Why to open a PPF account in India

POSTED BY manish ON August 5, 2009 COMMENTS (414)

PPF i.e. Public provident fund is the most recommended long term investment tool offered by Central government of India for Indian resident employees.

In this article we will see why one 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.

Open PPF account in India

But may be you don’t know what is PPF account? you will say. Click here to Understand what is PPF account.

Lets see in detail:

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 their post-tax returns are not attractive enough. Even if you Choose the best Fixed DepositΒ it won’t help
  • Debt funds are again not answer because again the post-tax returns are less

So how does opening a PPF account now helps us?

Well, definitely it can’t help us at this moment, But imagine future let’s 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%.

It costs just Rs. 500 per year for PPF account to stay active. So if you need the PPF account right now, then open it NOW and if you don’t need it right now, still open one NOW so that your Loan-in-period goes down by 1 every year.

Also, once in a while whenever you feel that you need your money to go in Debt component, simply use the PPF.

Read an article on Asset Allocation to understand the good mix of Equity and Debt Component.

So, here is what I suggest: Open PPF accounts in your name, your Spouse name and your Children name at interval of 2-3 years. So, after 12-13 years, each of the PPF accounts will mature in a gap of 2-3 years.

You can use this as an investment product that gives 8% assured tax free returns. πŸ™‚

Please comment to let me know your views. Is there any issues involved with this article content? Is there anything I have not covered? Your comments are valuable.

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414 replies on this article “Why to open a PPF account in India”

  1. Vineet says:

    Hi Manish,
    I have a ppf account opened in Feb 2006, I would like to go for a partial withdrawal from my PPF account. How it affects the matured amount after 15 years .

    Vineet

    1. THere is no effect on maturity due to this

  2. Priyanka says:

    Hi – I have a query .

    Can I open a PPF account now within 31 March 2016 to avail 8.70 % interest .After 1 April 2016 , it will be 8.10 % interest. Please advise

    1. It does not work like that. PPF interest is calculated on monthly basis. So you cant lock in the particular rate !

  3. Shrinidhi says:

    What happenes if you skip 500 Rs payment for a year?

    1. Nothing . Next year you pay the penalty of Rs 50 along with past minimum Rs 500 and continue !

  4. pooja says:

    i want to know if i open PPF account and pay money by ECS per Month Rs.2000 how interest will calculate at end of the year.

  5. Shashi says:

    I want to open my ppf a/c in sbi. Can I open my a/c bcz I am not in any service. And plz clear me that deposit amount is fixed or variable as wish of depositor, i. e. If I deposit 5000 in one year then can l change this amount in next year or not. Thank you!

    1. PPF can be opened by anyone, if they are in service or not . Does not matter. and you can keep it variable as per your wish

  6. Gauri says:

    I have opened PPF account when my son was minor. And I am natural guardian that time. Now after maturity how can we handle the account?

    1. He will have to go to handle the account now if he is mature !

  7. Sagar Mahajan says:

    I had made a PPF account in SBI Bank on 05-04-2014 with initial deposit of 10400/- and planning to deposit as much as possible before April. So what would be the interest gained till now and when will be the maturity date? Help me as i am new to PPF. Also can we transfer the amount through neft to a PPF account?

  8. chetan wasnik says:

    Hi Manish Sir,

    I have ICICI bank accnt but i want to open PPF accnt in SBI bank so i want to knowwhich one is better option for me??? whether i want to open saving accnt firstly in SBI bank to open PPF accnt in it later…pls help me…

    1. You can open PPF in icici itself !

  9. Ranjan Das says:

    Hi Manish,

    I opened my PPF account on Dec 2001. Till which financial year (and month if applicable) can I keep on contributing without extension? And when (month and year) should I apply for the extension?

    Thanks

    1. On Mar 2017, it will mature .

      1. Ranjan Das says:

        Thank Manish. And when should I apply for the extension of the PPF account for continued contribution?

        1. Once your 15 yr is complete , then apply for it

  10. Aparna says:

    Hi mannish,
    Lost the link where I put my original comment regarding opening PPF account for my daughter. Today I did it, they didn’t ask me any qns. However, I came across this page http://www.rbi.org.in/scripts/FAQView.aspx?Id=52
    There is a note that NRIs can’t invest in PPF or small savings.. Wondering if a new rule has come.
    Regards
    Aparna

    1. One cant open a new PPF account if they are NRI, but they can invest in their old PPF which they had opened earliar !

  11. Avinash says:

    Hi Manish,

    Please clarify this lunch hour ‘hot’ debate for me and my buddies πŸ™‚

    I am the only earning member in my family of 4. If I open 4 different PPF accounts for my family, I can invest upto Rs.1 lac per PPF account – that is, a total of Rs.4 lacs for the entire family. I know for a fact that interest is tax free for my investments into my PPF account to the extent of Rs.1 lac. What is the tax application for the remaining Rs. 3 lac investments made (by me) into the other 3 PPF accounts (Rs. 1 lac each)? If taxable, when does it become taxable (assuming 15 year lock-in period)?

    1. You will get tax free maturity amount + interest at the end of 15 yrs out of all the 4 PPF accounts, but at the time of making payment you will get maximum 1 lac tax deduction in a year . I hope it answers your question ?

      1. Avinash says:

        Hi Manish,

        Thanks for the prompt reply. I have however been given a different view on this by different people. The view is that on the remaining 3 PPF accounts, interest at the time of maturity would NOT be tax-free (and hence taxable). Can you re-confirm?

