What is PPF?
Public provident fund is a popular investment scheme among investors courtesy its multiple investor-friendly features and associated benefits. It is a long-term investment scheme popular among individuals who want to earn high but stable returns. Proper safekeeping of the principal amount is the prime target of individuals opening a PPF account.
Why open a PPF account?
A public provident fund scheme is ideal for individuals with a low-risk appetite and is okay to invest their money in the long term. Since this plan is mandated by the government, it is backed up with guaranteed returns to protect the financial needs of the masses in India.
Indian citizens residing in the country are eligible to open a PPF account in his/her name. Minors are also allowed to have a Public provident fund account in their name, provided it is operated by their parent.
Non-residential Indians are not permitted to open a new PPF account. However, any existing account in their name remains active till the completion of tenure. These accounts cannot be extended for 5 years – a benefit available to Indian residents.
Interest in a PPF Account
The interest payable on the public provident fund scheme is determined by the Central Government of India. It aims to provide higher interest than regular accounts maintained by various commercial banks in the country.
Interest rates currently payable on such accounts stands at 7.9% and is subject to quarterly updates at the discretion of the government.
How to Open a PPF Account
Both offline and online procedures are available for an individual provided he/she meets the requisite parameters mentioned in the eligibility criteria. Activating PPF online can be done by visiting the portal of a chosen bank or post office.
The following documents have to be produced at the time of activation of a public provident fund account –
- KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc.
- PAN card.
- Residential address proof.
- Form for nominee declaration.
- Passport-sized photograph.
Income tax exemptions are applicable on the principal amount invested in a PPF as an account. The entire value of an investment can be claimed for tax waiver under section 80C of the Income Tax Act of 1961. However, it should be kept in mind that the total principal that can be invested in one financial year cannot exceed Rs. 1.5 Lakh.
The total interest accrued on PPF investment is also exempt from any tax calculations.
Therefore, the entire amount redeemed from a PPF account upon completion of maturity is not subject to taxation. This policy makes the public provident fund scheme attractive to many investors in India.
List of Banks Offering PPF Accounts
- Allahabad Bank
- Corporation Bank
- Bank of Baroda
- HDFC Bank
- ICICI Bank
- Axis Bank
- Kotak Mahindra Bank
- State Bank of India and its subsidiaries which include the following –
- State Bank of Travancore
- State Bank of Bikaner and Jaipur
- State Bank of Hyderabad
- State Bank of Patiala
- State Bank of Mysore
- Canara Bank
- Bank of India
- Union Bank of India
- Oriental Bank of Commerce
- Central Bank of India
- Bank of Maharashtra
- Dena Bank
- Syndicate Bank
- United Bank of India
- Indian Overseas Bank
- Vijaya Bank
- IDBI Bank
- Andhra Bank
- Punjab National Bank
- UCO Bank
- Punjab and Sind Bank
These are some of the common PPF Account opening banks. There are other banks too and if you hold a savings account with another bank that is not on the list, you can find out whether the bank is a PPF Account opening bank or not.