Summary of Revised PPF Scheme w. e. f. 01/12/2011

1)     Interest on Public Provident Fund (PPF) is 8.6 % w.e.f. 01/12/2011.

2)      The accounts can be opened at any branch of the Nationalized Bank.

3)     An individual can open a PPF account in his own name. He can also open an additional account on behalf of a minor of whom he is a guardian. He can subscribe any amount in multiple of Rs. 5/- but not less than Rs. 500/- and not more than Rs. 1,00,000/- in a year in each of his account. A year for the purpose of the scheme means a financial year (1^st April to 31^st March). The deposits in excess of Rs. 1,00,000/- made during the year will not carry any interest and will not be eligible for rebate.

4)     Those having general provident fund or employees’ provident fund account can also open a public provident fund account.

5)     An individual can open only one account in his / her name either in post office or in bank. If two accounts are opened by the subscriber in his / her name by mistake, the 2^nd account will be treated as irregular and will not carry any interest.

6)     The subscriptions can be deposited in lump sum or in convenient installment of not more than 12 installments. It is not necessary to deposit subscription In every month of the year. The amount of subscription can also be varied to suit the convenience of the subscriber.

7)     The account can be closed after completion of 15 full financial years or the expiry of 15 years from the close of the financial year in which the initial subscription was made. This is, of course optional , and the subscriber can continue the account even after the period of 15 years for any number of further blocks of 5 years by exercising an option in Form ‘H’.

8)     A subscriber can take a loan from the fund in case of need. The first loan can be taken in the 3^rd year of opening the account i.e. if the account is opened during the year 1997 –1998, the 1^st loan can be taken during the year 1999 – 2000. The amount of loan will be restricted to 25 % of balance including interest for the year 1997 – 1998 in the account as on 31/03/1998.

9)     A subscriber can make one time withdrawal during any year. The first withdrawal can be made at any time after the expiry of full 5 financial years from the end of the year in which the initial subscription was made. The amount of withdrawal will be limited to 50 % of the balance at credit at the end of the 4^th year immediately proceeding the year in which the amount is withdrawn or at the end of the preceding year, whichever Is lower. Eg.  If the account is opened in 1993 – 1994 and the first withdrawal is made during 1999 – 2000, the amount of withdrawal will be limited to 50 % of the balance as on 31/03/1996 or 31/03/1999 whichever is lower , less the amount of loan if any drawn and which remains to be repaid . The amount of withdrawal is not repayable.  The balance as on 31/03/1996 or 31/03/1999 will include interest up to year 1995-1996 or 1998-1999 as the case maybe.

10) A subscriber may nominate 1 or more persons to receive the amount standing to his credit in the event of his death. No nomination can, however, be made in respect of an account opened on behalf of the minor. In the event of death of the subscriber, the amount standing to his credit can be repaid to his nominee or legal heir, as the case may be, even before the expiry of 15 years.

11) Subscriptions to PPF qualify for deduction from the taxable income of the subscriber for income tax purpose like contributions to Provident Fund, Life Insurance, etc.

12) The interest credited to the fund is totally exempt from Income Tax and Wealth Tax.

13) Condone in default in payment of subscriptions in the PPF account is permissible by charging the subscribed fee along with arrears of subscriptions.

14) The PPF account is not transferable from one person to another. In the case of death of the subscriber, the nominee cannot continue the account of the deceased subscriber.  

15)  The PPF account cannot be opened in the joint names. Further such account cannot be opened in the name of artificial / judicial persons.

16) The balance in the PPF account is not subject to attachment under an order or decree of court in respect of any death or other liability (other than income tax / estate duty liability of the subscriber).

17) If the subscriber dies and there is no nomination at the time of death, the balance in the account, if it is up to Rs. 1,00,000/-, will be paid by the accounts office to the legal heirs of the deceased on receipt of application in Form ‘G’ supported with necessary documents without the production of succession certificate. If the balance is more than Rs. 1,00,000/- , the production of succession certificate will be necessary.

18) The account, in which subscriptions are discontinued for any reason, will be treated as a discontinued account and cannot be closed before maturity. The account will be closed only after maturity and it will continue to earn interest till it is closed after maturity. The facility of loan or withdrawal will not be allowed from such an account. The account can be regularized by remitting a penalty of Rs. 50/- per financial year and Rs. 500/- per financial year (Minimum remittance for a financial year).

19) If the account is opened in the name of a minor and the minor attains majority before the maturity of the account, the ex – minor will himself continue the account thereafter. He will submit a revised application form for opening the account to the Accounts Office. His signature on the application form will be attested by the guardian who opened the account of the minor or by a respectable person known to the Branch.

20) The ceiling on deposits as provided by the Central Government, from time to time, which is Rs.1,00,000/- in a financial year at present , is per individual which shall be available for exemption under section 80-C of The Income Tax Act.