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How to open a PPF account?

PPF accounts can be opened at post offices, nationalized banks and major private banks such as ICICI, Axis Bank, HDFC bank, to name a few. Many banks allow you to open a PPF account online through net banking. Once the account is opened, a passbook similar to the bank passbook recording all transactions such as subscriptions, interest, withdrawals, etc. will be issued. However, some other banks simply allow PPF entries to be viewed online instead of issuing a passbook.

Steps to open a PPF account are as below:

  • Log in to your bank’s net banking portal.
  • Click on the option that allows you to open a new PPF account.
  • A few banks may have an option to choose between a self-account and a minor account. Choose the option as applicable.
  • Begin creating the PPF account by entering the nominee details, bank details, etc. Certain details such as your Permanent Account Number (PAN) will be displayed. You must verify that all the details displayed on the screen are correct.
  • After entering the details, you must enter the amount that must be deposited in the PPF account.
  • Standing instructions can also be set-up at certain banks so that the money can be automatically deposited in intervals or a lump-sum.
  • Enter the OTP that has been sent to your registered mobile number or the transaction password. (this step may not be relevant in case of some banks)
  • Once the above step is complete, the PPF account will be created. You can make a note of the account number that is displayed on the screen for reference purposes.
  • In some cases, you may have to take a print-out of the details that have been entered along with the reference number and submit it at the bank with the Know Your Customer (KYC) details.

Key Features of PPF Account

  • Being a Government-backed scheme, the principal and interest amounts in your PPF account are guaranteed and safe
  • Contributions to the account of up to Rs. 1,50,000 per annum and interest earned on the savings are both tax-free
  • The interest rate for the PPF account is declared by the Government every quarter. It must be noted that PPF returns are higher than FD rates of many banks in that period
  • The PPF account is immune from attachment from any order or decree of any court under the Government Savings Banks Act, 1873

Criteria for Opening PPF Account

Some of the important conditions that must be met to open a PPF account online are mentioned below:

  • The applicant must have a savings account with the concerned bank.
  • Net Banking facility must be activated.
  • Applicant’s Aadhaar number must be linked to the savings account.
  • The applicant’s mobile number must be linked to Aadhaar.

Eligibility to Open a PPF Account

Mentioned below are the eligibility criteria for opening a PPF account:

  • Only Indian residents are allowed to open a PPF account.
  • In case a Non-Resident Indian (NRI) has opened an account while he/she was an Indian resident, the account can be continued for 15 years. However, NRIs do not have the option of extending the account.
  • Hindu Undivided Families (HUFs) cannot open a PPF account.
  • An individual is allowed to have only one account under his/her name.
  • Individuals can open a PPF account on behalf of a minor as well.

Documents Required to Open PPF Account

  • PPF account opening form (Form A) can be obtained from specified bank branches or can be downloaded online.
  • ID proof
  • Address proof
  • Photograph of the account holder
  • Nomination form

List of Banks Where PPF Account Can be Opened

  • Indian Overseas Bank
  • Allahabad Bank
  • ICICI Bank
  • Central Bank of India
  • Axis Bank
  • Canara Bank
  • State Bank of India
  • Union Bank of India
  • Bank of Baroda
  • Indian Bank
  • IDBI Bank
  • United Bank of India
  • Punjab National Bank
  • Dena Bank
  • Corporation Bank
  • Vijaya Bank
  • Oriental Bank of Commerce
  • Bank of Maharashtra
  • Bank of India
  • State Bank of Patiala
  • State Bank of Bikaner & Jaipur
  • State Bank of Travancore
  • State Bank of Hyderabad
  • State Bank of Mysore

About PPF account

Public Provident Fund (PPF) is a preferred investment option for investors looking at long-term savings. It is backed by the Government of India and comes with an attractive interest rate and guaranteed returns. These returns are completely exempt from tax under Section 80C of the Income Tax Act. Investors can save tax anywhere between Rs. 500 to Rs. 1,50,000 in a given financial year, and can get facilities such as loan, withdrawal, and extension of account. PPF is a good investment avenue for self-employed people, or for those who are from unorganized sectors since EPF/GPF may not be available to them.

The interest on the PPF account is set for every quarter and is paid by the government. The applicable interest rate on PPF for the first quarter of the year, 2021-22 i.e. from 1st April 2021 to 30th June 2021 has been fixed at 7.1%. The interest rate for previous year 20-21 was also the same, i.e. 7.1%.

FAQs

1. Is PPF a good investment?

PPF is a common voluntary tax saving investment option that most salaried individuals opt for. It is a good option for those who wish to take up long-term investments as the lock-in period for PPF is 15 years. However, it is not the only plan that helps you save on taxes, multiple other plans and schemes, such as the ELSS, also tend to offer high returns on investments.

2. How can I get the maximum benefit from PPF investment?

In order to obtain maximum PPF benefits, one should always make investments before the 5th of every month. Higher returns can be earned when a lump-sum investment is made at the start of financial year i.e, before 5th April every year.

3. Can I withdraw PPF after 5 years?

The Government has lately amended the PPF scheme and propagated some positive changes regarding the withdrawal of balance from the account. You can now withdraw the whole amount and close your PPF after 5-years.

4. Can I withdraw my PPF before maturity?

The amount in PPF account can be withdrawn only at the time of maturity. However, earlier the PPF amount was locked for 15 years. But, now the balance of PPF account can be withdrawn on completion of 5-years.

5. What is the PPF lock-in period?

Investments made to a PPF account have a lock-in period of 15 years. However, individuals can make a partial withdrawal from the PPF account after 5 years from the date of opening the account.

End Note

Public Provident Fund (PPF) investment scheme is designed to mobilize small saving in the form of investment, coupled with a return on it. It can also be called a savings-cum-tax savings investment vehicle that enables one to build a retirement corpus while saving on annual taxes.

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