A Public Provident Fund (PPF) account is a popular savings-cum-tax-saving instrument in India, designed to provide long-term investment benefits and financial security. Opening a PPF account in a post office is a straightforward process, offering a reliable way to grow your savings with attractive interest rates and tax benefits.
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The Public Provident Fund (PPF) is a government-backed savings scheme in India designed to encourage long-term savings and secure your financial future. It offers attractive features like guaranteed returns, tax benefits on investment amount (under Section 80C of the Income Tax Act), and partial withdrawal options after a certain period. The maturity period is 15 years, but you can extend it in blocks of 5 years. Currently, PPF offers an interest rate of 7.1% (Q2 of FY 2024-25). Overall, PPF is a safe and reliable option for building a retirement corpus or saving for long-term goals.
Eligibility to Open a PPF Account in the Post Office
Any individual who works for a private company, is a pensioner, self-employed, or belongs to any other category can open a PPF account in a post office.
Only one PPF account can be opened per individual.
If more than one account is opened, only the principal amount will be refunded without any interest from the second account, and it will be closed.
A PPF account can be opened by either the father or the mother (not both) in the name of their child.
In case of the death of the father or the mother, the minor cannot continue with the account; it will be closed, and the money will be refunded.
An NRI cannot open a PPF account. If an NRI opened a PPF account while residing in India, they can continue it for 15 years, i.e., until the maturity of the account.
Documents Required to Open a PPF Account in the Post Office
An individual would require the following documents to open the PPF account in the post office:
The nomination form- Form E
Passport size photographs
Address proof- Aadhar card, Passport, Voter ID or Driving license
Identity proof- Aadhar card, Passport, Voter ID or Driving license
PAN Card
Process to Open a PPF Account in the Post Office (Offline)
Here's how to open a PPF account at your nearest post office in just four steps:
Get the Application Form:
Visit your nearest post office or sub-post office and request a PPF account application form. You can also download the form online for convenience.
Fill Out the Form and Gather Documents:
Carefully complete the PPF application form and collect the required Know Your Customer (KYC) documents, including:
A minimum deposit of Rs. 500 is required to open your PPF account.
The maximum annual contribution is Rs. 1.5 lakh.
You can invest this amount in a lump sum or spread it out across a maximum of 12 installments during the financial year.
Receive Your PPF Account Passbook:
Once you submit the completed application form, KYC documents, and initial deposit, the post office will provide you with a PPF account passbook. This passbook contains important details like your account holder's name, PPF account number, and branch name.
Note: Deposits made on or before the 5th of each month earn interest for that month. The interest is calculated based on the lowest balance in your account between the 5th and the end of the month.
How to Open a PPF Account Online?
If your bank allows online PPF account opening, follow the below-mentioned general steps:
Login to Net Banking: Access your bank's internet banking platform using your login credentials.
Locate the PPF Account Option: Look for a section dedicated to investments or new account opening. There might be a specific option for "PPF Account" or "Open a PPF Account."
Fill Out the Online Application: The online application form will likely request details like your name, address, contact information, and nominee details.
E-KYC Verification: If the bank has not already verified your KYC documents, you might need to submit scanned copies electronically during this step.
Initial Deposit: Make your initial deposit (minimum Rs. 500) through an online fund transfer from your existing savings account with the same bank.
E-Sign and Submit: Once you review and confirm all details, you might need to e-sign to finalize the application.
Account Activation: The bank will process your application, and upon approval, you'll receive confirmation and details about your new PPF account.
Where to Open a PPF Account?
You can open a PPF account at either the nearest Post Office branch or a participating bank branch, depending on what is most convenient for you. The list of participating banks that offer PPF accounts is provided below.
Bank of Baroda
HDFC Bank
ICICI Bank
Axis Bank
Kotak Mahindra Bank
State Bank of India
Bank of India
Union Bank of India
Oriental Bank of Commerce
IDBI Bank
Punjab National Bank
Central Bank of India
Bank of Maharashtra
Dena Bank
Interest Rate on PPF Account
The interest rate on a Public Provident Fund (PPF) account is attractive and determined by the Indian government on a quarterly basis. This means the rate may fluctuate slightly throughout the year. Currently, the PPF interest rate is 7.1% per annum (as of July 2024). This interest is compounded annually, further boosting your returns. It's a good option for those seeking a safe, government-backed investment with a competitive and tax-free return.
Withdrawal in the Post Office PPF Account
Withdrawing money from your Post Office PPF account depends on whether it's matured (completed 15 years) or not. For a mature account, you can withdraw the entire balance using Form C. For premature withdrawals (after 5 years), conditions apply. You can only take out a portion (up to 50% of the 4th year's balance) and only once a year. You'll need Form C and a valid justification for the withdrawal.
Closure of the Post Office PPF Account
Full Withdrawal and Account Closure:
You can fully withdraw your PPF account balance and close the account only after it completes its tenure of 15 years.
Upon completion of the 15-year term, you can access the entire account balance and close the account.
Premature Withdrawal:
Before the account completes its full tenure of 15 years, you cannot withdraw the entire account balance under any circumstances.
However, premature withdrawal of up to 50% of the account balance is allowed after completing 5 years.
This premature withdrawal is permitted only under special circumstances.
Transfer of a PPF Account
You can transfer your PPF account to another branch of the bank/Post Office, switch from a bank to a Post Office, or switch from a Post Office to a bank. Here is the procedure:
Step 1: Visit your current branch (bank or post office).
Step 2: Request and fill out the PPF transfer application.
Step 3: The branch representative will handle your application and send it, along with the certified copy of the account, nomination form, account opening application, specimen signature, and cheque/DD for the outstanding PPF account balance, to the new branch.
