Your Questions About Drawbacks Of Ppf Account

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Charles asks…

what is ppf account ? how can i open it and what is its feture?

i want to saving for future with better benefit and without risk

Justin answers:

The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.

Here’s how you can get started.

1. Make a trip to your local post office. You can open it at any head post office or selection grade sub post offices.

2. Visit the nationalised bank in your neighbourhood. Selected branches of nationalised banks can also open accounts.

3. Drop by a State Bank of India [ Get Quote ] branch. SBI and its subsidiary banks also open accounts. The web site will have the names of the banking subsidiaries.

4. You will have to fill up a form and attach a photograph. If you want to download the form or take a look at it, you can do so on the SBI web site.

5. If you do not have a Permanent Account Number, you will have to furnish an attested copy of either your ration card, voter’s identity card or passport.

6. You can have only one PPF account in your name. If at any point it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest.

7. You cannot open a joint account with another individual. The account can only be opened in one person’s name.

8. You are free to nominate one or more individuals. On the death of the account holder, nominees cannot keep the account going by making contributions. If there are no nominees, the legal heirs get the money.

9. An individual can open one account and others for his/her children or minor of whom s/he is the guardian. But, on his/her death, the minors or children cannot make any additional contributions.

10. Non-resident Indians earning an income in India and wanting to take advantage of the rebate can also open an account. Subscriptions, however, will have to made from their Non-Resident Ordinary (NRO) account on a non-repatriable basis.

11. When you open an account, you will be given a passbook in which all subscriptions, interest accrued, withdrawals and loans are recorded.

Tax benefits
(i) Rebate on investment U/S 80C of I.T. Act 1961

(ii). Interest income fully expemted from income tax.

(iii). Balance held in the P.P.F. Account is completely free from wealth Tax.

Other benefits

The balances in the account cannot be attached by any authority normally.

With a downward trend in the stock market and risk attached to the market, many individuals prefer to invest in the safe avenues i.e. Government backed investments. The demand of small savings has come again. Among the many small saving instruments, PPF is still one of the most popular investment tools in the hands of an individual.

PPF i.e. Public Provident Fund is an account acts as not only savings tool rather tax savings tool. PPF also serves as a retirement planning tool. The portfolio of an individual must include the Provident Fund. The interest of 8% compounded annually and tax saving under Section 80C of the Income Tax is sufficient to attract the investor’s attention.

The PPF account can be opened at the designated post offices or at designated branches of Public Sector Banks throughout the country. The account can be opened by an individual in his own name or in case of minor on his behalf.

Minimum investment of Rs. 500/- is required to open the account and maximum investment of Rs. 70,000/- can be made in the account in a financial year.

Monthly investments can be also be made in the account. One needs not to make a single investment at one time. Maturity period of account is 15 years.
There are both benefits and drawbacks to PPF account which are listed below. One must take into consideration these points before taking any decision on PPF :

1. Safety of investment to the individual.
2. Tax Savings under the Section 80C of the Income Tax Act
3. Interest rate 8% compounded annually.
4. Interest on deposits is tax free.
5. Tax Benefit can be claimed for making the making the contribution to
the PPF account of spouse or minor children.
6. Deposits made in the PPF accounts are also exempt from wealth tax.
7. Minimum amount required for opening is Rs. 500/-
8. Account can be transferred from one post office or bank to another post
office or bank.
9. PPF Account can be retained after the maturity for any period without
making any further deposits just to earn interest at normal rate as


1. Duration of account is too long i.e. 15 years.
2. Investment in PPF is not a liquid investment. Withdrawal can be made
after 6 years.
3. If deposits not made in any year, account will be treated as
4. Pre.mature closure is not permissible except in case of death. Nominee
can not continue the PPF account after death.
5. Pre-mature Withdrawal is permissible but after 6 years subject to
certain limit only.
6. PPF account can not be opened jointly. It can be opened either singly
or with one or more nominations.
7. Unlike Saving Account, a person

Thomas asks…

Help me in understanding SBI PPF account’s benefits and drawbacks.?

Justin answers:

Benefits ~ tax free return . Will get Rs 100 lakhs return after 30 years .( Have to invest Rs 1 lakh yearly ) . If you want more then keep it There for 10 years Also . Just do it …

No drawbacks …

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