Public Provident Fund (PPF) Scheme

Interest 9.5% w.e.f 1-3-2001 (subject to change as per GOI/RBI directives) to be applied annualy.

(1) The Public Provident Fund scheme is a statutory scheme of the Central Government framed under the provisions of the Public Provident Fund Act, 1968.

(2) The account can be opened in any branch of the State Bank of India or its Associates (except offices managed by single officer/clerk) or in any Head Post Office or any selection grade sub post office or in any of the nationalised banks.

(3) An individual can open a Public Provident Fund Account in his own name. He can also open an additional account on behalf of a minor of whom he is guardian. He can subscribe any amount in multiples of Rs. 5/- of not less than Rs.500/- and not more than Rs.70,000/- in a year in each of his account. A year for the purpose of the Scheme means a financial year (1st April to 31st March). The deposits in excess of Rs. 70,000 made  during a year will not carry any interest and will not be eligible for rebate.

(4) An individual who is a member of a Hindu Undivided Family can subscribe to the fund on behalf of and out of the income of the HUF any amount not less than RS 500 and not more than RS 70,000/- in a year.

(5) An individual can also subscribe to the fund on behalf of an association of persons or a body of individuals as referred to in clause (g) of sub section (2) of Section 80 C of the Income Tax Act, 1961 out of the income of the association of persons or body of Individuals, as the case may be, any amount not less than Rs500/- and not more than RS 70,000/- in a year.

(6) Those having General Provident Fund or Employees' Provident Fund Account can also open a Public Provident Fund Account.

(7) 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 second account will be treated as irregular and will not carry interest.

(8) The subscriptions can be deposited in lumpsum or in convenient installment of not more than 12 installments.

(9) 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.

(10) The account can be transferred at the request of the subscriber from one office of SBI or its Associates to Head Post Office or vice versa.

(11) 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'.

(12) A subscriber can take a loan from the fund in case of need. The first loan can be taken in the third year of opening the account i.e., if the account is opened during the year 1997-98, the first loan can be taken during the year 1999-2000. The amount of loan will be restricted to 25% of the balance including interest for the year 1997-98 in the account as on 31.3.1998.

(13) A subscriber can make one withdrawal during any one year. The first withdrawal can be made at any time after the expiry of 5 full financial years from the end of the year in which the initial subscription was made (i.e. from the 7th year onwards). The amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower. For example, if the account is opened in 1993-94 and 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 re-paid. The amount of withdrawal is not repayable. The balance as on 31.03.1996 or 31.03.1999 will include interest upto year 1995-1996 or 1998-1999 as case may be.

(14) A subscriber may nominate one 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.

(15) Subscriptions to Public Provident Fund qualify for deduction from the taxable income of the subscriber for Income Tax purpose like contributions to Provident Fund, Life Insurance, etc.

(16) The interest credited to the fund is totally exempt from Income Tax.

(17) The amount standing to the credit of the subscriber in the fund is totally exempt from Wealth Tax.

(18) The Account Office (including office of SBI and its Associates) can condone default in payment of subscriptions in the PPF account by charging the prescribed fee along with arrears of subscriptions.

(19) 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 deceased subscriber.

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

(21) The balance in the PPF account is not subject to attachment under an order or decree of court in respect of any debt or other liability (other than Income Tax / Estate   duty liability of the subscriber).

(22) If the subscriber dies and there is no nomination at the time of death, the balance in the account, if it is upto one lakh, 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 one lakh, the production of Succession certificate will be necessary.

(23) If HUF is dissolved, the account opened by the HUF will be closed after the maturity only. The account will continue to earn interest till it is closed after its maturity.

(24) The HUF account will not be closed before maturity on the death of the Karta but it will be continued by a new karta appointed by the HUF.

(25) A non-resident Indian can open a PPF account out of moneys in the applicant's non resident account in India in banks subject to certain conditions.

(26) The account in which subscriptions are discontinued for any reason, will be treated as 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.

(27) When the account is sought to be withdrawn from the minor's account, the guardian should give the following certificate on application for withdrawal.

" Certified that the amount sought to be withdrawn is required for the use of ……………………...... Who is alive and is still a minor."

(28) If the account is opened in the name of the 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.

(29) The PPF account can be opened by the guardian ( parent ) on behalf of their minor sons/daughters. A sum of Rs.70,000 can be deposited in each account of the minors in a year.