Public Provident Fund (PPF) Scheme

The Public Provident Fund (PPF) scheme is a long-term investment option for individuals in India, backed by the government of India. It was introduced in 1968 and is managed by the Ministry of Finance.

Here are the key features of the PPF scheme:

  1. Eligibility: Any resident Indian individual can open a PPF account with a minimum deposit of Rs. 500. Non-resident Indians (NRIs) are not eligible to open a new account, but they can continue to hold and operate an existing account.
  2. Investment: The minimum and maximum annual investment in a PPF account is Rs. 500 and Rs. 1.5 lakhs, respectively. Deposits can be made in lump sum or in a maximum of 12 installments per year. The interest rate on the PPF scheme is fixed by the government every quarter and is currently at 7.1%.
  3. Tenure: The PPF scheme has a tenure of 15 years, which can be extended in blocks of five years. The account can be closed prematurely after five years for reasons such as medical treatment or higher education.
  4. Withdrawal: Partial withdrawals from the PPF account are allowed from the seventh year of opening the account. The maximum withdrawal limit is 50% of the balance at the end of the fourth preceding year or the preceding year, whichever is lower.
  5. Tax Benefits: The contributions made to the PPF scheme are eligible for tax benefits under Section 80C of the Income Tax Act. The interest earned on the PPF account and the maturity amount are also tax-free.
  6. Loan Facility: Individuals can avail of a loan against their PPF account from the third year of opening the account. The maximum loan amount is 25% of the balance at the end of the second preceding year.
  7. Nomination: The PPF account holder can nominate one or more individuals to receive the balance in case of their death.

In conclusion, the PPF scheme is a popular investment option among individuals in India for long-term savings and tax benefits. It offers a fixed interest rate, tax-free returns, and a guaranteed maturity amount. The scheme also offers flexibility in terms of investment amount, withdrawal, and loan facilities.