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All you need to know about PPF Account

All you need to know about PPF Account

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Public Provident Fund (PPF) has been a preferred investment destination for many investors for many years. It is one of my favourite tax-saving products too.

Apart from the attractive tax-free interest rate, PPF investments also get a favorable tax treatment. PPF falls under Exempt-Exempt-Exempt (EEE) tax regime. I have covered several such aspects of PPF account in some of my earlier posts. In one of the posts, I discussed how PPF can be used as a pension instrument. In other posts, I discussed PPF accounts for children and facility of loans against PPF account.

In this post, I will consolidate various aspects of other posts and also try to answer some common queries about PPF accounts.

#1 How many PPF accounts can I open?

You can open just one PPF account. If two accounts have been opened, the second account will be considered irregular. Balance in the second account will not earn any interest unless the two accounts are amalgamated with approval from the Ministry of Finance. You cannot open PPF account under joint names.

#2 Is there a maximum age for opening PPF account?

There is no maximum age for opening a PPF account.

#3 Where can I open a PPF account?

You can open a PPF account with a post office. Alternatively, you can open a PPF account with any prescribed public sector banks (SBI, Union Bank, PNB, IDBI etc) and a few private sector banks (ICICI Bank and Axis Bank).

A few banks allow you to open PPF account online too. You can transfer your PPF account from post office to a bank or vice-versa. You can also transfer from a bank to an another bank or one post office to another.

#4 What is the interest rate payable?

The interest rate for the PPF account is notified every year by the Government of India. Your PPF balance earns the interest as notified by the Government every year quarter. Interest rate (as on October 7, 2021) is  7.1% p.a.

For the latest update on interest rates for various small savings schemes such as PPF, SSY and SCSS, please refer to this link.

PPF interest is calculated monthly on the lowest balance between the end of 5th day and last day of the month. However, total interest earned during the year is credited to your PPF account at year-end only. So, there is no compounding on monthly basis.

 

To sum up, interest on PPF balance is calculated on the balance as on 5th of every month (unless you make withdrawals after 5th of a particular month). Hence, if you make a contribution on 6th June, your contribution in the month of June will not earn any interest for the month of June. Rest of the balance (apart from a deposit on 6th) will earn interest for the month of June.

#5 What is the maximum and minimum contribution per year?

Minimum contribution per financial year: Rs 500

Maximum Contribution per financial year: Rs 1.5 lacs.

Minimum amount per installment: Rs 5.

You can make a maximum of 12 deposits per financial year.

#6 Can NRIs open PPF account?

NRIs cannot open PPF account.

However, accounts opened before becoming NRIs can be continued till maturity on non-repatriation basis. NRI are not allowed to extend PPF account beyond initial maturity of 15 years (or expiry of extension block of 5 years). Amount deposited after maturity shall be refunded to the depositor without interest.

For the accounts that were opened before becoming an NRI, such accounts need to be closed when you become NRI (as per FEMA). If you do not close the account, your PPF balance will earn a return of 4% p.a. from the say you became NRI.

For more on this topic, please refer to this post (NRIs need not close their PPF accounts).

#7 When does PPF Account mature?

PPF account matures 15 years from the end of financial year in which the PPF account was opened. For example, if you opened the account on June 28, 2012, your PPF account will mature on March 31, 2028.

At maturity, you can have three options:

  1. Close your account and withdraw the entire accumulated amount
  2. Extend PPF account for a further period of 5 years without any further contribution
  3. Extend PPF account for a further period of 5 years with further contribution

#8 Can I continue my PPF account beyond 15 years?

After the initial maturity period of 15 years, you can also extend the account in blocks of 5 years any number of times. While extending, you have two options. You can extend the account with contribution or without contribution.

a. Extension without further Contribution

After the completion of 15 years (or the end of extension block of 5 years as the case may be), you have to specify the extension option within one year of expiry of initial maturity. Under this option, you will not be able to make any further contributions to your PPF account.

Please note this is the default option. If you do not close the account after maturity or extend it with contribution within one year, your PPF account will be extended under this option automatically.

Once the PPF account is renewed without contribution, you cannot switch back to with contribution mode (even after expiry of extension block of 5 years). The balance in the PPF account continues to earn interest.

You are allowed one withdrawal per financial year. In this case, there is no limit on the amount that you can withdraw from your PPF account. You can even withdraw 80% or 90% in the first year itself. However, only one withdrawal from PPF account is permitted per year.

b. Extension with Contribution

Under this option, you will have to make regular contributions to PPF for another five years (just as you had to during the initial maturity period).

