“When preparation meets opportunity , Luck happens” . In this article we will see why one should should open a PPF account even if one does not need it or have no intention of putting his money in Debt , It may look idiotic , but we will see why it would make sense . We will also see an example which will help you understand things . But Manish , I don’t know what is PPF account ? you will say , Click here to Understand what is PPF account .
Imagine a situation , You need to invest your money in some debt product which gives you assured and good returns , but you don’t want it to get locked for long period , the maximum you want is 3-4 yrs of lock in . Is it possible right now is the question you need to ask ? NO!! is the Answer
- If you invest in PPF right now , the money will be locked in for 15 yrs (partial withdrawals allowed)
- If you invest in NSC , it will be locked for 6 yrs , but the interest would be taxable and hence your post-tax returns are again very less .
- Fixed Deposits are again not helpful , because there post-tax returns are not attractive enough . Even if you Choose the best Fixed Deposit , it wont help you .
- Debt funds are again not answer , because again there post-tax returns are less .
So how does opening a PPF account now helps us ?
Well, Definitely it cant help us at this moment , But imagine future , Lets say after 11 or 12 yrs , you need to invest some money for short term , at that time , you can put money in your PPF account and it will get matured in next 3-4 yrs and whole maturity amount would be Tax-free and earn you interest of 8% .
And it costs just Rs 500 per year for account to be active . So If you need the PPF account right now , Open it now and if you don’t need it right now , still Open one right now so that your Lock In period goes down by 1 every year . Also once in a while when ever you feel that you need your money to go in your Debt component , just use PPF and put your money into it . Read an article on Asset Allocation to understand the good mix of Equity and Debt Component.
So here is what I would suggest , Open PPF accounts on your name , your Spouse name , and your Children name at the interval of every 2-3 yrs , so that after 12-13 yrs , you have each PPF account maturing in a period gap of 2-3 yrs and you can use it as a investment product which gives 8% assured tax free returns 
.
Note : PPF returns are subject to change and is fixed by govt every year also .
Please comment to let me know if you think this does make sense to you , Is there any issues involved with this with i have not covered , your comments are valuable .
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{ 163 comments… read them below or add one }
HI
GOOD ARTICLE ON PPF , IN MY OPINION EVERY INDIVDUAL SHOULD OPEN HIS OR HER ppf ACCOUNT AS EARLY AS POSIBLE, IT WILL GIVE A GREAT RELIEF IN COMING YEARS OF THIR LIFE.
KHALID
Good. Everybody try to open a PPF a/c at the earliest. This will helpful for future life, u can expect a normal guaranteed return – now it is 8%, more over the attraction is the full maturity amount is tax free.
You mentioned " Open PPF accounts on your name , your Spouse name , and your Children name at the interval of every 2-3 yrs".
Isn't it that an individual can have only one PPF account opened in his/her name at one point of time?
~sr
read it properly… its mentioned to open an account in his her name also he /she can open an account in the of a child or his wife or her husband at any time .
Nice idea
Instead of opening PPF, how about NPS ?
this is a very good concept,
wish i thought about it 30 years back !
I think in a family of self,spouse and single child,one can have only two PPF accounts,either on self and spuose or spouse and child or self and child etc..pl confirm if this isnt so
Wish I had learnt this much earlier in life. Anyways PPF is the best debt instrument and if you follow it with the 70k a year limit for taxes it is a perfect way of saving for the long run.Thanks for the information I hope people who havent immediately open their ppf account
Hi,
PPF and PF are they similar concept. Could you elaborate on this difference. I feel that the PF/EPF is better as the employer also contributes toward it. May be you can throw a light on benefits and disadvantages.
Regards,
Vipin
@khalid thanks , you are correct
@~sr Yes , a individual can have only 1 account on their name . What i meant by " Open PPF accounts on your name , your Spouse name , and your Children name at the interval of every 2-3 yrs" was that
If you are 4 people in family , open each account with the gap of 2-3 yrs , so that you have a stream of PPF maturing after 10-12 years .
@Anonymous 1 thanks
@Anonymous 2 NPS is totally different , Also its tax treatment at maturity is still not defined and it also has other issues .
@Anonymous 3 No rule like that , Each individual can have 1 ppf account .
@moh … think of it now .. forget past
@Vipin
PF is providend Fund , its a concept .
PPF and EPF are two products for Providend fund , EPF is better than PPF becuase you also get employer contribution and have 8.5% interest on it compared to 8% on PPF . but EPF is only availbale to people in companies and not every one .. how ever PPF can be opened by anyone in India
So you have to decide which one suites u .
manish
I think EPF contribution from employer is only 12% of your basic even if you try to contribute more than from your side employer contribution remains the same.
so contributing into EPF rather than PPF just gives you advantage of 0.5% extra interest !
Please let me know if I am wrong.
Yes Asif ..
You are correct .. But no matter what 8.5% is more than 8%
. And .5% can make a big difference .
manish
Mainsh,
First, Khudos for this wonderful blog. I just landed on it and information is amazing all through !!
Just to extend this discussion, does EPF also follow EEE for DTC as PPF does? If yes, well as you said 0.5% can do wonders and also, having EPF deducted by my employer saves effort on one’s part to deposit in PPF. I am wondering is there some downside to go for extra EPF than depositing in PPF?
Vinit
No , EPF and PPF both are EET ,so you have to pay tax on maturity . You can save extra amount in EPF .
