PPF Account Online: How to Open a PPF Account, Required Documents, Eligibility, Withdrawals, and More
The PPF is one of the most popular long-term investment programs in India. PPF stands for Public Provident Fund and all citizens of India are eligible to open a PPF account regardless of job type, salary and tax bracket. It is essentially a long-term savings and also a tax saving instrument introduced by the National Savings Institute of the Ministry of Finance in 1968. It works slightly differently from the PF or Fonds de foresight. While the employer opens your PF account and adds money to your PF account with your monthly salary, a PPF account is a personal account that you can manage.
Once you open a PPF account, you will have full control of it and can add money to the account whenever you want. One of the main purposes of the PPF account is to encourage long-term savings, earn a reasonable income, and also gain tax benefits. You can open a PPF account even if you have a PF account and enjoy tax benefits. Ways to open a PPF account include using internet banking, mobile app and even offline. In this guide, we will cover a basic explanation of what a PPF account is, its benefits, and how you can open a PPF account.
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What is a PPF account?
As said before, PPF stands for Public Provident Fund. It is one of the most popular long-term investment options available to Indian citizens. It is a tax-advantaged investment set up by the National Savings Institute of the Ministry of Finance. Since this is a long-term investment, the rate of return is better than what you would get with other deposit options like fixed deposit and recurring deposit.
The minimum annual deposit of the PPF account is Rs 500 and you can deposit a maximum of Rs 1.5 lakh in a PPF account in one financial year. Although you can add more than 1.5 lakh in a year, anything over Rs 1.5 lakh will not earn interest. You can add money to the PPF account in installments, either spread over a year or as a lump sum. The Indian government announces the interest rate for the PPF account every quarter and the interest is compounded annually and paid in March every year. From April 21 to March 22, the interest rate is 7.1%.
Finally, the duration of a PPF account is 15 years and you can either close and withdraw the full amount or spend it for multiples of 5 years like 5, 10, 15 years with or without additional contribution.
PPF Withdrawal Rules
You can also partially withdraw the funds from your PPF account before you have completed 15 years. You can withdraw up to 50% of the amount from the account at the end of the 5th year. However, only one withdrawal can be made per fiscal year.
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How to Open a PPF Account Online
You can open a PPF account with any nationalized bank, post office and also with some authorized private banks in India. The account can be opened by any citizen of India under their name and even minors can open the account with the help of a guardian. Parents can act as a guardian for these accounts.
Opening a PPF account online is a simple process if you have already activated internet banking or have mobile banking (app) enabled by your bank. All you have to do is go to the Accounts > “PPF Account” tab on the website and verify your name, address, documents and add a candidate. Once done, you will be asked to make an initial deposit which can be as low as Rs 100.
You can either set up standing instructions, which will automatically deduct money from your savings bank account and add it to your PPF account every month/quarter/year, or you can add money manually when you wish.
Alternatively, you can also open a PPF on your bank’s mobile app, which also includes the same steps.
How to open a PPF account offline
If you find it difficult to open a PPF account on the mobile app or internet banking, the next best option is to visit the branch on your own and do it. Here is how you can open a PPF account offline:
- Go to the nearest bank where you already have an account
- Talk to the Bank representative and get the PPF form
- Complete the form and provide the necessary documents required
- Submit the form and amount to make your first deposit
- Once the bank has verified your details, your PPF account will be activated
Documents required to open a PPF account
Here are the documents you need to keep handy when opening a PPF account.
- Identity Proof: Aadhaar Card/PAN Card/Voter ID Card/Passport/Driver’s License
- Proof of Address: Aadhaar Card/Ration Card/Telephone Bill/Electricity Bill
- Proof of age (if minor): Aadhaar card / birth certificate
- Document from parent/guardian in case of underage account
- Payment slip (offline only for making a first deposit)
- Passport size photo (offline only)
- Nomination form (offline only)
Eligibility to Open a PPF Account
All Indian residents are eligible to open a Public Provident Fund account, including minors. NRIs (Non-Resident Indians) are not eligible to open a new account, but they are allowed to continue their existing PPF accounts until the 15-year maturity period.
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What are the minimum and maximum limits for a PPF account?
An annual deposit of Rs 500 is the minimum amount to maintain a PPF account. A maximum of Rs 1.5 lakh can be deposited into your PPF account in a fiscal year. However, anything over Rs 1.5 Lakh will earn no interest.
Can a PPF account be used for tax savings?
Absolutely, in fact, most PPF account holders use and maintain PPF account to save tax and get more benefits. All contributions made in a financial year are eligible for tax deduction under Section 80C of the Income Tax Act under the old tax regime. The tax benefit is capped at Rs 1.5 lakh in a financial year.
Can you qualify for a loan from a PPF account?
You can qualify for a loan based on your PPF account from the third year to the fifth year. You will be charged interest on the loan contracted. The interest rate charged on a loan taken out by the subscriber of a PPF account on or after December 12, 2019 will be 1% higher than the prevailing interest on the PPF. Up to a maximum of 25% of the balance at the end of the 2nd immediately preceding year would be authorized as a loan. These withdrawals must be repaid within 36 months.
You can also get a second loan as long as you are in the third and before the sixth year, and only if the first is fully repaid. Once you qualify for withdrawals, you will not be able to take out any more loans. Only active PPF account holders are eligible for loans.
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