PPF for savings tax

Tax Saving Public Provident Fund (PPF)

Secure your future with triple tax benefits

Why to invest?

  • A popular long term investment option backed by Government of India
  • Gives assured, tax-free returns with attractive interest rate
  • Triple tax benefits: With PPF, earn tax exemption on your investment amount up to Rs 1,50,000, interest earned and maturity proceeds

Know before you invest

  • Returns: Interest rate of 7.9% per annum*
  • Lock-in Period: 15 years after account opening, thereafter in blocks of 5 years
  • Keep it as collateral to avail of loan between 3rd and 6th financial year
  • After completion of 5 years it is possible for individuals to opt for premature closure.
  • Partial withdrawal of funds is available after completion of 6 years of opening the account. The account holder can withdraw 50% of the funds that are available after the fourth year in case of PPF premature withdrawal. It can either be at the end of the preceding year or the year before which the amount is withdrawn, whichever is lower.
  • Maximum 12 contributions allowed per year.

*Interest rate is subject to change by the Government of India.

Public Provident Fund (PPF) FAQs for Saving Tax

Can I increase my investment under the PPF scheme by opening 2 or more accounts in my name?

No. Under the Public Provident Fund Scheme, a person can hold and operate only one account in his/her name.

Can I continue to use an inactive account?

Yes. You can do so by paying the holding branch a penalty of Rs 50 for every year the account was inactive. You will also have to deposit a minimum of Rs 500 for every year the account was inactive as well as Rs 500 for the year you are activating the account.

Will I continue to earn returns if my account is inactive?

No. Interest will not be calculated for the year(s) the account is inactive. Once the account is revived, interest will be calculated on the balance held at time of revival.

If I open a PPF account in my minor child’s name, can I claim tax deductions from both accounts i.e. my child’s and mine, when I file taxes?

The maximum investment cap of Rs 1.5 lakh applies to all contributions you make to your account, your minor child’s account and/or your spouse’s account, collectively. Only amounts up to Rs 1.5 lakh can be claimed as deduction under Section 80C of the Income Tax Act. For e.g. if you contribute Rs 1 lakh toward your account and Rs 1 lakh towards your child’s account, you can claim only Rs 1.5 lakh as deduction and not Rs 2 lakh.

What if I wish to invest more money than Rs 1.5 lakh limit?

Interest will be calculated and paid out only on amounts up to Rs 1.5 lakh for any year. Only the maximum annual investment limit i.e. Rs 1.5 lakh a year will be considered towards all PPF calculations for all purposes.

The limit was raised from Rs 1 lakh to Rs 1.5 lakh mid-way through 2014. If the limit is raised this year in the same way, how will I make the additional deposit? Should I wait for next year?

When the limit is raised during a financial year, banks and post offices are instructed to accept additional investments if investors wish to contribute up to the revised maximum limit. This is what was done last year for those who wished to contribute up to Rs 1.5 lakh under the revised limit.

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