Manish
i thought you said its tax free and now your saying you have to pay tax on maturity ,,can u explain where am i getting it wrong
Prabeesh
I gave that comment after first draft of New tax code came which made PPF and EPF taxable at maturity , but now with revised draft they are again TAX-FREE
Manish
Hi Manish,
It was great insigth, I have PPF account for last five year but never imagine that PPF account can be use like this also,
Thanks
Hi Manish,
Very Nice Article….
can you Prepare One Excel Sheet about PPF Calculator – Monthly Or Annual Installment base…
My E-mail ID :
nikhil201053@rediffmail.com
@Neeraj
Many people do not realise that
, its ok 
@Nikhil
You can learn the generic formula for this and can use it for PPF , mutual funds etc .. look at : http://www.jagoinvestor.com/2009/05/video-post-on-basic-formula.html
Manish
Hi Manish,
very nice post and a good idea. But also thanks to mr. anonymous for pointing out that multiple accounts are not possible. After reading the post I thought that was the case.
I do try to follow your blog. Please, keep sending orkut updates. It helps.
Regards,
Angshuman
@Angshuman
Yes , One account per person is the rule
. Regarding updates , I would suggest you subsribe to multiple channels 
so that you get the updates and are not dependent on orkut , try email and mobile subscription .
Link : http://www.jagoinvestor.com/2009/06/subscribe.html
Today's Times of India shows that Govt is planning to tax the returns from PP at maturity i.e. it PPF will be treated as EET similar to NPS which is currently treated as EET.
This is still at discussion level, but can be implemented by Apr 2011.
@Sachin
That is true , It can happen and its proposed .. But it still is in discussion phase , lets not take a call on what can happen
. Read this : http://www.jagoinvestor.com/2009/08/what-is-direct-tax-code-and-how-does-it.html
Does this advice still hold after the new direct tax code? Or should we wait for more clarity on it?
I cannot lock-in money for 15 years at this stage of life. But if Rs 500 a year can decrease lock-in later, I am ready. After EET, is PPF still better than FD / debt mutual funds?
@Vishal
Dont judge the situation just now . Direct tax code is just a proposal and it will take too much time for it to come into effect . May be it does not happen at all .
Take the worst case scenario . Even if PPF becomes EET . It will be at par or better than FD or Debt mutual funds
Return – It will be same as others
Safety – Most Safe
Tax on Interest – Tax on interest is still exempt .
So whatever be the case , PPF wont be a bad choice .
Manish
YOU WANT TO BE A CRORE PATI – DONOT DREAM ~ YOU'RE ONE ~ DO IT NOW!
Here we go!!!
To unravel the hidden truth of COMPOUNDING (Discovered by Albert Einstein)
.Rs 70000/- per annum SAVINGS in PPF for 15 years a total of Rs 10.5 Lakhs would become Rs 22.5 Lakhs in 15 years.
…PPF a/c is extendable by 5 years after 15 years without any further investment
….Rs 10.5 Lakhs SAVINGS in PPF over a period of 15 years becomes Rs 33.06 Lakhs in 20 years.
Year BALANCE in PPF (Rs)
15 22.5 Lakhs
16 24.3
17 26.24
18 28.34
19 30.61
20 33.06
…..With 3 PPF A/C’s (in your name, wife’s name and your son/ daughters name) = 1 CRORE
@ Red Indian
Great presentation man… we actually donot think this much and keep on pondering from one investment instrument to other… we always ignore the magic of Compounding Returns….
Read this : http://www.equitipz.com/2009/05/how-rs-1-lakh-grows-to-rs-50-lakh-in-25.html
.-= Amandeep Singh´s last blog ..Comment on Mutual Funds :: Advantages of Investing by A guide to decide the best gift for your children on the New Year 2010 =-.
Hi
I thought by rule an individual can save only 70K in PPF in one or more accounts in a FY . Is this understanding incorrect ?
You are correct . Max is 70K
Manish
This issue of maximum allowed investment per year in PPF has been contested in Karanataka High Court. The Honourable High Court has given a verdict in favour of Rs.1,00,000/- and ordered Income Tax Department & Public Providend Fund Scheme to add appropriate amendments thus become compliant with Court’s judgment.
For detailed information, please refer: http://www.thehindubusinessline.com/2010/04/10/stories/2010041050080900.htm
As the author of the article clearly mentions, “wide publicity to the compliance of the court’s order needs to be given for the benefit of taxpayers and to avoid contempt of court.”
Hi Manish,
Very informative article on PPF, i have 2 queries as below.
First one is, whats EET or EEE and mutual funds come to which category,i.e ETT or EET?
Second one is about lockin period of PPF. suppose i invest 50K per year in a PPF account, so after 15 years lock will be freed for 50K only or full matured value(approx 14+ lakhs)?
@Anonymous
E means Exempt and T means taxable
If some thing is EEE , that means all the 3 things are tax exemption for each
1. Money you invest in the product.
2. Money you get as interest or return during the investment
3. Amount you receive at the end in maturity.
PPF is EEE , all the money is exempt .
Mutual funds are EEE if investment tenure is more than 1 yr .
Tax saving FD is ETT .
Lock in period of 15 yrs is for whole investment in PPF , you will get it all at maturity .
Manish
Manish
Another important point
PPF account can only be opened by a Resident Indian.. An NRI cannot open one.. However an NRI can continue an existing PPF account..
So people who work in software or other sectors where abroad posting is a strong possibility better have a PPF account ready
Manish
I also heard that returns from PPF may be taxed from now on accordng to the new Direct Tax Code to be introduced in 2011. Your view on this..
@Siraj
No Siraj , Your information is wrong , NRI can open the PPF account without any issues , just that they have to use money from there Indian Accounts : http://www.apnainvestment.com/ppf/Can-an-NRI-open-a-PPF-account.html
From New tax code , PPF's will become taxable , but then all the investments will become taxable and hence in comparision to others , still they will be a good investment option . Dont worry too much on tax at maturity , you will save a lot in the earning years so that you can invest more .
Manish
Please notify about PF details
Which PF details ? Please clarify ?
Manish,
I came to know that we can extend the PPF term by 5 more years even after the mandatory lock-in of 15 years is completed. if so, do you know whether we will be getting the same interest of 8% for those 5 years as well ?
