Salient features of PUBLIC PROVIDENT FUND (PPF) SCHEME, 1968

 

Public Provident Fund Scheme 1968 (PPF account) can be opened at all branches of Bank of Maharashtra.

 

 Who can open the account:

  • Any individual can open PPF account in any Bank. Its tenure is 15 years.
  • Only INDIVIDUALS can open the Account under the Scheme.  From 13th May 2005 it is not allowed to open the accounts of juristic persons i.e. HUFs, Trusts, Provident Funds etc. It may, however, be noted that the above amendments shall not be applicable to the Accounts opened prior to 13.05.2005 and these accounts shall continue till maturity only.
  • These accounts cannot be extended for any period after maturity.
  • Only one account is to be opened in one name.  If two accounts are opened by mistake, the second account will be treated as irregular account and will not carry any interest unless the two accounts are amalgamated with the approval of the Ministry of Finance through the Local Small Savings Office.
  • The account on behalf of a minor can be opened by either father or mother.  Both the parents cannot open a separate account for the same minor.  The Grand Father / Grand Mother cannot open an account on behalf of their minor grandson / granddaughter when parents of the minor are alive.  If neither parent is alive nor where the only living parent is incapable of acting, a person entitled under the law for the time being in force to take care of the property of minor, can open a PPF Account on behalf of such minor.
  • When the minor attains majority before the maturity of the Account, the ex-minor will himself continue the account thereafter.  He will submit a revised application form for opening the account.  His signature will be attested by the Guardian or a respectable person, known to the Bank. 
  • Account cannot be opened in joint names.
  • Account cannot be transferred from one person to another.
  • Non-Resident Indians are not eligible to open the account under the Scheme.

Treatment on Maturity:

  • After maturity of an account, it can be extended for one or more further blocks of 5 years without any loss of benefit.  For this purpose, Account Holder will have to give option of extending the account in writing, within the period of one year from the date of maturity.
  • If the Subscriber fails to give his option in writing to extend the account within one year, but continues to make deposits in the account, those deposits will be treated as irregular deposits and will not carry interest.
  • The Subscriber can retain his Account after maturity without making any further deposits for any period without limits.  For this purpose, it is not necessary to give option in writing.  The balance in the Retained Account will continue to earn interest at the normal rate applicable to PPF Accounts from time to time.  The Subscriber can make one withdrawal in each financial year of any amount within the balance.  Once the Account is continued without deposits for more than a year, the Subscriber cannot opt again to continue the account with deposits.  However, he cannot open a new account, in addition to his existing matured account, until the said account is closed.

Interest Rate:

  • As per the notification issued by the Ministry of Finance quarterly basis.  Interest is calculated on the minimum balance during 05th and the last Day of the month.

Frequency of computing interest: 

  • Interest is credited on 31st March every year

Tax aspects:

  • The interest is totally exempt from Income Tax.  The amount standing to the credit of the Subscriber in the Fund is totally exempt from Wealth Tax.

Investment to be made:

  • Subscription in a Financial Year should not be less than Rs.500/- and not more than Rs.150,000/- The number of subscriptions should not exceed 12 in a year.  It can be deposited in lump sum also.  A subscriber can pay his subscription in more than one installment in a calendar month provided the total number of installments paid in a financial year does not exceed 12.  He can vary the amount to suit his convenience.
  • When the Subscriber after opening the account fails to subscribe minimum amount in the following years, the account will be treated as discontinued.  In such cases, he will not be allowed to open another PPF Account.  The Account Holder has to revive his discontinued account in case he desires to continue the account.  If the account is not revived, the account holder will get back his balance in the account only after expiry of maturity period of 15 years, along with the interest, which will continue to be added each year at the rate fixed from time to time.  The facility of loan / withdrawal is not allowed for such account.
  • For reviving such discontinued account, the penalty of Rs.50/- per year along with minimum subscription of Rs.500/- per year will have to be recovered. The penalty so collected is to be remitted to Government Account and not to be credited to concerned PPF account or to Bank’s Profit & Loss Account.
  • A subscriber may deposit the minimum subscription of Rs.500/- plus the default fee of Rs.50/- for each year of default subject to the condition that the total deposit during the year in which the defaulted subscription is deposited should not exceed maximum deposit ceiling.

Loans:

  • Any time after the expiry of one year, from the end of the year in which the account is opened, but before expiry of 5 years, a subscriber can apply for obtaining the loan. 
  • No loan can be taken after the end of the 6th financial year from the financial year in which the account was opened.

Withdrawals:

  • Only one withdrawal is allowed during a financial year.
  • First withdrawal can be made at any time after the expiry of 5 years from the end of the year in which the initial subscription is made.
  •  Thereafter, withdrawal is allowed every year, which will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is to be withdrawn or at the end of the preceding year, whichever is less.
  • If the PPF Account is continued after maturity for a further block period of 5 years, the Subscriber is eligible to make partial withdrawals not exceeding one every year subject to the condition that the total of the withdrawals during the 5 year block period should not exceed 60% of the balance at his credit at the commencement of the said period.  This amount can be withdrawn in one installment also.  This limit of withdrawal will apply on commencement of every extension of block period of 5 years.
  •  When the withdrawal is to be made from the Account of a minor, the guardian should furnish a certificate that the amount sought to be withdrawn is required for the use of the minor, who is alive and is still a minor.

Nomination and repayment after death of subscriber

  • A Subscriber may nominate one or more persons to receive the amount standing to his credit in the event of his death. No nomination can be made in respect of an account opened on behalf of a Minor.
  • A nomination made by a subscriber may be cancelled or changed by a fresh nomination.
  • If a nominee is a minor, the subscriber may appoint any person to receive the amount due under the account in the event of the death of the subscriber during the minority of the nominee.
  • In the event of death of the subscriber, the amount standing to his credit can be repaid to his nominee, even before expiry of 15 years.
  • If the subscriber dies and there is no nomination, the balance in the account, if it is upto Rs. one lakh, may be paid to legal heirs of the deceased on receipt of application supported by necessary documents without production of succession certificate.  If the balance is more than Rs. one lakh, the production of succession certificate will be necessary.
  • On the death of the subscriber, the balance in the PPF Account does not cease to earn interest.  The interest is admissible till the end of the month preceding the month in which the payment of the deposit is made to the nominee / legal heirs, of the deceased subscriber.
  • As the PPF Account is not transferable from one individual to another, the nominee cannot continue the account of the deceased subscriber in his own name.

 

Click here to download Account Opening Form

 

PPF Scheme