Published Date - 19 March 2018 02:22:04 Updated Date - 19 March 2018 02:24:36

PPF (Public Provident Fund) Account / Calculator / Interest Rate in Post Office Scheme

Public Provident Fund is a tax saving instrument offered by Government of India. PPF scheme is governed by the provisions of Public Provident Fund Act, 1968. The deposits made towards the PPF account can be claimed as deduction under Income Tax Act and the interest earned on these instruments is tax free. Subsequently, the main aim of opening of ppf account is to mobilize small savings through investment with reasonable returns in addition to income tax benefits. Accordingly, ppf calculator can be used to calculate the ppf rate of interest which is currently fixed at 7.6% p.a by central government.

The history of these instruments goes back to 1968 when these were introduced by the National Savings Institute of the Ministry of Finance. The objective of this scheme is to mobilize small savings and encourage creation of retirement corpus. It is a risk free saving scheme as it is backed by the guarantee of the Central Government.

Post office PPF account is one of the best tax saving instrument where the maturity amount is also tax free. You can invest for longer time period of 15 years and above. So if you are employed in private sector and are not backed by any pension facility, then opening a PPF account is surely a wise decision.

People can open their ppf account in post office or some authorized branches of bank. Bank permits deposits in ppf account online. NRI candidates are not allowed to invest in Pubic Provident Fund Scheme. Check PPF vs NSC (National Saving Certificate) vs Kisan Vikas Patra KVP  vs Sukanya Samriddhi Yojana (Girls) Post Office Schemes.

Features of PPF Account

Either Father or Mother can open ppf account in the name of a minor. However, both are not allowed to open this account in the name of minor. Even grand parents can not open this type of account for minor but can act as guardian in case both the parents of minor are dead. The important features and ppf account rules are given below:-

  • People must deposit minimum Rs. 500 per year in their ppf account. The maximum limit is Rs. 1,50,000 per year. Any Indian Person can deposit money in lump sum or in 12 installments.
  • Subsequently, Joint account opening is not permitted in Public Provident Fund Scheme.
  • Accordingly, people can open their account in cash / cheque with minimum Rs. 100. In case of cheque, the date on which cheque gets cleared is the account opening date.
  • Moreover, the nomination facility is available at the time of opening of account and remains applicable even after the account is opened. If a person does not specify his nominee and the account holder dies then the entire amount will get passed to the legal heirs. In addition to this, account also has transfer facility i.e it can be transferred from 1 post office to another.
  • Subscriber can also open another account in name of minor but the maximum investment limit (adding balance in all accounts) needs to be followed.
  • PPF Scheme has maturity period of 15 years but subscribers can extend it for further 5 years and so on. People can also retain their maturity amount without any extension or any further deposits.
  • In PPF scheme, the amount invested get locked for 15 years. So, premature ppf withdrawal is not possible.
  • People also receive tax benefits through investment in Public Provident Fund. All the deposits qualifies for income deduction under section 80C of IT Act. Moreover, the interest amount is non-taxable (free from tax).
  • PPF Withdrawal is allowed from 7th financial year of opening account. Afterwards, people can withdraw amount every year.
  • In addition to this, Post Office / Banks also provides loan facility from 3rd financial year.
  • Furthermore, PPF Accounts have no attachment under court decree order.
 

People can open PPF account in a Post Office or nationalized banks (PPF SBI, PPF PNB, PPF Central bank of India) and other banks (PPF ICICI, PPF HDFC, PPF Axis Bank etc.). However each individual is permitted only to open one ppf account.

PPF Calculator

People can calculate their ppf interest earned, ppf closing balance, max loan and ppf withdrawal on an yearly basis on the amount deposited through the link given below:-
PPF Calculator

Benefits of PPF Calculator

Not only is this calculator easy to use and understand but also

  • Calculates interest on both fixed and variable investment
  • Calculates permissible withdrawal limit during the tenure of 15 years
  • Calculates possible loan amount you can opt for against your PPF account

 

Minimum and Maximum PPF Account Balance

For the 1st time on opening account, initial ppf account balance amount is Rs. 100 for subscription. For this, person will have to fill Form A along with subscription amount. On Receiving application for, Accounts Officer will open the account and issue a new passbook. This ppf passbook will consists information of all ppf deposits, ppf loans and ppf withdrawal.

As per the Public Provident Fund Act of 1968, minimum ppf account balance to be deposit in the account is Rs. 500 per year. Moreover, the central government has increase the maximum ppf account balance limit from 1 lakh to 1.5 lakh in FY 2014.

