PPF - Public Provident Fund Account

A PPF account helps long-term investors make an investment for various purposes, such as retirement savings. Given the long tenure of the investment (15-year maturity period), the PPF account helps ensure a disciplined approach to savings. Other than that, a PPF investment is safe because the Government of India guarantees the safety of this scheme. Since the interest rate is fixed quarterly, returns on the PPF are secured. This makes it a risk-free investment option for long-term investors seeking assured returns.

Another one of the PPF benefits is that you can avail of a loan facility against your PPF account, after the expiry of one year from the end of the year in which the initial subscription was made, but before the end of five years from the end of the year in which the initial subscription was made. For instance, if you opened your PPF account in 2020 December, you can avail a loan between 1 April, 2022 and 31 March, 2026. The repayment of the loan starts from the first day of the month from when the loan was taken and can be repaid over a period of 36 months.

The biggest advantage of Public Provident Fund is that it offers tax benefits at three stages, which almost no other investment product offers. The investment, interest earned and maturity amount on the Public Provident Fund balance are eligible for PPF tax exemption, which puts this savings-cum-investment option under the EEE (Exempt Exempt Exempt) status.

Contributions made towards the PPF account of up to ₹1.5 lakh are tax-deductible under Section 80C of the Income Tax Act, 1961, while the interest paid out as well as the PPF maturity amount is exempt from taxes.

This contribution can be made for self or for one’s child and still be eligible for the PPF tax exemption benefits.

While the EEE status makes the PPF a popular tax-efficient investment scheme, the long-term lock-in period fixed and secured returns make it suitable for planning for long-term goals such as retirement.

Offline Withdrawal Process

Here is how you can go about the offline process:

• Visit your bank, which is linked to your PPF account.
• Collect the Form C, fill it up correctly and submit it.

This is how you can opt for a partial withdrawal of your PPF balance:

1. Download Form C from your bank’s official website or procure the same from the branch office. On the form, there will be three sections, namely:

• Declaration: Fill in your PPF number and the withdrawal amount here. Also, mention the period for which the account has been active.
• Office-use: Mention the details such as the account opening date, the date of any previous withdrawal, current total balance, and total withdrawals made and so on.
• Bank details: This section will carry your bank account number and any other account details where the withdrawal amount will be credited.

2. Next, attach a copy of your PPF passbook with Form C.

3. Submit this bunch of documents at your bank branch

Once the application is processed, the withdrawal amount will be credited to your account. Alternatively, you can also get a demand draft (DD) offline. How you want to receive the amount should be mentioned on the form with your signature and a revenue stamp.

These are the steps to follow to transfer a PPF account from one bank to another:

1. Go to the bank branch of your current bank and make a transfer application. Be sure to mention the complete and correct address of the new bank account branch where you want to transfer the PPF account.

2. Surrender your old bank passbook to your existing bank. Your PPF account here will be closed, and the following documents will have to be sent to the new bank:

• A certified copy of the PPF account
• Existing PPF passbook
• The application form of the original account opening
• A cheque/demand draft (DD) of the account balance
• The nomination form
• A sample of your signatures
• A PPF transfer request letter from your end with an acknowledgement from the bank

3. Your new bank will inform you once they have all these documents, and you will have to submit a new account opening form along with your Know Your Customer (KYC) documentation, after which you will get a new passbook.

To revive or activate your PPF account, here is what you need to do:

• First, send a written application to your bank/institution/post office where your PPF account has been opened.
• Make a deposit of ₹ 500 for each year that the account has been dormant along with the current year’s deposit. Hence, if the account has been inactive for 2 years, you will need to pay ₹1000 along with another ₹ 500 for the current year to activate the PPF account.
• Apart from this amount, you will also be charged a penalty of ₹50 for each inactive year. This amount has to be paid along with the written application at the bank or institution where the account has been opened.
• Once this step is complete, your application and your record will be examined. If the investment has already reached its maturity of 15 years, you cannot reactivate the account.

It is also important to remember that you cannot have a new PPF account in your name even if your existing account is inactive. This is because, at any point in time, one individual can only have one PPF account.