There is some relaxation in withdrawal rules on the extension of PPF account. You can withdraw up to 60% of the balance amount at maturity in the next five years. The restriction of a single withdrawal per year applies in this case too.

For example, if you PPF account has Rs 50 lacs at the time maturity (completion of 15 years) and you choose to continue the account with further contribution, you can withdraw a maximum of Rs 30 lacs from your account in the next 5 years. Apart from this, there is no other restriction on withdrawal. You can even withdraw Rs 30 lacs in the first year itself. However, in such a case, you won’t be able to withdraw anything from your account in the next four years.

Please note you have to subscribe for this option within one year from the maturity of the account. If you don’t do so within the specified timeline, your account would be automatically extended without contribution, which is the default option.

You must specify the option by submitting Form H with the post office/bank. If you continue to deposit money in your PPF account without submitting Form H, you will not earn any interest on this deposit. Such deposits will also not be eligible for tax benefit under Section 80C.  Hence, submission of Form H is mandatory if you want to extend your PPF account with contribution.

#9 Can I withdraw money from my PPF account before 15 years?

Before the completion of initial maturity period of 15 years, premature withdrawals can be made after the expiry of five years from the end of financial year in which the initial subscription was made i.e. if the account was opened in July 2004, you can do a partial withdrawal from April 1, 2010.

The maximum amount that can be withdrawn prematurely is capped at 50% of the PPF account balance (four years prior to the year of withdrawal) or the PPF account balance in the preceding financial year, whichever is lower.

In the example given above (from April 1, 2010), you can withdraw 50% of balance amount as on March 31, 2007 or 50% of the balance amount as on March 31, 2010, whichever is lower.

From April 1, 2011, you can withdraw 50% of balance amount as on March 31, 2008 or 50% of the balance amount as on March 31, 2011, whichever is lower.

After the initial maturity of 15 years, withdrawal rules become a bit lenient. These rules have already been discussed in section Maturity Rules for PPF Account. In case of extension with contribution, you can withdraw 60% of the PPF balance at the time of maturity in the next five years. In case of extension without contribution, there is no restriction on withdrawal. However, in either case, only one withdrawal is allowed per year.

#10 Premature Closure of PPF Account is now permitted

Premature closure of PPF Account is now permitted subject to a few conditions. PPF account can be closed after 5 years for medical treatment of family members and higher education of the account holder. However, the premature closure comes with a penalty of 1% of interest rate for all the years you have been invested in PPF. Read more about premature closure of PPF account here.

#11 Can I take a loan against the balance in my PPF account?

You can take a loan from your PPF account one year from the end of financial year in which the account was opened (initial subscription was made) but before the expiry of 5 years from the end of financial year in which the initial subscription was made. The maximum loan amount is 25% of the PPF balance at the end of the second year immediately preceding the year in which the loan is applied for.

Suppose you open your PPF account in October 2014, you shall be eligible for the loan facility from April 1, 2016. You can avail the facility till March 31, 2020. From April 1, 2016 to March 31, 2017, you can avail loan up to 25% of your PPF balance as on March 31, 2015. Similarly, From April 1, 2017 to March 31, 2018, you can avail loan up to 25% of your PPF balance as on March 31, 2016. And so on. From April 1, 2020, you will be eligible for withdrawals from your PPF account. Hence, no further loans are allowed.

Interest rate applicable is 2% p.a. is above the prevailing PPF interest rate. The loan has to be repaid within 36 months. The way PPF loan is repaid is quite different from normal loans are repaid. You can go through the following post to know more about the repayment process.

You are allowed to take loans till such time you cannot withdraw from the PPF account. Since withdrawal is allowed from the 7th year (5 years after the end of financial year in which the PPF account was opened), no loan facility shall be available from the 7th year.

For more on loan on PPF accounts, please go through this post.

#12 PPF Act and Income Tax Act

Please understand PPF is governed by PPF Act, 1968. Income Tax treatment of PPF investments, interest earned and withdrawals is governed by Income Tax Act.

Contribution to self PPF account or PPF accounts of spouse and minor children qualifies for deduction under Section 80C of the Income Tax Act. The total deduction that can be taken by an individual is limited to Rs 1.5 lacs per financial year. Please note the Income Tax Act does not put any limits on how much you can put in PPF accounts. It only tells you about the tax treatment.

It is the PPF Act that limits contribution to (or investment in) self PPF account and PPF accounts of children (where you are the guardian) to Rs 1.5 lacs per financial year.

#13 Can I open PPF account in the name of my children?