Also, if we subscribe to monthly payment of around 5000/- , will each 5000/- be taken as a seperate investment and each has a lock-in of 15 years from that date OR will it be considered as a yearly payment of 60,000 and has a lockin from the last payment in that year ?
Your views…
Thanks,
Shantharam
Shantaran
You can extend your PPF to a period of 5 yrs after maturity , you can do this any number of times .. so you can extend it for 5 yrs , then once its over , you can again extend it to another 5 yrs and like this , as many number of times you want .
But your money will be locked for those 5 yrs , so it will behave like a FD of 5 yrs .. you can make payments in between , but your money will mature in 5 yr only
. you will get the same interst and also the TAX exemption 
Manish
Dear Manish,
I have PPF accounts for myself and my wife. I am thinking of opening one in the name of my child when I become a father. However there is one issue that is quite unclear because the rules dont seem to have anything explicit.
If I hold two accounts (mine and my child’s) is the limits of Rs. 70, 000 for each account or for both accounts?
I am trying to use PPF for my childs future along with MFs. However I am using PPF also for my retirement plan (again along with MFs) .
I am now investing Rs. 70, 000 in my PPF. If the combined limit for two accounts is Rs. 70,000 then I will have to reduce my PPF subscription when I open an account for my child.
Can you please clarify the limit on self+minor accounts. I searched a lot in the net.
My present understanding is based on three articles below.
Limit of Rs. 70,000 is combined limit of self acc and minor acc.
The language used is a bit difficult to follow but I think I am right. This is an important issue before opening a minor account.
So to be on the safe side I am going to open the account in the name of my mother with me as nominee.
Please take a look and clarify:
part 1
http://www.hinduonnet.com/thehindu/biz/2002/02/14/stories/2002021400390200.htm
Part 2 (most important)
http://www.hinduonnet.com/thehindu/biz/2002/02/21/stories/2002022100250200.htm
Part 3
http://www.hinduonnet.com/thehindu/biz/2002/02/28/stories/2002022800290200.htm
pattu
Pattu
The limit is only on the tax exemption you can get for , not amount for deposit . So you can deposit 70k in your account and you child account , but the tax exemption will be only upto 70k in total .
Manish
“but the tax exemption will be only up to 70k in total”
Can you provide a source of this statement?
I think you are wrong. The PPF rules only talks about ceiling on subscriptions.
and in the link that I sent you earlier the following declaration has to be signed:
“(iv) I also declare that I shall adhere to the ceiling on deposits as provided for by the Central Government from time to time, which is Rs. 60,000 in a financial year at present (NOW Rs. 70,000) )together in an individual self-account and account(s) on behalf of minor(s) of whom I am the guardian/ a HUF account/ an association account. In case, at any time the said declaration is found untrue/false, no interest shall be payable to me/ the subscriber on the amount of deposits found in excess of the prescribed limit”.
So its Rs. 70,000 for two accs. Also a few others seem to be of the same view:
I found this today:
http://qna.indiatimes.com/index.php?ref=permalinkquestion&question_id=185550
See the 5th point in this rediff article . http://ia.rediff.com/getahead/2006/sep/06ppf.htm
My views are also based on what i have read on internet. So I can definately be wrong . Why dont you try to find this from a Post office or SBI branch . Please share it with other users too
Manish
Hi,
Is there any clarity on this issue of beingable to deposit 70,000 in a minor child’s PPF a/c?
I have a 1 year old daughter and would like to open a PPF a/c in her name (under my gaurdanship) and contribute 70,000 per year in her a/c. At the same time I would like to keep investing 70,000 (or 60,000) in my own PPF a/c as I h ave been doing so for the last 10 years or so.
So, my question is wether I can deposit 70,000 in both a/c?
Ashu
No you cant , the total contribution for your account + Child account can be only RS 70,000 , You can make your wife as Guardian and then put the money .
Manish
Manish,
Was just reading from some article today…that we need to invest in PPF each year in the 15 year duration. is it mandatory to invest atleast 500 each year?
One thing i wanted to share is that ICICI bank is offering online PPF accounts and Senior Citizen Savings Schemes. It is great to have …but still feel people will go for SBI and Post Offices.
Shantharam
Shantharam
People still try old options because they feel they are safe .. Indians still need to take more risk . Anyways .. this will happen in coming times
Thanks for info
Manish
Hi,
Can I withdraw any amount in the middle from my ppf account? If so after how many years and how much?
Murali
The amount of withdrawal is limited to 50% of the balance in your account at the end of the fourth year — immediately preceding the year in which the amount is to be withdrawn, or at the end of the preceding year. Whichever is lower.
So if you opened account in 2001 , then you want to withdraw on 2008 , then the amount you can withdraw will be 50% of
Minumum of
1. Current Balance
2. Balance just 4 yrs back .(year 2004) .
Manish
An interesting and a clever way of looking at it Manish…
I was looking forward to start a PPF but had been delaying it for the same reason that why to open one when i donot have money to justify my cause… but this has been an eye-opener for me…
One point that i want to add here is that when you open an account just start with even as low as 500 p.m. and then start spending… this way you will be able to accumulate higher amounts in 15 years and this small amount even won’t affect your pocket.
.-= Amandeep Singh´s last blog ..The best gift for your children on the New Year 2010!!! =-.
Yup . you got it ..
Manish
Is the interest rate fixed at the time of opening the account? Hypothetically if interest rates average higher in the next 15 years then one might lose out (although tax savings might help but then again tax code changes threaten that too).
In any case, wanted to know if the interest rate is tied to an index or fixed at the time of account opening? Thanks.
No . Interest rate can change .
Current rate is 8% , In future it can go up or down depending on the govt decision .
