Public Provident Fund (Amendment) Scheme, 2016

Public Provident Fund (Amendment) Scheme, 2016

The Scheme introduced by the National Savings Organization in 1968 to mobilize small savings. The Scheme offers an investment avenue with decent returns coupled with income tax benefits. Salient features of the Scheme are as follows:

1. ELIGIBILTY – Individuals in their own name as well as on behalf of a minor can open the account at any Branch. As per extant instructions, opening of PPF accounts in the name of Hindu Undivided Family is not permitted.

2. INVESTMENT LIMITS - A minimum of Rs.500.00 subject to a maximum of Rs.1,50,000 per annum may be deposited. The subscriber should not deposit more than Rs.1,50,000 per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.

3. DURATION OF SCHEME - Original duration is 15 years. Thereafter, on application by the subscriber, it can be extended for 1 or more blocks of 5 years each.

4. RATE OF INTEREST - The rate of interest is determined by Central Govt. on quarterly basis. At present it is 8.0% per annum with effect from 01.10.2018. Interest is calculated on the minimum balance( in PPF Account) between 5th day and end of the month and is paid on 31st March every year.

5. LOANS AND WITHDRAWALS - Loans and withdrawals are permitted depending upon the age of the account and balances as on the specified dates.

6. TAX BENEFITS - Income Tax benefits are available under Sec 88 of IT Act. Interest income is totally exempt from Income Tax. Amount outstanding to the credit is fully exempted from Wealth Tax also.

7. NOMINATION - Nomination facility is available in the name of one or more persons. The shares of nominees may also be defined by the subscriber.

8. TRANSFER OF ACCOUNT - The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charges.

9. PREMATURE PAYMENT - Premature payment is allowed only after the account or the account of the minor account holder of whom he/she is the guardian has completed five financial years,

a) The amount is required for the treatment of serious ailments or life threatening diseases of the Account holder, spouse or dependent children or parents, on production of supporting documents from competent medical authority;

b) That the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India & abroad.

10. I OPENED MY PPF ACCOUNT WHEN I WAS A RESIDENT INDIAN. NOW I AM A NON-RESIDENT INDIAN. CAN I CONTINUE MY PPF ACCOUNT IN SBI? - As per Ministry of Finance Notification number GSR1237(E) dated 3.10.17, PPF accounts of resident Indians who became NRIs during the currency of the maturity period , would be deemed closed from the date from which the account holder became an NRI. However, this rule has now been put in abeyance (as per Govt OM no. F/01/10/2016-NS dated 23.02.18) and NRIs can continue to hold PPF accounts as before.

Disclaimer : PPF ( Amendment Scheme)2016 and other Small Savings schemes are implemented by National Savings Institute, under Ministry of Finance. Patrons are requested to visit their site for latest instructions regarding these schemes.