A parent/guardian can open an account for his/her minor children. Either parent can open the account in the name of a child. However, both cannot open in the name of same child. For more on PPF account for children, please go through this post.

#14 What if I deposit more than Rs 1.5 lacs per financial year?

As per PPF rules, you can deposit a maximum of Rs 1.5 lacs per year in your account (including any account, where you are the guardian).  

You give this declaration while opening PPF account. If the annual contribution to PPF account exceeds Rs 1.5 lacs, you will not earn any interest on the excess amount. This is clearly specified in PPF Act too.

It is possible that you can get away with depositing more than Rs 1.5 lacs in your PPF account and your children’s PPF account (where you are the guardian). However, with technological advancements, it is quite difficult. If you are caught, there is no recourse. The law is quite clear. The excess amount will not earn any interest.

There is a workaround. If you have two children, you can be a guardian in PPF accounts of one of them, while your spouse can be a guardian in PPF account of the other child.

Total contribution under your PPF account and PPF account of the first child shall not exceed Rs 1.5 lacs per annum.

Similarly, total contribution under your spouse’s PPF account and PPF account of the second child cannot exceed Rs 1.5 lacs. If your spouse is working and makes PPF contribution out of own funds, he/she can also avail tax deduction of Rs 1.5 lacs under Section 80C.  This way, you can contribute Rs 3 lacs per annum in PPF account.

There is a way in which you can invest more than Rs 3 lacs in PPF accounts (for the family; self, spouse and kids) if you are a dual income household. However, even though tax laws allow this, the approach does not seem right to me in spirit. I won’t discuss the trick in this post. More on this in another post. By the way, whether you should invest more than Rs 3 lacs in PPF (or even Rs 3 lacs) is also a question you need to answer.

#15 What if I deposit in my spouse’s PPF account?

If you deposit Rs 1.5 lacs in spouse’s PPF account, PPF Act has no problem. Your spouse is a major. You cannot be guardian in your spouse’s account. As per PPF account, it is a separate account and your contribution to your wife’s PPF account won’t be considered while calculating your total contribution to PPF account (as per PPF Act). So, you can put Rs 1.5 lacs in your PPF account and Rs 1.5 lacs in your spouse’s PPF account. Income tax benefits (to you) in this case will be limited to Rs 1.5 lacs per financial year.

However, if your spouse makes a contribution to her PPF account out of own funds, he/she can also avail separate tax deduction under Section 80C. So, tax benefits of up to Rs 1.5 lacs each under Section 80C to both of you.

#16 Tax benefits for PPF

PPF falls under Exempt-Exempt-Exempt (EEE) tax regime. Investment in PPF account up to Rs 1.5 lacs per financial year is eligible for deduction under Section 80C of the Income Tax Act. Interest earned is not taxable. Any withdrawal from PPF account is also not taxed. Maturity amount from PPF account is also exempt from tax.

#17 You can smartly use your PPF account as a pension tool

Once your PPF account completes 15 years, it becomes extremely flexible in term of withdrawal. We have already gone through PPF extension rules above. If you are retired, you can smartly use your PPF balance as a pension tool. For more on this, refer to this post.

In this post, I have tried to address many common queries about Public Provident Fund (PPF) accounts. If you want me to address any other query, do leave your query in the comments section.

90 thoughts on “All you need to know about PPF Account”

  1. Dear Deepesh, I have a PPF account which will be maturing on 31st March 2016 (completes 20 years, with one extension in the past). I would like to extend it another 5 years, with contribution. However, I am moving to the US in the December of 2015 for employment. Would I be treated as an NRI, when its time to renew the PPF in April 2016, and thus not be allowed to extend the PPF? Since I would have spend more than 8 odd months in India in FY2015-16, I am unclear as to my residency status when its time to renew the PPF deposit. Also, in the event I am not allowed to renew the deposit, will it automatically be extended without contribution and continue to earn interest?

    1. Dear Vikram,
      There are two definitions of NRI. As per Income Tax Act and as per FEMA. In your case, you will be resident as per definition under Income tax Act. However, as per FEMA, you become an NRI from day 1 if you are going abroad for employment. As I understand, for the purposes of PPF, status as per FEMA will be applicable. So, you will be treated as NRI when time for PPF extension comes.
      NRI are allowed to make contributions only till maturity. As per PPF Act, non-residents are not eligible to continue/extend PPF accounts after maturity. It clearly states any subscriptions/deposits made after maturity will not earn any interest. However, it does not clearly state what happens to the existing balance. My reading of PPF Act suggests the amount that has been deposited in accordance with the PPF Act will continue to earn interest till such time you withdraw it.
      Therefore, if you do not close the PPF account and withdraw the amount on maturity, the account will be deemed extended without contribution.The balance in PPF account will continue to earn interest till such time you withdraw the funds from PPF account.
      So, if you are going for long term employment, it is better not to make any further contributions to PPF account once it matures on March 31, 2016. The undrawn amount will continue to earn interest.
      Would suggest you drop me an e-mail at support[AT]PersonalFinancePlan.in so that I can update you if there is a change in my interpretation of PPF Act and FEMA.

