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Public Provident Fund (PPF)

What is Public Provident Fund?
The public provident fund schemes are provided by the Government of India
and are widely used by employees all over India.

Duration: The PPF have a maturity period of 15 years.

Mode of Investment: Single, Joint (Two or more), HUFs and Minor with

Investments: Min Amt. Rs.500/- and additional investment in multiples of

Rs. 5/- Max Amount Rs. 70,000/-

Returns: PPF provides an interest rate of 8% p.a. (compounded yearly) is

Credited to the PPF account at the end of each financial year.

· Tax benefits can be availed under sections 88 for the amount invested.
Interest accrued is Tax free.
· A PPF account cannot be attached by the Govt. or any court of law or
through any decree.

Apart from a Post Office, a PPF account can also be opened in SBI & its
associates and other select nationalized banks.
Nomination can be done at the time of opening the account or during the tenor
of the account.
15 years from the date of initial investment with a block of 5 years there-after
up to a max of 30 years incl. 15 years.

The PPF account matures after 15 years. One can then exercises on option of
continuing the account for an additional block of 5 years or close it.

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The first loan can be taken in the third financial year from the date of opening
of the account, or up to 25% of the amount at credit at the end of the first
financial year. The facility can be availed of any before expiry of 5 years from
the end of the year in which the initial subscription was made. The loan is
repayable either in lump sum or in convenient installments numbering not
more than 36. Interest at 1% would be charged if loan is repaid in 36 months.
Such interest should of loan is not repaid within 36 months, interest on
outstanding amount of loan would be charged at 6%.

A withdrawal is permissible every year from the seventh financial year of the
date of opening of the account, of an amount not exceeding 50% of the
balance at the end of the 4th proceeding year or the year immediately
proceeding the year of the withdrawal, whichever is lower, less the amount of
loan if any.

A PPF account can be opened by an individual on his own behalf or on behalf

of a minor of whom he is the guardian or on behalf of Hindu Undivided
Family (H.U.F) of which he is a member or on behalf of an association of
persons or a body of individuals. An individual can open only one account for

The account can be transfered at the request of the subscriber from one office
to another, including from Bank to Post Office and vice- versa all over the

A subscriber may nominate one or more persons to receive the amount

standing to his credit in the event of his death. No nomination can, however,
be made in respect of an account opened on behalf of a minor.
In the event of the death of the subscriber, the amount standing to his credit
can be repaid to his nominee or legal heir, as the case may be, even before the
expiry of fifteen years. Legal hairs can claim the amount up to Rupees One
Lakh without production of succession certificate after observing certain
formalities. P.P.F. account can be revived by paying a fee of Rs 10/- for each
year of default along with the arrear subscription of Rs 100/- for each year of
such default.

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No PPF account can be terminated before its completion. However, if requests

for premature closure of PPF accounts and refund of deposits from the
subscribers are genuine in nature, such cases can be dealt with under Rule 13
of the scheme. Since no withdrawal is permissible before the expiry of four
years from the end of the year in which the account was opened vide para 9
(withdrawal) of the scheme, the request for termination or closure of accounts
can be considered only after the expiry of the said period.
For example, the request for premature closure of accounts opened in 1988-89
can be considered only after 1.4.1994.
Such requests may, therefore, be forwarded to the Ministry of Finance along
with the following information –

· Name and address of the account holder

· Account number
· Date on which the account was opened
· Loans availed of if any from the account with dates and position regarding
· Satisfactory reasons given for the request and evidence in support thereof
· Designation and address of the income tax authority under whose
jurisdiction the subscriber falls
· Any other information relevant to the request.

A PPF account is free from any attachment under any order or decree of a
court in respect of any debt or other liability incurred by him

Non Resident Indians may also open a PPF account out of the funds in the
applicant's non-resident account in India in banks subject to the following
conditions –
· The account is marked as non-resident account

· All credits therein or debits thereto are made subject to the same
regulations as are applicable to non-resident account.

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