How to open PPF account
The Public Provident Fund (PPF) is one of the best tax saving investment options. You get the deduction on the income but icing on the cake is that the interest that is earned is tax free.
PPF is a long term debt scheme by the government of India where the interest is paid on regular basis. This investment product is offered by Indian Postal Service.
Eligibility:
Any individual whether self employed or salaried or any other category is eligible for scheme and can get great returns which are more than any return offered on fixed deposits.
Salient Features:
- This scheme is for 15 years
- The rate of interest is compounded annually at 8%
- Flexibility of investment
The minimum amount to be deposited is Rs. 500 and the maximum deposit is Rs. 70,000 in a year. The minimum deposit of Rs 500 is mandatory.
- The deposit can be made in installments as well. You cannot go for more than 12 installments in a year and more than 2 installments in a month. It is not necessary to deposit every month.
- If the deposits are not made then the account is discontinued and it can not be closed until maturity. To activate it one might have to pay a deposit of Rs 500 and Rs 50 for each year.
- Account should be individual or minor with the help of a guardian. Joint account is not allowed.
- First withdrawal is possible only in the 7th year and the limit is only 50 percent of the amount.
- One can also extend the PPF account for 5 years every time.
- There is no specific age when it comes to opening a PPF account.
- It is eligible under Section 80C of Income Tax Act.
- Exempt from wealth tax.
- It is the best for long term investment as it is completely tax free.
Opening a PPF Account
- PPF scheme can be opened in nationalized bank or post office. It can be opened in any of the branches of State Bank of India and its other associated banks like State Bank of Mysore and other nationalized banks. It is easier to open in post office as many banks can be reluctant to open an account as they do not gain additional fees. It can be opened at General Post Office, head post office and other selected grade post offices.
- The account can also be transferred from bank to post office and vice versa.
- One needs to keep in mind that operation two or moor PPF accounts is not possible. Every individual is allowed to have only one PPF account in their name,
Documents required to open PPF account:
Opening a PPF account is easy and straightforward. All the documents are required like an address proof and an identity proof. Identity proof can be Passport, Voter ID card, driving license or PAN card. One also needs to submit passport sized photographs.
If you don’t have a Permanent Account Number then you will have to submit an attested copy of voter’s identity cad, passport or ration card.
After the approval of your application, PPF passbook is issued. The book will contain all the details or printed transactions including withdrawals, loans, subscriptions and accrued interest.
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