      1. A related query – once I become NRI, do I get exemption under 80C on my Indian income for contribution to pre-existing PPF account?

  2. Hi , My husband opened a PPF account 15 years back in a post office in Chennai and operated the same for 3 years. We then moved to Mumbai and he promptly forgot about the same. All we have now is a copy of the passbook. How can he withdraw the money from his ppf account . Can he transfer the account to Mumbai. What would be the required documentation ?

    1. Hi Viji,
      Your husband’s PPF account will be treated as discontinued.A discontinued account can be revived only during the period of maturity (15 years from the end of financial year in which the account was opened). If the account is already 15 years old, you cannot revive it. You would have to close it to get the money. You can open a new PPF subsequently.
      Alternatively, if your account has not yet matured (15 years are not over), you can provide reactivation request to the post office. Penalty of Rs 50 per financial year shall be charged. As I understand, your husband will have to visit the Post office in person.
      Some times, the PPF rules are not very clear to post office or bank officials. Hence, they may unknowingly relax some condition or put additional requirements.
      For transfer of PPF account to Mumbai, your husband will have to fill in form SB-10 and send to post office where he has PPF account. You can refer to this article in Economic times for more process details. http://articles.economictimes.indiatimes.com/2012-10-29/news/34798390_1_ppf-account-balance-transfer-post-office.

      1. Hi Deepesh,
        I have a similar question. I opened the PPF account in Oct 1999. Was regularly contributing till Jan 2007. Haven’t contributed after that. The account should have matured by Mar’15. When I called the SBI branch, I was told that I cannot withdraw the amount due to irregular contribution. I need this money urgently. Pls advise if full withdrawal is allowed in this case. Thanks in advance.

        1. Deepesh Raghaw

          Hi Mahesh,
          You can withdraw full amount. SBI Bank branch official is misguiding you.
          Your PPF account would have been automatically extended without contribution.
          Under the mode, you can withdraw as much as you want.
          Your balance in PPF account would have continued to earn interest for all these years.

    1. Long term gilt funds do well in the falling interest rates scenario. In the falling interest rate scenario, interest on your SSY and PPF schemes will fall. So, essentially, he is talking about countering drop in interest rates for SSY and PPF with capital gains on long duration gilt funds.
      It is a good approach. However, long term gilt funds are tactical plays (not buy and hold). Capital gains in falling interest rate regime will be wiped out in the rising interest rate regime. You need to exit at the right time. So, it is tricky to implement.
      Keep things simple. Rates on SSY and PPF are quite high considering the interest is exempt from tax.
      Personally, I don’t like long term gilt funds. Too volatile with no significantly extra returns over long term.
      Would suggest keep an allocation between equity and debt.
      In my debt portfolio, I prefer short term funds.
      I am not sure if I got your second question properly. You want breakup between SSY and gilt funds (out of Rs 3 lacs)?
      There is no compulsion to invest in gilt funds.

  3. Thought of balancing ppf/ssy interest rate volatility by investing in gilt fund and so equal investment.
    For e.g in a yr ssy provides 8% and gilt provides 9%. In a next yr, vice versa avg 8.5% and so one’s down is compensated by other’s up.

    But, I don’t have much knowledge on how gilt fund works completely.
    As you mentioned, we can keep things simpler by sticking to ssy.

    1. Deepesh Raghaw

      In principle, the approach is fine but it is not easy to execute.
      Gilt refers to Government Securities. Hence, gilt funds invests in government securities. Hence, there is no risk of default.
      However, interest rate sensitivity remains.
      Yes, keep things simple.

  4. 1. How many financial years can be invested, assume one time investment of max value on every June as per your illustration.

    2. If 15 investments are only allowed, then no investment can be made on June 2027 ?

    My case:
    3. The PPF was invested on 28th March 2016 but no interest is accrued for last financial year. Online SBI shows no interest accrued but PPF transactions statement shows credit – dated 28th march only. Also could not find maturity date too?

    4. Since no interest accrued for last financial year, the investment made is meant for this financial year 2016-2017 only? If so, can I invest in this financial year, as I have invested max of 1,50,000 on 28th March 2016 itself ?