Manish
Hey Manish, Gr8 article on one of the smallest and most commonly ignored concept, this is just like ignoring insurance at the early stage of careers which most of the do and then go for paying higher premium at late 35′s and so. I felt quite happy to see an article which talked in short about the needs of having a PPF a/c.
Thanks again Manish, Kudo’s.
Thanks Bose
I am glad you liked the article . You are correct about ignoring Insurance in early stages of life .. Most of the people do that in india and even then they realise , they get into wrong products
which is worse . So what do you think about taking Term Insurance in early stage of Life ? Do you have one ?
Manish
Thanks for your prompt and quick reply Manish. I came to an understanding that age brings immaturity as it grows (specifically with our countrymen) and it disables them from taking wise decisions, Believe me I have a personal experience in that corner. Coming to your question for me on “taking Term Insurance in early stage of life”, Yes it’s a brilliant idea and relatively less costlier (After visiting your BLOG I don’t consider Term Insurance as an EXPENSE anymore, but rather as an Investment for future) than what it gets at later years. I was not earning a handsome income till October ’09 (My expenses were much higher than my earnings) and believe me I never thought about insurance till I got into Deepak shenoy’s blog which later referred your blog for more details on few of the investment practises that needs to be followed. Though I believe that I’m late to start now(I’m being 28 already) , I feel it’s better late than never and I’m looking forward to take a term plan in a month’s time or so from LIC (Courtesy: discussions on your BLOG about the solvency ratio and that it’s the oldest Insurance company in the country) for a period of 10 years and Sum assured of 15 lac’s(I don’t remember the premium amount) along with ICICI Prulife’s(I thought it’s good to have a mix of Term Insurance and Critical
Insurance) Pure Protect Classic for a period of 10 years and Sum assured of 15 lac’s with Critical Insurance of 7.5 lac’s (This is as per the rough calculations on their site for my age and gives an annual premium of Rs 3531/annum). Please let me know your thoughts on this.
Great
I am glad that you have realised what you need to go . Thats the most important part
regarding your insurance , Why 10 yrs ? What after that ? wont you be earning and your family be dependent on you when you are age 38 ?
You should ideally take it till your retirement and Make sure you have calculated your insurance requirement correctly ? Why 15 lacs ?
Manish
Well, I couldn’t talk about all of my plans in the previous reply, I guess 30 lac’s for Sum Assured( I’m single having only 2 dependents as of now ) is a good amount for sum assured as I was planning to take 2 term plans( Breaking the risk 50-50 ) LIC would give pure term cover and ICICI Pru would give term cover as well as Critical Insurance cover. I have opted for a 10 year plan as I wanted to opt for a 30 year term plan at the age of 35 ( 35 age, 30 yrs term plan )which would cover me till my retirement age with a bigger amount set for Sum assured (Again assuming that I would be married, and with 3 kids ( I love kids ). Also, I’m making an assumption that companies like Aegon Religare would bring much more competitive TERM PLANS in the future with better and affordable Premiums ( Making competition tougher and better, Hope they would raise there standards to a similar extent ) and better I would know more about private players by then. Also I have already taken the Print outs for the SBI PPF account opening forms today so that I can start investing some money in there in the coming weeks. Hey, I thought you can throw up some light on the latest news on ONLINE PPF accounts, can I have some info on the same.
So, what do you thinks of my plans.
Your plans look good .
Regarding Insurance , Did you compare 10 yrs first and then 30 yrs term VS 30 yrs first and 10 yrs later . See how it compares in todays value . Take a Health insurance soon .
I have to find more about online PPF thing and then I can post something . Do you have idea about it ? Tell me some thing more ? Is it with ICICI only ?
Manish
Hi Manish,
I am currently working in Singapore and holding the NRI status for more than 2 years. Since long time, I am planning to open PPF a/c. But, I came to know from one of my friend saying that “NRIs can not open a new PPF a/c only they can continue the a/c which was opened during their Resident status”. I am totally confused, Please help in clarifying. I am having NRO a/c with Citibank, India and interested to open PPF a/c, Can I use the funds from my NRO a/c to open a new PPF a/c in India..
Looking forward for your comments on this. Thanks a lot in advance.
Mahesh
These is lot of confusion on this one . i will get back with more information on this one with some post . keep watching
manish
Hi, I have invested Rs 20000 into PPF a/c in Dec 2008.On March 31, 2009 the interest I got was 527.If I caluculate at 8 percent I am getting more.Can you please clarify.
interest at 8% on 20000 comes out to 1600 . But you invested sometime in Dec . So your money was roughly invested for 3-4 months . So you got interest only on that part . This is what i can figure out .
Manish
HI Manish,
I am truly surprised(shocked) by the fact that, PPF is in force for so many years(or shall i say decades),so many people know abt it,Still they are reluctant to go for it.When I spoke to relatives and friends, they just refuse to even consider it. Flatly refuse is the right word. and they dont mind regular PF. Even the fathers and uncles were of same opinion. the rates were so much higher in previous century(name 1999 and earlier).They could have made a lakpatis.Is it a matter of mass ignorance or sheer laziness?
.-= Mukul´s last blog ..Decade recap =-.
Amazing point you bring in here .. I am noting down the point to write a post sometime on this
So I would say that this is sheer lazyness . When govt says with a stick in hand that no matter what they have to invest in PF , they feel happy , But they wont invest in PPF because they have control over where they want to invest in . Other reasons why they dont want to invest in that is
1. Lack of Knowledge : they can obvisouly take their money out partially .
2. No proper planning .
What do you feel ? Do you agree ?
Manish
Yes, this is what I want to add.
Firstly it is the laziness that cuts down the profits one can earn from PPF.
Secondly since it is optional, people have to investigate it, and go the extra length of depositing the money. Unlike PF, it is not deducted at source (which actually allows investment at ones discretion), and no one wants to take that walk to post office or bank.