In case the PPF account holder does not deposit this minimum ppf account balance amount, then he has to bear a penalty of Rs. 50 along with arrears of Rs. 500 subscription for that year. People can deposit this amount in lump sum or in 12 monthly installments.

Eligibility to Open PPF Account in a Post Office

  • Any Indian citizen whether a salaried employee or self-employed is eligible to open a PPF account in a post office.
  • In the case of minors, the parents or guardian of the minor can open a PPF account in a post office on behalf of the minor.
  • For NRIs that have moved abroad during the course of the PPF lock-in period, he/she in this can case can continue to hold the account and make contributions towards it.

Procedure to Open PPF Account in a Post Office

To open a PPF account in a post office, the individual is required to follow the below listed steps.

  • The individual has to locate the nearest post office or sub post office in his/her area.
  • One can either get the PPF application form online or at the post office.
  • Once at the post office, the candidate is required to fill in the details of the PPF application correctly. For example, name, date of birth, father’s name, etc.
  • Once the application form is filled, the applicant is required to paste his/her passport size photograph on the application form.
  • He/she will then have to make an initial deposit of Rs.500 towards the PPF account. The maximum initial contribution that can be made towards the PPF is Rs.70,000.
  • Note that the minimum deposit for a year is Rs.500 with the maximum being Rs.1.5 lakh.
  • As soon as the applicant provides all the necessary documents and the initial deposit, the post office executive will hand him/her a passbook for the PPF account. The passbook will hold the details of the account holder - Account holder’s name, PPF account number, branch name, etc. In the future, all transactions can be recorded in the passbook.

Documents required to open PPF account in a Post Office

When applying for a PPF account, applicants are required to submit the below listed documents.

  • Identity proof - Passport, Voter’s ID, Driver’s license, etc.
  • Address proof - Passport, Voter’s ID, Driver’s license, etc.
  • PAN card
  • 2 passport size photographs

 

PPF Interest Rate / Rate of Interest

Central govt. benchmarks this ppf rate of interest against 10 year government bond yield (around 0.25% higher). Previously, ppf interest rate were revised annually but from FY 2016, govt. revises these rates quarterly.

How to Earn Maximum PPF Interest – PPF Interest Rate is calculated per month on the basis of lowest ppf account balance between closure of 5th day and end of month. So, subscribers must make all their additional deposits before 5th of every month to earn maximum interest on ppf withdrawal. However, the ppf interest is credited at the end of every year.

PPF Rate of interest for the previous quarters

Period

PPF Interest Rate

Jan 2017 to Mar 2017

8%

April 2017 to June 2017

7.9%

July 2017 to Dec 2017

7.8%

Oct 2017 to Dec 2017

7.8%

Jan 2018 to Mar 2018

7.6%

PPF Withdrawal

People can make ppf withdrawal on closing their account after 15 years (interlock period). For this, subscribers can fill Form C and must also produce passbook of their account.

PPF Account Extension – All account holders have the facility to apply for extension for further 5 years. While applying for extension, people are liable to make Partial PPF Withdrawal through filling Form H. However in extension case, total amount of withdrawal must not exceed 60% of the available ppf account balance at the time of extension.

Pre Mature PPF Withdrawal – All the ppf account holders can make pre mature withdrawal after 5 years. At that time, maximum amount which a person can withdraw is 50% of the amount (whichever is lower from the given 2 two parameters):-

  • PPF Deposit at the end of 4th year or
  • PPF Amount at end of last year in which subscriber seeks ppf withdrawal.
 

Moreover on pre mature ppf withdrawal, there is a penalty of 1% reduction in rate of interest on the whole deposited amount.

Public Provident Fund Tax Benefit / PPF Tax Benefits

In Public Provident Fund Scheme, there are 2 types of amount – first is the principal amount which a person deposits and second is the interest earned. PPF Account has tax benefits on both these amount which are as follows:-
PPF Tax benefit on Principal Amount – PPF principal amount will get deduction from Gross Total Income under 80C of IT Act. However, this amount is limited to Rs. 1.5 lakh per annum. For rest amount, subscriber will have to pay tax as per their income tax slab.
PPF Tax Benefit on Interest Earned – Interest earned is absolutely tax free and govt. cannot levy any income tax on this amount.

References

— For more information on Public Provident Fund Scheme, please visit the official website indiapost.gov.in

 


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