    Please clarify

    1. Deepesh Raghaw

      The initial maturity is 15 years. Subsequently, the account can be extended in blocks of 5 years.
      The interest is given on the lowest balance between 5th and last day of every month. Since you made investment on 28th, you wouldn’t get any interest for the month.
      However, please note that does not mean that you did no make investment in PPF in FY2016. You did.
      You can invest an additional Rs 1.5 lacs in this financial year.

  5. Thanks for the details.
    In your illustration, it comes around 16 years. As I already asked, Is PPF meant for 16 financial years and 15 year of investments ? i.e Is investment allowed on 2027 as per the illustration.

    1. Deepesh Raghaw

      You are welcome.
      To be precise, PPF account matures 15 years from the end of financial year in which the account was opened.
      So, if you opened in May 2012, you are opening in FY2013. FY2013 ends on March 31, 2013. 15 years from March 31, 2013.
      Guess it answers the question.

  6. – Also the date of maturity shows 1 April 2031 and not 31 March 2031. But Account Starts Date shows 28 March 2016 only, Accured Interest Start Date Shows 1 April 2016. So Not sure whether new investment can be made or not, now

    (Data obtained from SBI bank official inputs. Even SBI officers are unaware about basic things on PPF rules !! )

    – Assume, if account is opened on 1st April 2016, then the maturity will be March-2017+15yrs = April 2032?

    – Usually interest will be calculated on the lowest value of the month between 5 and last day of the month – is what I heard about it.?

    1. Deepesh Raghaw

      To be honest, I wouldn’t about March 31 and April 1. It will mature on March 31. When they allow you to take money out on or after date of maturity is an operational matter.
      1. Yes
      2. yes, lowest between 5th and last date of every month. Error in my previous comment. Thanks for pointing out.

  7. Could you please answer this left out one..
    “Is investment allowed on 2027 as per the illustration.” i.e 15 financial year investments only can be made ?, if so what to do 16th fin yr i.e not to invest/min:500 to be invested?

    1. Deepesh Raghaw

      If you opened in June 28, 2012, your PPF account matures on March 31, 2028.
      You can make contributions before your account matures.
      If you choose to extend your PPF account, you can contribute before maturity too.

  8. hello Deepesh,

    Actually i have two ppf accounts ..one was open 9 years back at postoffce and by mistake i opened in Sbi a year ago.. so how can i close my new ppf account which i have opened last year in sbi…

  9. They are saying once the ppf account is open they cannot close till 15 years…
    i have to keep …but is there any way out i can close my new ppf account…
    is there any clause in which i can say them to close it…

    1. Deepesh Raghaw

      I expected something like this. In a way, it is justifie otherwise many will come up for PPF withdrawals.
      You show them copy of your PPF passbook from post office and tell them that as per PPF Act, you cannot have more than 1 PPF account.
      They could provide a solution.
      I reread the PPF Act. I am copying copy the clause from there:
      Only one account can be opened in one name. If two accounts are opened by the subscriber in his name by mistake, the second account will be treated as irregular account and will not carry any interest unless the two accounts are amalgamated with the approval of the Ministry of Finance (DEA). For this purpose the subscriber will have to write to the Under Secretary-NS Branch MOF
      (DEA), New Delhi-1 through the Accounts Office giving detail of each account.

      There is no mention of closing the second account. So, you might get stuck here and that too without interest.
      In any case, do not make any contribution to SBI PPF account.

      1. I do have the same problem, I have opened a PPF account in post office 7yr bck and just now i opened a new one in SBI and put all 1.5 K money there. I was not able to transfer the money to PPF account as i was out of country for couple of yrs. Is there any way i can transfer the PPF account of Post office to SBI and then link the same with my existing PPF account in SBI.

        Or if the 2nd account does not provide any intrest should i need to contribute 500Rs each year to maintain or it will going to charge aftr 15 yrs during closure.
        Please help.

        1. Deepesh Raghaw

          Dear Anjali,
          You cannot have two PPF accounts.
          No, you cannot transfer from one PPF account to another.
          You could have transferred your PPF account from post office to SBI.
          Technically, these two accounts can be amalgamated with permission from Ministry of Finance.
          You will have to write to Under Secretary-NS Branch Ministry of Finance. I am not sure how it will go.

  10. Krishna Chaurasia

    Is there a minimum amount to be deposited each year without which the account closes?
    Also, is it good to deposit money every month or just at the end of the year? What is the best time of the month to deposit the money to get the maximum benefit?

