Public provident fund or the commonly known as PPF is long-term saving instrument established by the central government with an objective of providing the old-age income security to the self-employed. It matures after the expiry of 15 years from the end of financial year in which the account was opened or to make it more clear if the account is opened in the FY 2004-05, then it will get mature on 01 April 21.
The scheme was launched by the central government in July 1968 and is fully backed by the government therefore considered as the safest investment option among the people. Tax deduction on deposits, guaranteed return and tax-free maturity are the biggest driving force which pulls the investor towards it.
PPF account can be opened with the minimum investment of Rs 500 per annum and a maximum of 12 deposits allowed in a year with an upper cap of Rs 1 lakh per annum. Investment can be made either in lump sum or in installments but not more than 12 installments in a year or 2 installments in a month. However you need to ensure that you are investing Rs 500 minimum in a year, otherwise you have a bear a penalty of Rs 50. It is also advisable to invest before the 5th of every month if you want your contribution to earn the interest for that month as well.
The PPF account can be opened by any individual or a minor through guardian but the deposit of the minor account will get clubbed with the account of the guardian for the maximum limit of Rs 1 lakh and only one account is permissible i.e. 2 account at different places in India are not permitted. We do have an option of extending the PPF account on maturity for any period in a block of 5 years on each time i.e. if PPF account is getting matured on April 2013 and you want to get it extended for another 2 block then it will be extended for another 10 years. Please note this facility is no longer available to HUFs.
Premature of PPF account is not allowed except in case of death however partial withdrawals are allowed after the completion of 6 years or from the 7th financial year or you can take a loan against your PPF but it cannot exceed 25% of the balance in the preceding year, and in case of premature withdrawal : we can withdraw 50% of the balance at the end of 4th preceding year or the year immediately preceding the year of withdrawal, which ever is lower, less the amount of loan if any.
If the account is opened in FY 1999-2000 and today is December 2009 that means the current FY is 09-10,previous FY is 08-09 and 4th FY is 05-06 so the amount which we can partially withdrawal would be 50% of account balance dated on 31st March 2006 or 31st March 2009 which ever would be lesser and in the below mention case it would be Rs 125000 which is 50% of the account balance as on 31st March 2006.
|Date||PPF A/C Balance|
|31st March 2000||10000|
|31st March 2001||25000|
|31st March 2002||75000|
|31st March 2003||100000|
|31st March 2004||125000|
|31st March 2005||200000|
|31st March 2006||250000|
|31st March 2007||275000|
|31st March 2008||350000|
|31st March 2009||400000|
You can open the PPF account with Head or general post office, SBI or its branches, branches of nationalised bank permitted to collect direct taxes and with some of the private sector bank like ICICI.
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