Home » News » Personal Finance»Fixed Income - Bank Deposits
Oct 08, 2012, 06.07 PM | Source: Personalfn.com

All you need to know about PPF Account

Public Provident Fund has remained the most popular saving instrument in India and almost every individual in the country has a PPF account. But do you really have total PPF knowledge? Read this space to know the important facts about your PPF account.

Till date, the Public Provident Fund (PPF) scheme is the most popular investment in India. If you're looking for an exemption on the money you invest, interest that is non-taxable and a maturity amount that is exempt from tax as well, this is the instrument for you.

So it's no surprise that with these 3 very prominent benefits, almost every individual in the country has a PPF account and contributes to it religiously every year.

But do you really have total PPF knowledge? Are you aware of interest rate changes in the PPF over time? Do you know that this money can never be attached to any debt or liability i.e. it is yours forever? There are many ways in which you can derive the maximum benefit from your PPF account.

In the first of a 3 part article, we will walk you through the facts you need to have about your PPF Account.

Let's get straight to the facts...

1. PPF stands for Public Provident Fund - a government backed, long term, retirement savings instrument.

With a 15 year lock in, this is the longest horizon for an investment that exists in India. If you are keen on a safe investment, a decent rate of return, tax benefits (deduction and tax free interest) and have a long term investment horizon, then the PPF is for you. It is a disciplined investment avenue as your money is blocked for 15 years. PPF also offers loan against the account which can help you during occasions like a wedding in the family, further studies of your children, etc.

2. The main features are:

a. the 15 year lock in,

b. the E-E-E status (tax exemption on investment, interest and maturity) under Section 80C,

c. the minimum investment of Rs. 500 p.a. and maximum of Rs. 1 lakh p.a. (w.e.f 01-Dec-2011)

d. and the interest rate which currently stands at 8.8% for this fiscal year. The interest rate will be announced annually, it is no longer fixed at 8% p.a.

In fact, the PPF interest rate has steadily dropped over the years, and can be expected to slowly fall as the years proceed. Here’s a look at what rates used to be in the hey-days of the PPF account:

Period Interest Rate p.a.
01 April 1986 - 14 Jan 2000


15 Jan 2000 - 28 Feb 2001


01 March 2001 - 28 Feb 2002


01 March 2002 - 28 Feb 2003


01 March 2003 - 30 Nov 2011


01 Dec 2011 - 31 March 2012


01 April 2012 till date











3. An NRI can't opn a PPF account.

The rule of 25th July, 2003 states that 'Non Resident Indians are not eligible to open an account under the PPF Scheme'. However 'Provided that if a resident who subsequently becomes a Non Resident during the currency of the maturity period prescribed under the PPF scheme may continue to subscribe to the Fund till its maturity, on a Non Repatriation Basis.'

So if you open it as an RI, and during the 15 year tenure become an NRI, you can continue to invest, but on a non-repatriable basis.

4. You can make up to 12 investments in a year into your PPF account, in multiples of Rs. 5.

PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm

READ MORE ON  Public Provident Fund


Ask the Experts

Get your Personal Finance queries answered

  • Q

    i have been investing in the follwoing MF for the past one year should i contiune or switch to other funds. 1 Axis equity fund direct(g) 2 Axis gold fung direct (g) 3 Birla Sun Life Dynamic Bond Fund - Retail Plan dirct (g) 4HDFC Mid-Cap Opportunities Fund (G) 5 ICICI Prudential Dynamic Plan - Direct Plan (G) 6 ICICI Prudential Top 200 Fund (G) advice if i have to switch, all are for long term


    All the schemes look fine and you may continue. The amount that you invest in respective schemes is not known, so just make sure you have al...

  • Q

    i want to investment in 60 lacs invest in mutual fund and i accept 16 percentage return per year my goal after 10 years 2.80crs what is possible please true guide


    Equities over a long term are expected to give a return of 14-17%. Sensex has given a return of approx. 17% since inception i.e 1979-80 till...

  • Q

    Iwant to invest rs10l free of risk ! Shd i go for bank fd's or as the bank suggest " guaranteed income plan" ? Please guide .


    Yes bank returns are fixed....

  • Q

    My daughter 18 yrs. old is studying at IIT Madras for engineering. She is a tax payer in the 20% slab. I wish to get her a LIC policy at an early age. The agent recomends JEEVAN ANAND from LIC of India. Kindly advise the best options.


    Hello, Jeevan Anand is a with-profit plan by LIC which has an insurance component as well. It is always recommended not to mix insurance and...

  • Q

    I am 40 years old working in private company. Want to invest open ended fund Rs. 2000 per month. Kindly suggest


    The scheme that you should invest into would depend upon your time horizon. If you can stay invested for long term ( 7 yrs + ) then you shou...

  • Q

    I am planning to invest a lumspum of Rs 10000 in Mutual Fund for 2 years horizon. Please suggest me some good funds which will provide me maximum returns. I am ready to bear the risk. Would appreciate your advises. Thanks


    For a period of 2 years, I would suggest that you invest in a dynamic bond fund. However, since you have mentioned that you wish to take ris...

  • Q

    Dear sir/madam i am Dhananjay Surve from mumbai .I have got placement through my engineering college and working sience last 2 months .Ia am 22 years old ,i s investing in sip is good for me .As iam looking for time period of 3 to 5 years from now for investment ,which will be the best fund and what other investment option will be best .i am looking for 2 to 2.5 k per month investment.


    Invest the entire amount in a balanced fund. Its a good way to get an understanding about mutual fund working and investments. Invest in Tat...

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.