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Understanding PPF: Features, Eligibility and Documents Required

Published On Oct 02, 2021

Have you been looking for one of the best savings schemes? Have you been advised to make an investment in PPF? If considering PPF as one of the key options, know that you have rightly been advised. However, it is recommended that you understand the basics of PPF before making the final decision.

What is a PPF Account?

A PPF account or a Public Provident Fund account is an excellent savings as well as investment product. One of the most popular options, PPF is ideal for the long run and widely sought after due to its safety, returns, and tax saving feature. In PPF, the government of India guarantees the investment in funds and sets the interest rate on a quarterly basis. Investors get a great option in PPF as they can build a corpus for their retirement by keeping aside a specific amount of money regularly for over long time periods. 

Features of PPF Account

Some of the key features of the PPF account are: 

Minimum & Maximum Investment: You can easily invest a minimum amount of Rs. 500 and a maximum of Rs. 1.5 Lakh in a financial year as per your convenience. 
Lock-in Period: A PPF account is a long-term savings product with a lock-in period of 15 years. In simple words, the amount accumulated in a PPF account can only be withdrawn at maturity i.e., only after 15 years. The 15-year lock-in period can be extended by 5 years. Moreover, premature withdrawals are also permitted, but only in the case of emergencies. 
Interest on PPF: The calculation of interest on the PPF balance is done every month. The interest amount is credited to the PPF account at the end of every financial year. It is important to note that the interest rates are pre-declared by the Government for each quarter. 
Loan Against PPF: A PPF account holder is permitted to take a loan against his PPF balance, but only between the 3rd and the 6th year. 
Taxation: Public Provident Fund comes under the Exempt-Exempt-Exempt (EEE) category of tax policy. In simple words, the principal amount, the maturity amount, and the interest earned is exempt from taxes.

Eligibility Criteria for PPF

If you are looking forward to opening a Public Provident Fund account, read the below mentioned eligibility criteria beforehand:

  • The account holder must be a resident of India.
  • The account holder must not be an NRI. However, a resident Indian who has become an NRI after opening
  • the PPF account can continue it until maturity.
  • Parents or guardians can open PPF accounts for their minor children.
  • Joint accounts and multiple accounts are not permitted.

Documents Required to Open a PPF Account 

Below mentioned are the documents you would require to open a PPF account:

  • PPF account opening form- Form A (You can get this from any bank authorized to open a PPF account)
  • Nomination form- Form E (You can get this from bank authorized to open a PPF account)
  • Aadhaar Card, driving license or Voter ID card.
  • Proof of Address
  • PAN Card
  • Passport-size photograph

Now that you are well aware of the PPF account, go ahead and get started with your savings right away!

You may also like to read - Investment Options That Can Enhance Tax Savings

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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