport, PAN Card, Aadhar Card, Driving License, Voter’s ID, Employer’s letter, Utility Bill, Rental/Lease Agreement, Bank Account Statements, Ration Cards, Signed Cheque
- Photographs
- The account opening form, along with nomination form if nominees are being named.
- This is not an exhaustive list. Banks may request additional documents if necessary.In case of minors, age proof will be required i.e. the minor’s birth certificate or school certificate.
Public Provident Fund (PPF) Forms
There are various forms pertaining to PPF accounts. They are Forms A to H, each of which are issued for a specific purpose.
- Form A – To open a Public Provident Fund Account (PPF Account)This is the form issued to those opening a new PPF account. It will require key particulars of the account holder such as name, address, PAN card and signature to be filled in. The amount being deposited will also have to be specified. In case of minors, particulars such as the minor’s name, guardian’s name and relationship with the applicant will be required. If the account is being opened by an agent, the agent’s name will have to be filled in.
- Form B – To make deposits into / repay loans taken against a PPF accountThis is used to deposit or pay money into an account. These deposits or pay-ins may be investments, repayments for a loan taken against the account or payment of penalties to reactivate an inactive account. Investments have to be made every year to keep the account active. Loans can be availed from year 3 to year 6, counted from the year of account opening. Amounts can be deposited via cash, cheque, PO, DD or internet banking. This has to be specified in the pay-in slip. In case accounts are opened and deposits made through an agent, the agent’s name and code has to be entered in the form.
- Form C – To make partial withdrawals from a PPF accountCertain sums of money can be withdrawn from the account from year 7 of opening the account. This form is an application to withdraw such amounts. The form requires the applicant to fill in the account number and the amount to be withdrawn as well as a declaration stating no other amounts were withdrawn during the same financial year.
- Form D – To request a loan against a PPF accountAccount holders can utilise the loan facility provided under the scheme from year 3 to year 6 of an active account. Details to be specified are the PPF account number, the amount being borrowed and an undertaking that the amount will be repaid with interest within 3 years as per the rules.
- Form E – To add a nominee to a PPF accountMore than one person can be nominated for a single PPF account. The names of such persons, along with their addresses and relation to the account holder has to be specified in the form. In case more than one nominee is stated, the percentage of funds that can be claimed by each nominee will have to also have to be specified. Nominations cannot be made for minors’ PPF accounts.
- Form F – To make changes to PPF account nomination informationThis form is to be used to cancel or alter nominees for a particular PPF account. The account holder will have to specify when the nominee being cancelled/replaced/altered was named so. Nominees can be added, removed at any time during the PPF account tenure. The percentage allocated to each nominee can also be altered.
- Form G – To claim funds in a PPF account by a nominee/legal heirWhen an account holder dies, those whom he/she stated as nominees or his/her legal heirs, can claim the amount in his/her PPF account. To do so, Form G will have to be filled out with required details such as the name(s) of the nominee(s)/heir(s) of the account holder. The form asks for confirmation from the claimant that the death certificate of the account holder has been enclosed.
- Form H – To extend the maturity period of a PPF accountThe standard tenure for a PPF account is 15 years after which the investor can withdraw funds held therein, completely and freely. However, if a PPF account holder wishes to extend the term of the account beyond 15 years, he/she can do so for a further 5 years by submitting this form. The account number and date of account opening will have to be specified.
Interest Rates for PPF Accounts
The Public Provident Fund Scheme is a fixed-income, debt investment offered by the government. It is the central government who sets and announces the latest PPF interest rates. The rate currently stands at 7.9% p.a. for the year 2017-2018
The table below represents PPF interest rates for the last 16 years.
| Financial Year | Interest rate (p.a.) |
| 2017-2018 | 7.9% |
| 2016 – 2017 | 8.1% |
| 2015 – 2016 | 8.7% |
| 2014 – 2015 | 8.7% |
| 2013 – 2014 | 8.7% |
| 2012 – 2013 | 8.8% |
| 2011 – 2012 | 8.6% |
| 2010 – 2011 | 8.0% |
| 2009 – 2010 | 8.0% |
| 2008 – 2009 | 8.0% |
| 2007 – 2008 | 8.0% |
| 2006 – 2007 | 8.0% |
| 2005 – 2006 | 8.0% |
| 2004 – 2005 | 8.0% |
| 2003 – 2004 | 8.0% |
| 2002 – 2003 | 9.0% |
| 2001 – 2002 | 9.5% |
| 2000 – 2001 | 11.0% |
