PPF Account: Important Rules Investors Must Know Before Investing

The number of PPF account holders is increasing in the country. The principal amount invested in PPF is eligible for tax deduction under Section 80C of the Income Tax Act and the interest earned on it is also tax-free under Section 10. 

Above is some basic information that we keep in mind while investing in a Public Provident Fund (PPF). But, there are many important things that you must know about the small savings scheme. 

Below are some special and important rules related to PPF accounts that an investor must know.

Who can open a PPF account?

Public Provident Fund (PPF) is a 15-year scheme, which can be extended indefinitely in blocks of 5 years. It can be opened in any post office or bank account. An Indian Citizen of any age can open a PPF account. Even those who have an EPF account can open a PPF account.

Maximum money Deposit in PPF account

Money can be deposited in PPF accounts a maximum of 12 times in a year. To get interest for the entire month. An investor can also deposit a lump sum amount at the beginning of the financial year itself. Taking loans and partial withdrawals are also allowed under this scheme.

The minimum annual amount required to keep a PPF account active is Rs 500, while the maximum amount that can be deposited in a financial year is Rs 1.5 lakh.

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PPF interest rate

The interest rate on PPF returns is regularized by the union government every quarter on the basis of returns on government securities. At present the interest rate for the December 2023 quarter in the financial year 2023-24 is 7.1 percent.

Nomination for PPF account

There is no provision for nomination in the application form (Form-A) of PPF because it has to be filled in a separate form. Make sure to fill out the nomination form (Form-E) while opening the PPF account to avoid any legal hassle for the nominee later.

Minor PPF Account

A PPF account can be opened on behalf of a minor through either his father or mother. Both parents cannot open separate accounts for the same minor. Therefore, an individual can open only one PPF account on behalf of each minor of whom he is the guardian.

PPF rules do not allow grandparents to open a PPF account for a minor. However, they can open an account for a minor, if the minor's parents have passed away.

Number of PPF accounts

A person can open only one PPF account in his name in a post office or bank and he has to declare the same in the application form for opening the account. 

Premature closure of PPF account

Earlier only loans and partial withdrawals were allowed on PPF accounts, but now it is also possible to close the PPF account prematurely. However, this is allowed only after the completion of 5 financial years of the account. 

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