Also, no one sees it as an INVESTMENT. The locking period of 15 years is a deterrent for many.
It is like people refusing to see that it is actually half glass full and not empty. We need to provide a set of Manish glasses for one and many to make the obvious even more OBVIOUS.
.-= Mukul´s last blog ..Decade recap =-.
Mukul , Why dont you send them to my blog , If they dont want to come , feel free to paste my article as a mail and make them read .
Did you try this ?
Manish
Yes Manish, I have fowarded your blog as a recommended link to many in friends and family already.
.-= Mukul´s last blog ..Decade recap =-.
Thanks Mukul
One of the characteristics of the people you talked about is that they love LIC and FD’s and no matter what they consider that Stock market is a place for gamblers
. I am sure this will be the case with you also . no ?
Manish
Hi Manish,
I want to get more clarification about below point, please advise
*interest at 8% on 20000 comes out to 1600 . But you invested sometime in Dec . So your money was roughly invested for 3-4 months . So you got interest only on that part *
Is there any specific time period to invest in PPF so that i will get full 8% interest?
Thanks in advance,
Definately .. The financial year starts from Apr and the interest is also calulated for 1 full year . So if you invest in Apr 3 2009 . You will get full interest of 8% after 1 yr .
Manish
Hi,
Right now Interest rate is 8%, suppose after 1-2 years it changed to 7% or may be 10%, then which rate applicable for my investment done in this year?
Interest on PPF is calculated every year on a single day . So whatever rate of interest was applicable for a particular year ,. you will get interest for that year . So it can vary everyyear ,.
Manish
Hi all,
Good afternoon..
would like to know where should i open ppf account.. I dont understand the calculation funda etc.. not good as you ppl are.. but willing to just invest something for future..
PPF – opening in Post office
PPF – SBI > have gone through couple of site where they have given negative feedback about sbi service.
My challange i need online payment facility.. as i keep traveling.
regards,
Kunal
Kunal
Most of the people open PPF at SBI only . But i have heard that post office works out to be better. Incase you are looking at online PPF account . I would suggest look at ICICI . Govt has recently authorised ICICI bank to issue PPF account and you can do that online . Have a look .
Manish
Dear Kunal, Manish,
I manage three PPF accounts (mine, wifes and mothers) at SBI. I pay online from my SBI acc via “third party transfer”. Its quite convenient.
ICICI online PPF could be useful if one can look at the account statement etc.
Ohh great
Thats a nice news .. I never knew we can do that . Nice stuff ..
Manish
hi pattu,
do you hold PPF accs at SBI? Can i have PPF acc in one SBI branch and savings acc in other branch at other city and still pay via third party transfer?
.-= mukul´s last blog ..Decade recap =-.
Mukul,
Yes, me, my wife and mother all hold PPFs at SBI. When you register a PPF as a “third party acc” all you need is the acc no. The system will automatically recognize the branch at which you hold the PPF acc. So there is no problem.
In fact this is the beauty of computerized banking. You are a customer of the entire bank not just one branch
Thanks ” Pattu & Manish”..
My opinon people prefer & trust SBI / Post Office are most trusted DOMAIN…
Private Banking like HDFC , ICICI still need to proove and own ppl confidence .
Pattu has mentioned valid point about online statement.. I was aware about SBI about netbanking feature for payments.
PPF – My rating goes to POST OFFICe… after reading various blogs, but only draw back we need to go there physcially.. if any one doing online i would be glad. As its driven under govt hence its always safer and reliable, some one has mentioned taking risk about private banking..
I would welcome some more expert opinion about place to start with..PPF.
Thank once again…..
Kunal
Kunal
Yeah .. i guess Post office can be the first choice while buying PPF . even though there might be online accounts , considering that we have to invest just one time (atleast 1 time ) even a non-online account is fine .
What do you think ?
Manish
PPF is a govt account. Post offices, SBI and ICICI are authorized to hold the money on behalf of the govt. So its purely a matter of convenience where you open it.
Post offices are archaic institutions with zero service. Its good only for uneducated rural people (Sorry!). Post office does not give online account for savings account. It does not even have a printer for pass book updation. The point is post offices have several employees and its trying to find them work! If we make financial services online many of them will be jobless!
Pattu ..
But still some people complain of services from SBI and even Post offices , I dont understand what services are they talking about while opening the accounts ?
Manish
Post ofice service is lousy. I recently helped open a PPF acc for my friend if one has:
two photos,
pan card +photocopy
address proof + photocopy
filled ppf application form account can be opened as fast as SB acc.
First time one has to fill out challan to put money. After getting passbook if one has SBI acc one as to register as third party and start investing online.
If above documents are in order even an idiotic banker can open an acc fast enough!
I usually update my ppf pass book once a year to give for IT proof. Passbook updatation is similar to that as SB acc.
Hi,
If i open PPF A/c and after 2-3 years i stop depositing money due to unemployment or any other reason, in this case can i get back my deposited money after 15 year or it will be lapsed.
Secondly supose i died before compliting 15 years in that case my nominee will get back the money immeditely or they will get it only after complition of 15 years.
Pranjal
As per PPF rules , Minimum 500 has to be deposited every year , failing which the account will lapse . After your death , the nominee will get the money , not after 15 yrs .
Manish
Hi,
If i open PPF A/c and after 2-3 years i stop depositing money due to unemployment or any other reason, in this case can i get back my deposited money after 15 year or it will be lapsed.
Secondly supose i died before compliting 15 years in that case my nominee will get back the money immeditely or they will get it only after complition of 15 years.
Please guide me.
Pranjal
You have to pay atleast 500 to keep the PPF account alive else it will be discontinued.
If one dies , one can not get further deductions on some one else names and one will get the money on maturity or in some particular case one can get the amount early also .