    1. Deepesh Raghaw

      PPF account is not closed if you do not make minimum contribution of Rs 500 in a financial year. The account is merely discontinued.
      You can revive the account by paying arrear subscription amounts (500* number of years you did not invest) and penalty of Rs 50 for every financial year you did not make contribution.

  11. I am 70 yrs and actively working. My PPF account has matured on31st march 2016 after two blocks of 5yrs Extension. Is it advisable to continue at this age or should I withdraw and invest where there is easy liquidity?

    1. Deepesh Raghaw

      Dear Sir,
      You should continue.
      Whether you should with contribution or without contribution, depends on your finances.
      Even with PPF, there is a lot of liquidity after initial maturity of 15 years. Just that you need to plan better because you can withdraw just once per year.
      Unless you foresee a scenario where you would need to withdraw more than 60% of your PPF corpus at time of extension, I would suggest you continue PPF account with contribution.

  12. Dear Deepesh

    Very useful article. Can you advise if the amount invested every year in PPF and SSY is fixed or can be variable as long as they are within the regulatory range? Meaning if i invest 1.5 lac each in PPF and SSY this year, will i have to invest the same amount each year thereafter?

  13. I have an existing PPF account that was opened long before I became and NRI. During last financial year, I have income from Indian sources. Do I get an exemption under 80C for PPF contribution as an NRI?

  14. Deepesh ji, I am a senior citizen. If I open a PPF account in the month of September 2016, can I invest or deposit in to the PPF accopunt Rs.1.5 lakh in one or two or three instalment before 30 November 2016. So that I can submit my savings details/records to the department concerned for Income Tax calculation purpose? (We have to produce all our savings details/records in the month of December itself to our department.) Please clarify.

    1. Dear Sir,
      You can do that.
      You can put Rs 1.5 lacs in two or three installments in PPF till November 30, 2016.
      You can do that even if you open PPF account on November 29, 2016. It is completely your discretion.
      In PPF, your money will be locked in for 15 years. You need to see if you are okay with that.

  15. I do not have a PPF account. I am planning to open one. As it is October 16 today. How opening a PPF account in next 5 days will affect my earnings. Should I wait for next year April or open it in between 1st to 5th November. If I open this year, will I not get interest till next year March.

  16. I had opened one PPF account in 1979, when I was NRI. The account matured in 2005. I submitted an application for extension of the account unknowingly that PPF account of NRI can not be extended, and my Bank extended it. I contributed regularly in the account. Now the Bank advised me that the account was not eligible for extension as my status is NRI. I have requested them to pay me interest on the balance of account as on 31st March 2005 till now. I am ready to forgive the interest on contributions made after 2005. My status is still NRI. Am I eligible to get interest on the balance after 31/03/2005 till date of closure of the account ?

    1. This aspect can be argued both ways.
      In my opinion, you should get interest on the amount deposited before March 31, 2005 till the date you withdraw the amount.
      What is the bank saying?

  17. Hi.. I came to US in April 2014. In my recent visit to India, I opened PPF account this year April 6 2016. I was not aware that its not legal to open PPF account for NRI.
    What shall I do now? Do i need to close my account? if i close, will the amount be given back to my savings acct?
    I have plans to come back to India completely after 3 years.
    Please suggest..

    1. Dear Rajeev,
      Technically yes, you should close the account and you will not get any interest.
      However, banks don’t close PPF accounts so easily even in genuine cases like yours (for wrongly opened accounts).
      Suggest you get in touch with your bank.

  18. Hi Deepesh,

    Your work is much appreciated. As a starter i have learned a lot about term insurance plan and life insurance plan.

    Regarding PPF i have few doubts.
    Suppose if a person is paying 1.5 lakh in ppf for one year and the very next year he is no more will that amount can be withdrawn from the account means can his nominee close it and can get the amount or the amount can be taken after 5 years…by closing the account.

  19. Hi Deepesh, I am an NRI and had opened a PPF account when I was a resident Indian. But when it matured in 2010 I was already an NRI and without knowing the rules had extended for one block of 5 years with contribution. After 20 years, I had closed the account in 2015 and withdrawn the amount with interest till the time. Can you advise what should I do in this case now?

  20. That’s right Deepak. In fact I have filed returns for FY 2015-16 and declared the interest received during that year as well. Is there anything else I need to do or are there any income tax related implications which is basically my concern? Thanks a lot for responding

  21. Dear Deepesh,

    We have missed the deadline for extending with contribution after completion of 15 years, now what do we do, we wanted to extend it for next five years with contribution, but we missed it!