Step 4: After the new branch receives your application and supporting documents, you must submit a new PPF account opening application along with the passbook of your old PPF account. You can also change the nominee at this stage.
Step 5: Once processed, your PPF account is transferred.
Know Your PPF Account Number
Offline Process:
When you open a PPF account offline at a bank or Post Office, you will receive a passbook. The passbook contains important information, such as:
PPF account number
Bank/Post Office branch details
Account balance
Transactions made in the account
You can regularly update the passbook to access the latest account data.
Online Process:
If you have internet banking enabled, you can log into your account through the internet banking portal. On the home page, choose the PPF account to view:
Account number
Account balance
Recent transactions
Other relevant account details
How to Link Aadhaar with a PPF Account Online?
Access your internet banking account.
Select the ‘Registration of Aadhaar Number in Internet Banking’ option.
Input your 12-digit Aadhaar number and click ‘Confirm’.
Choose the PPF account you wish to link to your Aadhaar number.
Click on the ‘Inquiry’ option on the homepage to verify if the Aadhaar linking request has been processed.
Features of Post Office PPF Account
The following are some of the key features of opening the PPF account in the post office:
A minimum deposit of Rs 500 is required in a PPF account, and the maximum deposit permitted is Rs 1.5 lakh in a financial year.
The number of deposits permitted into the post office PPF is capped at 12 yearly.
The Public Provident Fund is an EEE investment wherein the principal sum invested, the maturity amount and the earned interest remain tax-free.
Benefits of PPF Account
Higher interest rate compared to other savings schemes (7.1% per annum, compounded yearly, as of April 01, 2020).
15-year maturity period, extendable in 5-year blocks.
Nomination facility available.
Premature withdrawals are allowed after 5 years; premature closure is permitted under special circumstances.
Loan facility available from the third financial year.
PPF Account Extension
A PPF account can be extended in the blocks of 5 years any number of times once it reaches maturity, 15 years after the account's opening date.
How to Withdraw Money from PPF Before Maturity?
Check Eligibility: Ensure you are eligible for premature withdrawal from your PPF account.
Obtain and Fill Form C: Get Form C from the bank or Post Office and fill it up with the relevant details.
Additional Declaration (if applicable): If the account is in the name of a minor, provide an additional declaration stating the money is for the minor and that the minor is alive.
Submit the Form and Documents: Submit the filled Form C and any supporting documents to the bank or Post Office branch.
Processing and Payment: If all the information and documents are satisfactory, the bank or Post Office will process the request and release the payment.
When Should You Deposit Money in a PPF Account?
There is no set deadline for depositing money into a PPF account. However, it is advantageous to deposit funds between April 1 and April 5 of a financial year. If making a full year's deposit at the start of the year is not feasible, you can make monthly deposits by the 5th of each month to maximize benefits.
How Much Money You Withdraw from a PPF Account?
You can withdraw money partially after completing five years from the date of opening the account.
You can only withdraw up to 50% of the total account balance at the end of the fourth year from the date of opening.
How to Convert a Minor PPF Account to a Major?
When a minor PPF account holder turns 18 years old, submit a revised application form with necessary documents stating the age of the account holder.
The guardian can submit the application along with the account holder’s signature on the application form as an attestation.
How to Close a PPF Account in a Post Office?
You can close a PPF account after completing 15 years from the date of opening the account.
Step 1: Fill up the relevant information in Form C and attach your PPF passbook.
Step 2: Submit this to the relevant Post Office branch where the account is held.
Step 3: Your application will be processed, and the account will be closed. You will receive the payment in your savings account linked to the PPF account.
How Does the PPF Account Work?
A PPF account can be opened by an adult for self or on behalf of a minor.
The account tenure is 15 years, with a lock-in period of 15 years.
You can deposit between Rs.500 and Rs.1.5 lakh per financial year.
Deposits can be made in a lump sum or in installments, with no restriction on the number of installments per financial year.
Deposits are exempt from income tax under Section 80C.
A minimum deposit of Rs.500 per financial year is required to keep the account active.
If you fail to make this deposit, the account will be discontinued. You will have to pay a penalty of Rs.50 along with the minimum deposit of Rs.500 to reactivate the account.
An interest rate of 7.1% per annum (Q2 FY25) is applied to the deposit and compounded annually.
A loan facility is available on the PPF balance.
Partial and premature withdrawals are allowed subject to certain conditions.
Upon completing the tenure, you can choose to extend the account with or without making additional contributions, or close the account.
How to Activate an Inactive PPF Account?
Step 1: Submit a written letter to the bank or Post Office branch requesting to reactivate the account.
Step 2: Pay a minimum amount of Rs.500 for each year you have not made any contributions, along with a penalty of Rs.50 per inactive year.
Step 3: The bank or Post Office will process your request and reactivate the account.
FAQs
How many times can a PPF account be extended?
A PPF account can be extended any number of times without any restrictions.
How many PPF accounts can one open?
An individual can open only one PPF account across the country, either in a bank or a Post Office.
Can I link my Aadhaar card with my PPF account online?
Yes, you can link your Aadhaar with your PPF account if it's with a bank that offers online Aadhaar linking. Here's how:
Log in to your internet banking account.
Look for an option like Registration of Aadhaar Number or similar wording.
Enter your 12-digit Aadhaar number and confirm it.
Select the PPF account you want to link.
Check the status of your Aadhaar linking request by going to the Inquiry section.
Important Note: This process might differ slightly depending on your bank.
Do I need to link my SBI PPF account to my SBI savings account online?
No, there's no need for separate online linking between your SBI PPF account and SBI savings account. When you opened your PPF account (online or offline), you likely provided your existing SBI savings account details. This links them automatically. You can access both accounts using the same net banking login.
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#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
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