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Friday, 24 January 2020

PPF Account -12 Frequently Asked Questions

Public Provident Fund (PPF) is considered as most important and safe amongst all tax saving investments schemes.  This scheme is falls under the EEE category i.e. Exempt, Exempt and Exempt which means if you invest in it, you will get a deduction u/s 80C on your income. Further, the interest you earn on it alongwith its maturity proceeds will be tax-free in the hand of investor.
While dealing in Public Provident Fund, investors having various doubts therefore in this article I am discussing some Frequently Asked Questions (FAQ) related to PPF. Such as whether more than one account is allowed under PPF or not? Eligibility criteria for PPF account, information related to deposit criteria and interest earning on PPF account balance, loan facility, etc
Frequently Asked Questions related to Public Provident Fund (PPF) are as under:  

1. Can I maintain more than Public Provident Fund (PPF) account under my name?

Only one PPF account can be maintained by an Individual, except an account that is opened on behalf of a minor.

2. What is the eligibility for investing under Public Provident Fund (PPF) Scheme, 1968?

A Public Provident Fund (PPF) account can be opened by resident Indian Individuals and individuals on behalf of minors or a person of unsound mind..
Only one Public Provident Fund (PPF) account can be maintained by an Individual, except an account that is opened on behalf of a minor.
A Public Provident Fund (PPF) account can be opened either by the Mother or Father on behalf of their minor Son or Daughter; however the Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same minor.
Grand-parents cannot open a Public Provident Fund (PPF) account on behalf of minor grand-child; however, in case of death of both the Father and Mother, Grand-parents can open a Public Provident Fund (PPF) account as guardians of the Grand-child.

3. What is the minimum and maximum amount that can be invested under the Public Provident Fund (PPF) Scheme, 1968, in a financial year?

The minimum deposit amount is Rs. 500 per annum and the upper ceiling limit is Rs. 1,50,000 per annum.

4. What happens if I fail to deposit any amount in one or more Financial Years?

A penalty of Rs. 50 will be levied per year of default, if the customer doesn’t deposit the minimum deposit amount of Rs. 500 on the completion of the financial year.

5. What is the Interest earned in Public Provident Fund (PPF) account?

The current rate of interest on Public Provident Fund (PPF) is 7.5%, which is compounded annually .

6. When does a Public Provident Fund (PPF) account mature?

A Public Provident Fund (PPF) account gets matured after the completion of 15 years from the end of the year in which the account was opened.

7. Can I extend the tenure of a Public Provident Fund (PPF) investment beyond the Maturity Period?

A customer can extend the tenure of a Public Provident Fund (PPF) investment for a block period of 5 years beyond the maturity period by submitting Form 4 within one year from the date of maturity.

8. Can I terminate or closed the Public Provident Fund (PPF) account before before maturity?

No premature withdrawal is allowed for Public Provident Fund (PPF) accounts. Only in the case of the death of a customer, their nominee /legal heir can close the account by submitting the required documents as guided by the Ministry of Finance.

9. Can I withdraw funds from my Public Provident Fund (PPF) Account?

Customer can make one withdrawal every year, from the 7th financial year, of an amount that does not exceed 50% of the balance of the customer credit at the end of the fourth year immediately preceding the year of withdrawal or the amount at the end of the preceding year, whichever is lower.
Facility of partial withdrawal under PPF Scheme shall be available to the account extended, subject to the condition that the total withdrawal during the block period of five years shall not exceed sixty per cent. of the balance at credit at the commencement of the block period.
Please note that the withdrawal, subject to the ceiling as specified above may be made either in a single or in yearly instalments.

10. Can I avail of Loan facility on my Public Provident Fund (PPF) investment?

Customers can avail the loan after completion of 2 year from the date of Initial subscription but before expiry of 5 years. Application must be file in Form 2 to the accounts office and for the amount which is less than or equal to 25% of total amount of credit balance in your account at the end of 2nd year immediately preceding the year in which the loan is applied for.

11. What is the process for transferring my existing Public Provident Fund (PPF) account maintained with another bank/post office to Bank of Your Choice?

As per the PPF scheme of the Government, subscribers can transfer their PPF account from one authorised bank or Post office to another. In such a case, the PPF account will be considered as a continuing account. To enable customers to transfer their existing PPF accounts to  Bank of your choice, the following process must be followed.
The customer approaches the bank or the Post office where his current PPF account is held and makes an application for transfer of PPF account to another Bank’s branch.
Once the application is processed, the existing bank/Post office arrange to send the original documents such as a certified copy of the account, the account opening application, nomination form, specimen signature etc. to another Bank branch address provided by the customer, along with a cheque/DD for the outstanding balance in the PPF account.

12. Role of another Bank Branch in case of Public Provident Fund (PPF):

Once transfer in documents are received at another Bank branch, customers are required to submit fresh PPF account opening form and Nomination form, along with their original passbook . Also customer is required to submit a fresh set of KYC documents.
Related Post
(Republished with Amendments)
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