Salient features of the PPF Scheme

(i) The Public Provident Fund Scheme is a statutory scheme of the Central Government framed under the provisions of the Public Provident Fund Act, 1968.

(ii) The account can be opened in any branch of the State Bank of India, its subsidiaries or in any Head Post Office, Selection Grade Sub-Post-Office or branches of nationalized banks engaged in the collection of direct taxes under the collection scheme of Central Board of Direct Taxes.

(iii) Any individual can subscribe to the Public Provident Fund on his own behalf or on behalf of a minor of who he is a guardian any amount in multiples of Rs. 50/- not less than Rs. 500/- and not more than Rs. 1,00,000/- in a year. A year for the purpose of the scheme means a financial year (1st April to 31st March).

(iv) An individual who is a member of a Hindu Undivided Family can not subscribe to the fund on behalf of and out of the income of the Hindu Undivided Family.

(v) Those having General Provident Fund or Employees Provident Fund can also open a Public Provident Fund account.

(vi) Only one account can be opened in one name either in the authorized Post Office or in the State Bank or in the nationalized bank.

(vii) The subscriptions can be deposited in lump sum or in convenient instalments. Not more than 12 instalments can be deposited in a year. More than one instalment can be deposited in a month.

(viii) It is not necessary to subscribe every month of the year. The amount of subscription can also be varied to suit the convenience of the subscribers.

(ix) Balance in the Fund earns interest at the rate fixed by the Government from time to time.

(x) The account can be transferred at the request of the subscriber from one post office to another. The account standing in the State Bank or nationalized bank can also be transferred to Post Office and vice versa.

(xi) The account can be closed on maturity, i.e., after the expiry of 15 years from the close of the financial year in which the initial subscription was made. This is, of course, optional and the subscriber can continue the account even after the period of 15 years for a further block of 5 years without any loss of benefits.

(xii) A subscriber can take a loan from the fund in case of need. The first loan can be taken in the third year from the year of opening the account, i.e. if the account is opened during the year 1978-79, the first loan can be taken during the year 1980-81. The amount of loan will be restricted to 25% of the balance in the account as on 31.3.1979. The loan is repayable either in lump sum or in convenient instalments of not more than 36. Subsequent loan can be taken when the earlier loan with interest has been fully repaid. The amount of fresh loan will be restricted to 25% of the balance at the end of the second year preceding the year in which the loan is applied for. No loan can be obtained after the end of 5th year following the expiry of the year in which the initial subscription was made. The interest at prescribed rate will be charged on the amount of loan and debited to the account.

(xiii) A subscriber can make one withdrawal during any one year. The 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 was made. The amount of withdrawal will be limited to 50% of the balance at the credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year, whichever is lower. For example, if the account is opened in 1980-81 and the first withdrawal is made during 1986-87, the amount of withdrawal will be limited to 50% balance as on 31.3.1983 or 31.3.1986 which ever is lower. Only one withdrawal can be made in one financial year. The amount of withdrawal is not repayable.

 

(xiv) A subscriber may nominate one or more person to receive the amount standing to his credit in the event of his death. No nomination can, however, be made in respect of an account opened on behalf of a minor.

(xv) In the event of death of the subscriber, the amount standing to his credit can be repaid to his nominee or legal heir, as the case be, even before the expiry of 15 years.

(xvi) Subscription to Public Provident Fund qualify for deduction from the taxable income of the subscriber for income tax purposes like contributions to Provident Fund, Life Insurance, etc.

(xvii) the interest credited to the fund is totally exempt from income tax.

(xviii) The amount standing to the credit of the subscriber in the fund is totally exempt from wealth tax.

(xix) The credit balance in the Public Provident Fund account is not subject to attachment under any order or degree of court in respect of any debt or liability incurred by the subscriber.

(xx) The Account Office can condone default in payment of subscription in the PPF account by charging the prescribed fee along with arrears of subscription.

(xxi) The PPF account is not transferable from one person to another. In the case of death of the subscriber the nominee cannot continue the account of the deceased subscriber.

(xxii) The female depositor can change her name in her PPF account in the event of her marriage.

(xxiii) The PPF account cannot be opened in the joint names. Further such accounts cannot be opened in the name of an artificial/juridical person.

(xxiv) The PPF account can be opened through an authorized agent appointed under the PPF Agent Scheme.

(xxv) A Non Resident Indian cannot open a PPF account.