    My mom is about 57 years old, now getting a new account with 15 years lock in would be really upsetting, please bail us out of this situation.

    1. Deepesh Raghaw

      Dear Khushman,
      You can do it within 1 year.
      I am not sure how to get this rectified.
      You can write to Ministry of Finance (DEA), NS Branch and seek relaxation. I am not sure if this works.

      1. Deepesh Sirji,

        I am really sad with the fact that you have just disclosed, hope you understand my mom is already aged, how can one expect her to go everywhere and get her answer for the needed at this age, whereas opening a new PF account at this age is out of question, please advice us for the last ditch effort. You have mentioned to write to Ministry of Finance (DEA), NS Branch, Sirji whom to write and whom to address, will they even bother to answer also!

        regrd.

          1. Deepesh Raghaw

            Hi Khushman,
            You can write to under-secretary. Can’t say if you will get a response.
            You can see the details here http://dea.gov.in/whos-who
            Moreover, it will be better if the letter is written and signed by your mother (and not you on her behalf).
            Or you can write the letter in her name and ask her to sign it.

  22. RAMESHWAR GAGRANI

    Sir- I opened a ppf a/c on 29/03/2000. I contributed for 5 years. Now in March 2017 what options I have.
    Can I close the account in March 2017. If yes, shall I get interest up to March 2017? OR I will be paid interest only upto 31/03/2015 (15 years). will I be charged any penal amount for not contributing after 5 years.
    I think I am not eligible to extend the a/c for another block of 5 years with or without contribution as more than ONE year has passed after expiry period.

    RAMESHWAR GAGRANI

    1. Deepesh Raghaw

      Dear Rameshwar,
      Your balance will continue to earn interest till such time you don’t withdraw.
      Yes, Rs 50 per year on non-contribution.
      My experience is that it is automatically adjusted in PPF balance.

  23. Dear Sir
    To extend PPF account for a further period of 5 years with further contribution, is it necessary to furnish Form H or else contribution within one year year after the completion of 15 years (or the end of extension block of 5 years as the case may be) without the Form H is sufficient for extension?

  24. Dear Sir

    If I deposit 2.5 lakhs in my ppf account in fy 2016-17, I think that I’ll earn interest on 1.5 lakh only & not on excess 1 lakh in fy 2016-17….right.

    But, in next financial years…..what will be taken as my contribution (for fy 2016-17) for interest calculation?

    Kindly reply on priority….

  25. Sir,

    No interest credited for PPF Account on 31st Mar 2017 for the investment from April 2016 to Mar 2017. However, it was credited last year by 31st Mar 2016.

    Kindly reply on priority.

    1. Deepesh Raghaw

      Happens on March 31.
      Wait for a couple of days. There might be a technical glitch.
      One more reader has written about a similar issue. Therefore, not an isolated issue.

  26. Sir,

    I opened a PPF account some time in 2007, back then i didnt care much about PPF and after the initial contribution of Rs 500 in first month didnt see it. And i dont have any docs/number or pass book or anything about my account the only thing i remember is the bank i opened in. So now i want to start seriously contributing to PPF but i cant open a new account i beleive ? and since i dont have any details of the account how do i track it out is there a way to find out about it.

    1. Deepesh Raghaw

      Hi Nikhil,
      Please Contact the bank branch where you opened the account. You must have deposited PAN details. Quite possible your PPF account is linked to your savings account. Branch officials may be able to guide you.

  27. Dear Deepesh,

    I open my ppf account before becoming NRI and I continued contribution which is ok as per law. I want to ask you a question that how much money(maximum) can be deposited by NRI (searched many places but not clear, some people saying NRI can deposit only 70000 and some saying they can deposit 1.5 lac). Can you please let me know. thanks.

    1. Dear Shahnawaz,
      No difference in cap on investment for resident and Non-residents.
      You can contribute up to Rs 1.5 lacs per financial year.

        1. You are welcome, Shahnanwaz.
          Request you to share the post with your friends on Facebook/Twitter/Whatsapp so that they can also benefit.

  28. Kridhna Gopal Kapoor

    Respected Sir

    I am retired person and I have opened a PPF a/c in my wife’s name .who is house wife and not earning. Sir, I have the following questions–
    1) Can I Deposit money every year in wife’s account.?
    2) Is the interest so earned will be clubbed in my income?
    3) Can I become a nominee in this case?
    4) I am also having a PPF a/c in my name and taking a benefit of Income Tax under Section 80/C.