Manish
Finally, I opened a PPF account for me Manish
Hope that I build a corpus for me in the coming years
If not, still I am atleast curbing the long 15 years day-by-day 
.-= Amandeep Singh´s last blog ..What is a ‘Reverse Mortgage’ Scheme? =-.
Amandeep
Nice to know that . Where did you open that , bank or Post office ?
Manish
Hi,
I Want to open new ppfaccount ,pl teel me it takes how many days
Shafiulla
It take around 1 hour
: http://www.jagoinvestor.com/2010/02/how-to-open-a-ppf-account-at-sbi-bank.html
Manish
Hello all /Manish,
Some one suggested me LIC Jeevan saral is better than PPF.
I am already having jeevan saral policy 15k/pa. wanted to invest 10k – 20k more yearly.
would appreciate your expert opinion.
regards,
Kunal
Kunal
I dont think Jeevan Saral will give better returns than PPF . Again if its for long term , even PPF should be avoided for all your money, better get into Equity .
Manish
hi Manish Ji ..
Thanks for such a good website and information.
Can you please clear 2 points for me.
1. I want to open PPF account. suppose I open one PPF account now. right now in my company there is no EPF system. but in future if I change my company and the new company will have the EPF system, then will the current PPF account may create any issue..?
2. there are so many bank/postoffice offer this service. so where should I open this account. I am really confused. Can you please suggest me for this. re SBI I was reading at this website that SBI PPf acount I can not see my amount.(drawback..?)
Can you please clear me above thing
Thanks
Abhishek
Abhishek
Thanks for the comment . Your answers are
1) No . EPF and PPF have no connection , both are different .
2) You can open your account anywhere , there are no issues anywhere . SBI would be better because you can also do the net transfer online .
For more info on PPF from SBI , look at : http://www.jagoinvestor.com/2010/02/how-to-open-a-ppf-account-at-sbi-bank.html + See all the comments
Manish
Thanks Manish for the information.
Your blog really Rocks!!
Abhishek
Manish…
I admire you…cant say anything more.. !
great blog ! and great comments..
just 1 clarification: my PPF account gets free just as my 15th year completes, irrespective of time of my deposits, right?
I mean, lets say I open an account today, deposit Rs. 500/- every year for 1st 6-7 years just to keep account alive and then invest say 1 lac each year till the 15th year. So after the end of the 15th year, ill get my entire 500*7 + 1lac*8 + interests back? Or ill have to wait for each installment to complete its 15th year?
Rahul
Thanks for the appreciation
Your PPF account will mature after 15 yrs exactly . dont worry , you can deposit 500 for 10 yrs and then more for 5 yrs , you will get everything back after 15 yrs
Manish
@ manish,
you have ignored to comment on his his amount of Rs 1L.
Ohh yes … Didnt see that thing . He cant go beyond the limits per year. . my bad
Manish
Thanks Abhishek
Manish
Manish..
was excited about ppf account…but from ur other posts and the comments, got to know that opening such an acc with sbi/icici is a big hassle and with po u cannot operate online..:-(
double trouble..!
best option to open ppf seems to open one with sbi, get it attached to a savings acc and then transfer funds to ppf thru this savings online. bur wat is meant by “attaching of savings acc with ppf”, i ve no idea !
Rahul,
“attaching of savings acc with ppf”.
What this means is that if you have a SB acc. with any SBI branch, you could get an online acc. Now if you open a PPF acc. (with any SBI branch in principle) you could link the PPF acc to your online SB acc as a ‘third party acc.’. Now you can transfer funds from SB –> PPF accs online.
Hi Manish,
I wish i could read it earlier
nonethless very informative and thanks for the same.
I have a query fr working couple, can we have two PPF accounts and contribute 70k each every year?
Praveen
Definately you can open 2 PPF , PPF is for each person
Manish
can we take loan against PPF account balance?
Shyam
Sure you can. But only during a fixed period of time. You can take a loan from the third year of opening your account to the sixth year.
Also, the loan amount will be upto a maximum of 25% of the balance in your account at the end of the first financial year (if you opt for the loan in the third year).
If you opt for a loan in the fourth year, the second year’s balance will be taken in to account and so on.
Can a person have both EPF and PPF Account?
Riya
Yes , they have no relation to each other …
Manish
Hi Manish,
Nice Blog and very good articles to read. Thanks.
My query is, as you said above that “Your PPF account will mature after 15 yrs exactly . dont worry , you can deposit 500 for 10 yrs and then more for 5 yrs , you will get everything back after 15 yrs”…..Take for example, i opened my ppf account in 1st March 2000 and it will mature on say 1st march 2015……..if i had invested 70k on 1st Feb 2015 and claimed tax benefit for the same………..so do you mean i would get my entire 70k also on the maturity time i.e. 1st march 2015? please clarify.
Santosh
Yes , that is correct , you will get all your money on maturity .
manish
I think your ppf acc will mature on 31st March 2015!!!
I opened PPF account with SBI – planning to use it as ‘debt’ portion of my investments… invested full in this march, so that i can have the maximum benefit of compounding effect (allowing higher amount for higher number of years). If i had missed completing the limit for this March, I would have lost the opportunity by one year! Thanks Manish for pointing out PPF account importance!
You should also look at your asset allocation .. make sure that you have a balance in equity + debt .
Also look at debt oriented funds as option .
manish
Thanks Manish,
Debt oriented mutual funds have a tax outgo and since I am in higher tax bracket, I required to look for tax free returns (at least as of yet! don’t know what will happen after DTC!!)
And, yes, I am looking at the Debt+Equity ratio as well! {though just recently started deliberate saving after reading your ‘Eye Openors’ – can you live with 10% of your salary} Currently the ratio is 50-50 and i will increase it with time!
