Public Provident Fund- Tax benefit for the citizens

Public provident fund

Account can be opened by any individual who has citizenship of india(not for NRI),minor can also open account under guardianship.

Account can be opened in any bank(nationalized or private) or in post-office.

Only one account for a individual.

Account has to be maintained for at least 15 years,after that individual can close the account or can extend the same for further 5 years.


This extension for 5 years of Public provident fund can be done for multiple number of times.

Minimum amount to be deposited is rs 500 up to rs 150000.
Rate of interest decided by government on quaterly basis.

Loan facility starts from 3rd year on the deposit account after that partial withdrawal(only one time in a financial year) is allowed from 7th year onwards till the completion of 15 years.


Loan on ppf is 25% of the amount on balance of preceding year,withdrawal amount is 50% till 15 years.
After extension of 5 years, it is raised to 60%.

Interest on loan is 2% more than interest paid on ppf that to be returned within 36 month.
On fail of repayment 6% extra interest than normal interest will be charged and the amount will be debited from your Public provident fund account at the end of each financial year. 

Why ppf!!-   

One of the best scheme for the investment purpose as the interest rate paid on ppf is quite good,sometimes better than the interest rate what you get on FDs.


Compounded interest is paid on ppf amount.

Tax benefit given by the government.
Interest earned on Public provident fund amount and maturity proceeds are tax exempted too.

Better scheme for the saving purpose as locking period of 15 years allows you to save money for longer period,a handsome amount you get back that can be used for higher prospective.

Withdrawal facility that can be used in urgent need of money.

Queries related to Public Provident Fund-

1. What is the minimum locking period of public provident fund account?
-15 years.

2. Is it possible for individual to open two different Public provident fund account in different bank?
-No,declaration is given by the customer at the time opening of account that he doesn’t hold any other ppf account.

3. Is it possible to continue with the Public provident fund account if minimum deposit in a financial year is missed?
-Yes,mimimum amount plus fine amount can be paid in next financial year to smooth the account.

4. What is to be done with the freezed Public provident fund account?
-It cannot be renewed again,it has to be closed.


5. Document required for taking withdrawal form Public provident fund account?
-Pan card is required with a identity proof,revenue stamp is also required.

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