    1. Deepesh Raghaw

      Dear Kridhna,

      1. You can transfer the money to her bank account and she can contribute to her PPF account.
      2. Yes, the income will be clubbed. Only the interest on principal will be clubbed with your income. Interest on interest will not be clubbed. Since the interest from PPF is exempt from income tax, there shall be no increase in your income tax liability despite clubbing.
      3. Yes
      4. No problem.

  29. Sir,
    As a NRI, I inadvertently opened PPF A/c back in 2012. I wish to close it now, so please let me know the procedure to do so.

    Thank you.

    1. Deepesh Raghaw

      Don’t know Pradeep.
      Banks will not let you close even if you tell them you were an NRI at the time of initial subscription.
      Talk to your bank branch manager.

  30. Sir, thank you for your reply.
    Another query is that we (me and spouse) went abroad initially in 2010, later in entire 2012 and 7 months in 2013, my spouse spent in India. She was back to abroad in Aug. 2013 (dependent visa). In Apr. 2013, she opened PPF A/c. According to FEMA, Is she a resident Indian during FY 2013-14 as she spent more than 182 days in India during preceding FY(2012-13)?
    or
    come under-Section 2(v)(i) of FEMA subcategory A (c)- for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period? please clarify.
    I think FEMA NRI definition is applicable for PPF accounts?
    Thank you.

    1. Deepesh Raghaw

      Please contact a good Chartered Accountant.
      FEMA is applicable for any investment (not just PPF).

  31. Sir,

    I’ve noted from some websites that Indians going abroad for study, seminars, lectures, or research are not NRIs. Is it correct?

    According to FEMA, Which residential status is applicable to Indians going abroad for postdoctoral research purpose for about 1 to 3 years, please explain.

    Thank you.

    1. Deepesh Raghaw

      Hi Uday,
      I my opinion, if you are going for studies, you are NRI as per FEMA from day 1.
      Please understand I am not a FEMA and IT expert.
      Please talk to an expert too.

  32. Dear Deepesh,

    Unknowingly, I have opened a new ppf account in a bank and continued to deposit savings. Only later I realised that I have a ppf account with the post office which is in dormant state with only about 500 INR in it.

    Kindly advice on what should be done now?
    Should I ignore my dormant account and continue with the bank account or should I get them merged? Please advice thank you

    1. Dear Amit,
      Hmmm…I have read about the process to get two accounts merged. Not sure if it works in real life.
      This is what is mentioned in PPF Act.
      If two accounts are opened by the subscriber in his name by mistake, the second account will be treated as
      irregular account and will not carry any interest unless the two accounts are amalgamated with the approval of the Ministry of Finance (DEA). For this purpose, the subscriber will have to write to the Under Secretary-NS Branch MOF (DEA), New Delhi-1 through the Accounts Office giving detail of each account.

  33. Hi Deepesh,
    I’m planning to withdraw partial amount from PPF account which is opened on 2009. Would like to know the how 50% of amount of calculated if I take amount of 15th Mar 2018(50% of 13-14) and 5th Apr 2019(50% of 31st Mar 2018 or 31st Mar 2015) in subsequent financial years ?

    If I’m withdrawing on 5th Apr 2019, will the bank reduce the amount withdrawn on 15th Mar 2018 ?

  34. Krishan lal Bhasin

    Sir I am a retired person .I want to deposit amount in PPF accounts of my Gd childrens , ,account opened by their parents. I want to know if I can take the Income tax rebate of Rs 1.5 lac against the amount deposited in their account
    ii can I deposit in their PPF account directly by cheque or by some other mode

    1. Dear Sir,
      The deposits can be made only parents or legal guardians.
      Even if you do, you won’t get any tax benefit for such investment.

  35. Dear Deepesh

    Inadvertently i opened 2 ppf account, what is the process of amalgamation and to whom should we contact? Can the branch manager of SBI treates as accounts officer as per ppf act?

    1. Deepesh Raghaw

      Hi Priyanka,

      This is what is mentioned in the PPF Act.
      If two accounts are opened
      by the subscriber in his name by mistake, the second account will be treated as
      irregular account and will not carry any interest unless the two accounts are
      amalgamated with the approval of the Ministry of Finance (DEA). For this
      purpose the subscriber will have to write to the Under Secretary-NS Branch MOF
      (DEA), New Delhi-1 through the Accounts Office giving detail of each account.

  36. Thanks for the useful information provided here.
    For my wife’s ppf account, in the last financial year, no contribution was made. This year when we visited to regularize the account by paying panelty, SBI told us that the account got matured and has to be closed as it is irregular and matured at the same time. Could not find any clear instruction on it anywhere. So wanted to confirm before closing.

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