public provident fund (PPF) scheme, created in accordance with the Public Provident Fund Act of 1968, is a long-term investment scheme supported by the Government of India. It offers security with attractive interest rates and returns that are completely tax-free.
income tax benefit
PPF interest income is completely exempt from income tax. PPF account balance is completely exempt from wealth tax.
PPF loan facility or partial withdrawal
After the fifth year, withdrawals are allowed in each subsequent year. The maximum withdrawal is 50 per cent of the account balance at the end of the fourth year immediately preceding the year of withdrawal, or at the end of the year, whichever is less, less any outstanding loan taken by him.
In the third financial year after the financial year in which the account was opened, the depositor is eligible for the loan. At the end of the first financial year, the credit balance of the account can be up to 25% of the total amount that can be borrowed. The loan has to be repaid in 36 months.
PPF Features
HUFs and NRIs are not eligible to open PPF accounts. Lump sum payment or 12 monthly instalments, both with a minimum of Rs. are accepted for membership. 500 and maximum Rs. 1,50,000. The tenure of the account is 15 years, but it can be extended to one or more blocks of five years without loss of interest on written request within one year prior to the maturity date of the account.
Enrollment
A PPF holder can nominate one or more nominees. The percentage of each nominee’s share, which should be equal to 100%, should be mentioned in case the person wishes to nominate more than one person. Additionally, nomination facility is not offered if the name of a minor was used for opening the account.
When is PPF account considered closed?
If the customer required minimum Rs. do not pay. 500 in a given financial year, their account will be considered closed. In these situations, the customer will not be allowed to take loan or make partial withdrawals until the account is revived. The subscriber is allowed to open only one PPF account at a time.
As per, “The subscriber of a closed account can revive the closed account by paying Rs. 50/- aspenalty for each year of default with outstanding subscription of Rs. 500/- for each year.”