Hi Manish,
Can a PPF account be opened for a minor.
and I don’t think an NRI can open a PPF account? I read this somewhere , but want to double check with you.
Thanks & appreciate your response,
Prasad
Prasad
Yes , they can not , however process wise they will be able to open , but the point is they should not , if later govt finds that you opened it while being in NRI status , you will loose all interest .
Manish
Thanks Manish for the quick response.
so a Minor can open a PPF account. As I am not in India right now, my child who is in India can open the same in the supervision of a guardian (per se, my brother-in-law.). in this case, once I am back to India as a father , can I take the charge of my child’s PPF account which is opened by in-law?
Regards,
Prasad
Manish,
Can a person who go abroad on short term employment contract on irregular basis open PPF account when he is in India? I mean , if a person works for a year and is back home, then after some time gets a good offer and moves once again say after 3 months on a one year assignment.
Regards,
Naveen
Naveen , the only requirement while opening PPF is that you should not be an NRI , so if you are onsite and your resident status is not NRI , then you can open , however when you come back to india , you can open because then you are in india .
Manish
Gr8 work Manish!!
thankyou very much for your efforts in making people like us financially literate. I started reading your posts just a week back and believe you me this blog has given me so much knowledge in just a few days time.
I pledge to be a regular at your blog.
Kudos to you!!!
In reply to querry of Pranjal,you have stated that the PPF account shall lapse in case Rs.500 is not deposited in a year. My son has a ppf account in the name of his wife with a balance of about 2.5 lacs. He forgot to deposit the mandatory 500 in 2009-10. Does it mean that the balance amount stands forefieted or there is some way to revive it, say any late fee etc?
A S Bhalaik
yes , there is provision of late fees , its very less , you need to revive it now . May be for the time your didnt put money , the interest will go away for that period .
Manish
Hi Manish.
I am an aspiring finance student (MBA) and I have to say that your blog is a revelation! (I am so glad a friend told me about it). What impresses me most is the simplicity with which you discuss investments; understanding follows naturally. I look forward to learning a lot from you
On a different but related note, I have recently opened a PPF account and was wondering what the ideal investment strategy would be: I have around Rs 50000 for investment. I had earlier considered investing a large chunk of it (30000) in the first year of the PPF; I feel the earlier you put in the larger amount the better as the duration of compounding will be more and I do not see investment rates going up in the future ( higher ROI and duration on the larger amount of money). But at the same time I am apprehensive about the returns in case PPF income does become taxable upon maturity (please keep us updated on this). I know investing in equities for the long term will give better returns but then I don’t have a lot of knowledge on how to invest in the stock market and what little knowledge I do have tells me that this is not the right time to enter the equity markets. Kindly suggest the best way to make my investments grow without taking a lot of risks. Thanks
Harsh
Thanks for your honest comments
. PPF might not be the best thing as you are young and most of your EPF will be covering your debt component anyways .
Invest in equity using mutual funds , thats for investors who have no idea what to do .
Manish
Thank you Manish
I guess I’ll just keep my PPF account going for the now.
I had invested in the markets around Dec 2008 (BSE around 8000) and exited around July 2009 (when it reached 16000). I made decent profits but I am sure that it was my timing more than any technical knowledge which resulted in the profit making…. beginners luck….
. I am an investor and have a very long term horizon but I feel that NOW is not the right time to enter the Stock Market (with Market PE over 21!) even via mutual funds. Please let me know your views on that and if I should wait. I would also love to read about your views on index funds. 
Harish
you can enter through mutual funds if your horizon is long term and you will invest consistently . Index funds are less riskier than mutual funds , but active funds will out perform mutual funds .
Manish
What is the upper limit for deposit into PPF. I understand that the benefit of PPF contribution is limited to Rs 70,000/- in a financial year
Nirmal
THere is no limit , however you can see that no one will be able to deposit more than 70k in a year, so how much will one invest in one account through his/her life ? 40-50 yrs max in worst case , thats 28-35 lacs .
Manish
Manish,
As you said, we can invest more than 70k per annum, if we invest more than 70k and not able to invest 70k in next year than how the interest will get calculated.
They calculate interest on 70k or on whole amount we deposist, say 1k in first year.
How much will be the Tax exception. Give one example with deposist more than 70k and less than 70k.
Gaurav
Gaurav
Nah .. there is some confusion , I said that there is no limit on overall money one can have in PPF , however for 1 yr , the limit is 70k . Interest is calculated on the amount of money you have in PPF account , so whenever they calculate the interest , it will be on the total money in PPF . I hope you get it .
Manish
Manish,
There is any facility, if I want the interest part only and don’t want complete amount after 15 years, because let’s assume we will get around 25 lacs after 15 or 20 years but I just want to get around 20-30 k per month(I don’t think we have this facility). Can you suggest any alternative by which we can get this amount similarly like PENSION and no need to pay tax on this amount.
(Some what like PPF)
Additionaly, please suggest any other investment plan, safe as well as profitable
Gaurav….
dear
I have opened PPF accounts in the name of my sons for last 5 years and they have started earning now. Do I have to close those accounts and they have to open new accounts to deposit in PPF? or they can continue depositing in the original accounts in their name ?
KHANNA
Not very sure on this , i think they should be able to continue and they can now take the tax deductions .
Manish
Hi Manish and Others…
I found a great information here while searching for PPF account benifits. Thanks for all that !
One question: Can we credit the amount monthly into PPF account like it is done in EPF account ? Or it has to be done only once in a year ?
Thanks…
Kishore
Kishore
You can do monthly investments in PPF , actually maximum of 12 payments are allowed
. So you can pay every month .
Manish
hi Manish,
I am just going through this complete website and this idea is fantastic! I have a ppf account for past 5 years, but never thought of this
I actually extended your idea a bit. Hold mutual funds for long and once you know the fund is not going to give me more (lets say because of sudden rush on a particular scheme), I am planning to take out money from that and invest in this ppf. I anyway would have 3 ppfs for my family
Thanks friend for this idea and am slowly recognizing the power of this website!
Ps: Just three visits to your website and you have given me two ideas:
1. Funds India way of investing
2. opening my eyes on the power of PPF.
Thank you,
Gopal.
Gopal
Cheers
. Keep coming . I am sure we have lot of learn from each other in coming days
Manish
Dear Manish,
Looks like you are the only right person to solve one’s query on PPF issues.
I’ve read your blog and all the queries, almost satisfied and on the fire to open an account but still feel to ask you ‘four’ questions to completely sublime my apprehensions. I might look repetitive but feel honored if you could answer them:
1. I would like to open an account for my child along with me and ditto with my husband i.e. we would like to open account for our child separately with each one’s name.
Is it possible for both of us to have it and manage it separately.
2. Whether can we deposit 70,000 in our account separately each year and enjoy the benefits after 15 years collectively.
3. Can we deposit 70,000 Rs at one go. Say if I open the account today, can I start with depositing 70,000 right away.
4. Can I or Can I not deposit more than 70,000 rs a year.
Your blog has helped me from drowning but your answers on these would help me come out of the water at last.
Please help out.
Thanks.:-)
Mehar
Mehar
1 . You can open a PPF account for everyone seperataly , however for the child what ever contribution you make , it will be included in the contributor limit of 70k for 80C . So if you are putting 70k in your account anf 70k in your child , the max tax exemption you get is 70k only .
2. What does it mean ? Not sure
3. Yes you can
4. YEs , you can deposit more than 70K , however it will not get any interest and tax exemption .
Manish
Hey Manish,
Thank you for your post.
I am glad I found you……err I mean your post.
Mehar
haha
thanks
. Keep coming
Manish
Hi Manish,
Hey another question again. Sorry couldn’t help it. I tried to find its answer on the web first but in vain so finally decided to bother you on this.
1. The interest accrued on the deposits made will be calculated at the end of each FY or on the monthly deposits. Can you please explain this.
For Eg:
I open an account on 30th july with 1000 rs. Then if i want to deposit remaining 69000 in the next month in aug, can i do that or shall i wait & deposit it at the end of this FY if interest is calculated annually.
By this, i can utilize those 69ooo rs for other purposes/deposits and earn interest from there too.(Just a thought)
I hope you understand my question this time and look forward to a useful solution from your end.(Please don’t answer in one liner – I always was a back bencher.)
Thanks.
Mehar
http://www.livemint.com/2010/04/25214344/The-next-big-battle-in-Indian.html
Can i invest 10000 in 1st year and then keep on investing 1200pa till 15year.will the interest and total money i will get will be tax free
Yes
Hi,
I have 1 PPF and 2 EPF accounts with me. I have changed job around 2 yrs back so 1 EPF account with old company and 1 with new company. I tried to transfer PF amount from old to new account but somehow it is not transferring. So, What are my options?
Another thought, what if i withdraw my old PF amount and put it into PPF? i know i can earn 0.5% less in PPF vs EPF and last EPF has completed 5 yrs so there should not be taxable at the time of withdraw right?
What abt NPS? is it good option other than PPF?
Thanks,
Kunal.
Kunal
You can withdraw and transfer it to PPF , thats one good options , what difficulty you are facing with transfer , can you elaborate on that ?
Manish
Manish,
It is submitted by me to my current employer twice and somehow struck in between PF offices(karnataka and haryana). dont know how to track that?
Also can you answer my other two questions….tax on withdrawal and NPS?
Thanks,
Kunal.
NPS is not taxable at maturity now
I started my PPF account in Jan 1983 and have taken 3 extensions of 5 years each after completing 15 years. I have the following queries:
1. Will the last deposit of Rs 70K be in FY 2012-2013 or 2013-2014?
2. Can I get another extension of 5 years after completing tenure of 30 years?
Thanks.
Shyam
It should be FY 2012-2013 ,as you invested in financial year 1982-83. I am not sure on your 2nd questions , did you check with Post office or SBI where your account is .
manish
Thanks for the first answer!
I checked with SBI and they asked me to “google” for the answer, which is how i found your website!
So, would be great if you could tell if i can get another 5 year extension.
Shyam
I think you can extend it , once you go to SBI for extention , if its not possible , they will let you know that anyways
Manish
Hi Manish!
If we open a new PPF A/C in SBI, then later on can we make the future deposits in our PPF A/C via online net banking of some other bank (say PNB), if we don’t have any Savings A/C in SBI ?
Please reply its urgent.
Thanks
Ravi Gupta
Ravi
yes we can , Read more on the article comments called “How to open PPF account in SBI”
Manish
Thanks Manish,
1 more query I forgot to ask earlier – Can we open a PPF Account jointly (say husband and wife) , like their are joint Saving Accounts in banks.
please clarify.
Thanks
Ravi
Ravi
No , you cant open it jointly , there is no concept like that
Manish
hi.manish.kudos 2 u for ur all this invaluable gyaan,take a bow.have a qustn,my fathr is 50 nd mothr 47,they are having only agricultural income,m looking for a term plan with coverage for 5lakhs on each,suggest me the best one,nd wud b gr8 if i cud get my premium back aftr maturity.i have to make the payments for the above plans,keeping this in mind also suggest one for me wid coverage of 25lakhs till 65yrs,m of 26yrs now nd i earn around 3lakhs/annum.eagerly waiting. . . . . . .rgrds rajiv
Rajiv
Couple of questions
1. Why you want to take insurance for your parents ? Is some one financially dependent on them ?
2. Why do you insist on return of premium in case of term plan ? are you ok with the idea that you will pay more premium in case of return of premium ?
Manish
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