        1. Why not ? Any PPF maturity is tax free . I am very much sure, but better discuss it once on our forum – http://www.jagoinvestor.com/forum

  12. Yagnesh says:

    Hi Manish,

    i opened PPF account in may-2013. i did one mistake. i opened two account one for me and one for my wife on same day. just two days back i have read your blog and i came to know. it is better to open PPF account with 2-3 years duration. i understand the benifits of this.
    what i can do now? at present i can’t afford to deposite big amount in both account. if i will not deposite big amount in starting years, after 15 year i will be loss because it compound interest. better deposite big amount in starting phase.

    Can you give any suggetions?

    1. I think you shoudl not worry much on this . Its fine if you have started on same day ! . For some years just deposit the minimum Rs 500 only and then increase it later !

      1. yagnesh says:

        Hi,
        Thanks Manish for your replay, yes you are right, i can increase amount later but I have calculated. if we deposit high amount starting time 0 to 4 years, After 15 years we will get some big amount. the difference is not small amount.

        when we open account, that day onwards they are calculating interest. am i right?

        Is there any procedure like hold account, postpone in SBI PPF??

        1. Yes, if its possible for you, always pay more and more in start .

  13. Sanoj says:

    Hi,
    Manish, Thank for this article becasue of this i come to know the important of PPF A/C and i had open the PPF a/c in SBI Bank where i already have saving a/c also.
    It takes me to 20 Minutes to open PPF a/c, you just need to provide pan card copy with PP size photo, and add proof. and when i returned to office and open the my internet banking i saw that my PPF A/C are showing in it as linked a/c. and you can transfer the money in Transfer fund option. no need to add ppf ac separtely. this is amzing service by SBI Bank.

    Ones again thanks a lot.

  14. Chetan Ambi says:

    Manish, Which one is good? Investing monthly or lumpsum investment yearly in PPF? I know that if we make lumpsum investment before 5th of April each year it ll get interest on whole year. But how about doing monthly investment? Please let me know your thoughts.

    1. The more money you deposit in start, the better it is . but its not possible for everyone to deposit the full money in start , so do it if you have money else second best option is to deposit on monthly basis before 5th each month . Read more here – https://www.jagoinvestor.com/2012/02/how-ppf-interest-is-calculated-video.html

      1. Chetan Ambi says:

        Thank you !! I am doing monthly investments in PPF from one year.

        I think we can do like dis: Invest in RD from April to March for one year lets say Apr 2013 to Mar 2014 and then invest this lumpsum amount in April 2015. This works good. We ll get interest on RD and can also invest this amount in PPF. What you say Manish?

        1. Chetan Ambi says:

          small correction.. I meant to say investing d amount from RD in April 2014 not in April 2015.

        2. But how does it help . If you directly invest in PPF each month, you anyways get all the interest also per month . I dont understand why do you want to do what you suggested, I hope you know how PPF interest is calculated – https://www.jagoinvestor.com/2012/02/how-ppf-interest-is-calculated-video.html

          Manish

  15. ishar ji says:

    if ppf a/c mature then again ppf a/c open or not?

    1. Yes, you can open it again , but why to do that when you can continue it for next 5 yrs blocks ?

      1. ishar ji says:

        thx Mr. Chauhan sahib Ji

  16. Navin Prajapati says:

    Manish,
    Which one is better PIL or PPF as i am Govt. employee

  17. M.Saravanan says:

    Hi Friends,
    I would like to understand the following, say example i have invested 15 lacs in a 15 years of time in PPF account, so after the maturity how much money in total i will receive?
    Please give your answer for this

    1. If you have invested 1 lac each year , then close to 35-40 lacs is possible

      1. M.Saravanan says:

        Thank you very much for your reply.

        Regards,
        M.Saravanan

  18. Ajay sharma says:

    Dear Munish Ji,
    one of the LIC plan (Marriage & Education Endowment) table no-90 also gives you good return of 7.9% if you are under age 30, if you invest 44,930/- yearly for 21 years you will get rs: 24,15,906/- and it will also gives you accidental insurance,loan facility and moreover if proposal died in between all of the rest premiums are waived off.so,kindly suggest PPF is better than this.

    Rgds
    Ajay

    1. You should decide if you need liquidity or not ? If NOT , then you can even consider this LIC plan

      1. ajay Sharma says:

        Dear Manish ji

        I am not getting you can you plz expain.Ishall be very thankful to you.

        Rgds
        Ajay

  19. subhash chandra says:

    Sis,
    your way of writing is indeed good,even a lay man can learn many things.Gift to relatives,and PPF articles are really useful.

    1. Thanks for appreciation πŸ™‚

  20. RAVI SARMA VEMURI says:

    Dear Sir,
    I have the following questions in my mind and like to get clarify/ advise from you please.
    1) I opened my PPF on 9th,Dec’1998.. when would be maturity date.
    2) still i am earning at my age of 57 now, working in a private company, and may be continued till attaining the age of 65years.. so is it advisable to continue my PPF extended .. if so what benifit will i have..
    Request you advise please.
    RAVI

    1. 1. 1999 + 15 yrs = 1st Apr 2014

      2. Its a personal choice. you can alwyas extend it for next 5 yrs if you want .

  21. Amitabha Roy says:

    Hi,
    Thanks for these valuable suggestions. I’m planning to open one ppf a/c. I wanted to know if I open the a/c in May 2013 then when I will be eligible for partial withdrawal?
    Thanks.

  22. Priya Gupta says:

    I want to know whether a person can hold one active and one inactive PPF Account with SBI. