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Fact checked byA member of the leadership team with over 17 years spent working at the intersection of Investment Analysis, Personal Finance, and Technology. Hands-on experience across multiple functions including Index Construction, Index Maintenance, Asset Allocation, Portfolio Construction, Managing a team of Digital Relationship Managers, etc
Public Provident Fund is a post office saving scheme that is launched by the Government of India to encourage saving among Indian residents. It has a fixed lock-in period of 15 years and currently has an interest of 7.1% per annum. The Ministry of Finance announces the interest rate every quarter. This article covers PPF account and the different forms of PPF like the account opening form, withdrawal form, etc. in detail.
Public Provident Fund is Government of India initiative to encourage saving. It was launched by the National Savings Institute in 1968. All resident individuals, minors and people of unsound mind can open a PPF account with a post office or any authorized bank. However, minors and people of unsound mind would need a guardian to open a PPF account. Only one PPF account is allowed per individual.
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The minimum amount of deposit in a PPF account is INR 100. The maximum amount of deposit in a PPF account is INR 1,50,000 per annum. An individual can invest this in instalments or in a lump sum. To keep a PPF account active, an investor needs to invest at least INR 500 per annum for 15 years. The interest is calculated on the minimum balance from 5 th to 30 th of every month. However, the interest is paid at the end of the financial year.
The rate of interest on PPF accounts is 7.1% p.a. for the current quarter (January 2021 – March 2021). The interest is compounded annually for PPF accounts. One can estimate the returns from this long term scheme investment using a PPF calculator. Scripbox’s PPF calculator is available online and is free to use.
This post office savings scheme is a long term investment scheme with a tenure of 15 years. A PPF account matures only after 15 years, and the investment proceeds are credited to the investor’s account after 15 years. However, investors can take a loan against this post office saving scheme or partially withdraw their investment as per the rules. Investment in PPF qualifies for tax deduction under Section 80C of the Income Tax Act, 1961. Moreover, the interest income and maturity amount are exempt from tax.
PPF Form A is the PPF account opening form. An investor who wishes to invest in PPF has to fill in Form A (PPF Application Form) with the following details:
PPF Form B is for making contributions to PPF scheme. It is also for repaying the loans against the PPF account. An investor planning to make contributions in PPF has to fill in Form B with the following details:
PPF allows investors to withdraw their investments partially after completion of 6 years of investment. However, the withdrawal is allowed in certain conditions such as a child’s marriage, medical emergency, child’s education, etc. PPF doesn’t allow investors to withdraw the investment in full until the scheme matures. To partially withdraw their investments, one has to submit PPF Form C. They will have to fill PPF Form C with the following details:
PPF Form D is to apply for a loan against the PPF deposits. Investors can apply for a loan only between the third and the fifth year of the account tenure. However, the loan value cannot be more than 25% of the deposit amount made till the end of the second financial year. Additionally, PPF investors can also avail a second loan after the sixth financial year. However, for this, they have to pay off the first loan entirely.
One has to fill the PPF Form D with the following information:
A PPF account holder can add a nominee anytime during the tenure of their PPF investment. In case of an unfortunate and unexpected death of the investor, the nominee will be entitled to receive the PPF investment proceeds. To add a nominee to their PPF account, one has to fill and submit PPF Form E (PPF nomination form) with the following details:
Please note that a PPF account holder can nominate more than one nominee. However, if the account is opened on behalf of minors, then one cannot have a nominee. One can cancel or change the nominee anytime during the tenure of their investment. Also, one cannot name a trust as a nominee. A nominee doesn’t hold the right to operate the account. Therefore, they are only entitled to the investment proceeds upon the unfortunate death of the subscriber.
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PPF Form F is for changing the nominee name for the PPF account. Following are the details that the investor has to fill in the form:
PPF Form G is a claim form. A nominee can use this form to claim the investment proceeds in the subscriber’s unfortunate death. A nominee has to fill the following details in PPF Form G:
A nominee or a legal heir has to submit the attested copies of the letter of indemnity, affidavit, and letter of disclaimer on affidavit. In case a PPF account doesn’t have a nominee, then a legal heir can claim the investment proceeds. To claim the same, they have to submit either a succession certificate, or letter of administration, or attested copy of the will along with the documents mentioned above.
PPF Form H is for extending the maturity of a PPF account. The tenure of a PPF account is 15 years, and the account can be extended by a block of five years. Also, this extension does not require any additional investments by the subscriber. Following are the details that have to be provided for PPF account extension in the Form H:
