Features of PPF Account

There is so much that we actually do not know about our provident pension fund – that is why it is essential to look into every aspect of it, most even in detail. This post here talks about all of the major characteristics of the PPF Account, but before we get there, don’t you think you might want to know more about what the account actually is?

What is the Meaning of the PPF Account?

As it combines tax benefits, returns, and safety, the Public Provident Fund (PPF) scheme is a particularly well-liked long-term savings plan in India. The National Savings Institute of the Finance Ministry introduced the PPF program in 1968. The scheme’s primary goal is to support people in making modest savings and to offer returns on those savings. The PPF program offers a competitive interest rate, and there is no tax withholding required on interest-rate-related returns.

What Exactly Is This Account?

The National Savings Institute had created the Public Provident Fund (PPF), a post office savings program. Some private and nationalized banks, though, are permitted to accept PPF investments. It is backed by the government. Returns are therefore assured. The current quarter’s PPF Interest Rate is 7.1% (FY 2022-23).

Every year on March 31 – the interest is deposited. However, between the fifth and the thirty-first of each month, the interest is calculated on the minimum PPF balance. The lock-in period for Public Provident Fund is 15 years. The program can be extended further in 5-year increments.

The Public Provident Fund accepts investments from all Indian nationals. HUFs and NRIs cannot, however, open a PPF account.

Additionally, PPF enables investors to borrow money against their PPF investments. Between the third and fifth years, there is a loan facility accessible. On the bank’s website, one can apply for a loan online.

One PPF account can be opened by each investor. There can be only one PPF account. A flat sum or twelve separate installments are both options for investors. The minimum and maximum investments are 500 and 1,50,000, respectively. However, some banks just require a minimum deposit of INR 100 to create a PPF account.

What are the Major Characteristics of the PPF Account?

Here is the list of PPF Account Benefits and features:

a) The Maturity

The PPF account has a 15-year maturity term, which is common knowledge. Less commonly known – is the fact that this maturity period is not determined from the moment the account was opened. A PPF account’s 15-year maturity period is computed starting from the end of the fiscal year in which the initial investment was made.

b) The Tax Exemptions

Exempt-Exempt-Exempt status, or EEE status, is available for PPF investments. The amount invested is the first PPF exemption. PPF investments are eligible for tax deductions under Income Tax Act Section 80C.

c) Contributions

In accordance with current PPF regulations, the account must receive a minimum annual deposit of Rs. 500 to remain active. PPF now only permits annual contributions of up to Rs. 1.5 lakh. The maximum annual contribution of Rs. 1.5 lakh is, however, liable to change from time to time.

A subscriber’s excess deposits are considered irregular and are returned to them without interest if they total more than Rs. 1.5 lakh annually.

On the other hand, the PPF account would become inactive if a subscriber does not pay the required minimum annual deposit of Rs. 500 in a fiscal year. A penalty of Rs. Fifty must be paid for each year that a PPF account has been dormant in order to reactivate it. For each year the account was inactive, a minimum contribution of Rs. 500 was also required in addition to this penalty.

d) Who is Eligible?

A PPF account could be opened in the name of any Indian citizen. Additionally, parents or legal guardians are permitted to open a PPF account in a minor’s name.

However, under the current regulations, HUF (Hindu Undivided Family) cannot open PPF accounts, nor are combined PPF accounts permitted.

NRIs (non-resident Indians) are also not permitted to open new PPF accounts. The PPF account, however, may be kept open until its maturity if it was opened before the subscriber became a non-resident. NRIs cannot, however, continue to contribute to their PPF account after it reaches maturity.

e) Is It for Minors Too?

Parents may open one PPF account in the name of a minor child, but each parent may only open one of these accounts. A parent and a minor child may each contribute a maximum of Rs. 1.5 lakh per year to PPF.

Therefore, if the parent deposits Rs. 1.5 lakh in the minor’s PPF account in a fiscal year, that parent is not permitted to deposit an additional Rs. 1.5 lakh in his or her own PPF account.

While grandparents are permitted to open PPF accounts in the names of their underage grandchildren, parents are not permitted to do the same. However, if a grandparent is a legal guardian, they may open a PPF account for their young grandkids.

Indians frequently invest in PPF accounts for children since they can help them accumulate tax-free funds. When the PPF account reaches maturity, which takes 15 years, the corpus can then be used for a variety of things, including the child’s higher education costs.

f) Partial Withdrawal

After five financial years have passed, subscribers may take partial withdrawals from their PPF accounts. However, the beginning of this five-year period is taken as the end of the fiscal year in which the initial contribution was made. Therefore, from the beginning of the seventh year of the PPF account, computed from the date of account opening, partial withdrawal of the PPF balance is actually permitted.

g) Closing the Account

After maturity or the end of the extension period, closing a PPF account is a straightforward process that just requires the subscriber to submit an application to the bank or post office that manages your PPF account.

Premature account closure, however, is subject to a few restrictions. First off, a PPF account cannot be prematurely closed until at least five financial years have passed. Therefore, a subscriber may only shut a PPF account after the beginning of the seventh year following the date the account was opened.

A Public Provident Fund account may only be prematurely closed under certain circumstances, such as further education, a change in residency status, or to secure funding for a serious sickness.

Additionally, the subscriber will get interest, which is 1% less than the PPF interest rate than they would have if they had kept the account open. Although this 1% penalty might seem insignificant, it is actually effective as of the date the account was opened.


If you are salaried, working in a company with more than 20 people, and earning more than Rs. 15,000 a month – you are already contributing to the EPF. But, when it’s time to do the investment yourself, that is when you choose a PPF, which means – this article is a good way to get started on knowing more about this account in particular.

IPS, No PR, Wire