PPF Account: Features, Interest Rate, Withdrawal; Key Things You Need To Know

The public provident fund (PPF) is one of the fixed-income financial instruments. Guaranteed by the government, the returns on the PPF depend upon the market performance, while some offer fixed returns. Some are open-ended with no lock-in period, some have a lock-in period.

PPF comes under small savings schemes, of which the interest rates are reviewed on a quarterly basis. PPF is a long-term investment option that comes with a sovereign guarantee. You can use the PPF account to accumulate wealth over the long term.

Key Features of PPF

Investors can invest as low as Rs 500 per year, and as high as Rs 1.5 lakh per year, in their PPF accounts.

Investors can invest their money in their PPF account for as many as 15 years in a row, as per the guidelines. However, if one does not need the money at the end of 15 years, he or she can extend the tenure of the PPF account for as many years as needed. This can be done in blocks of five years by submitting a PPF Account Extension Form.

PPF is also one of the very few schemes that provide an option to the public to save taxes with its Exempt-Exempt-Exempt (EEE) feature, meaning that it is totally a tax-free savings option. There will be no tax deducted on principal, profit and the accumulated amount on withdrawal.

A single adult who is a resident Indian can open a PPF account, while a guardian on behalf of a minor/ person of unsound mind can also invest in PPF.

PPF Interest Rates

The interest rate on PPF currently stands at 7.1 per cent. It is reviewed on a quarterly basis.

How To Withdraw PPF Money?

For premature withdrawals, a subscriber can take one withdrawal during a financial after five years excluding the year of account opening. Only 50 per cent of the balance at the credit at the end of the fourth preceding year or at the end of the preceding year, whichever is lower, can be withdrawn.

a) After 15 years, a PPF subscriber take maturity payment by submitting account closure form along with a passbook at the concerned Post Office.

(b) He or she can also retain the maturity value in his/ her account further without a deposit. In this case, the PPF interest rate will be applicable and payment can be taken any time. Alternatively, the subscriber can take one withdrawal in each financial year.

(c) The subscriber can also extend his/ her account for a further block of five years and so on (within one year of maturity) by submitting a prescribed extension form at the concerned post office.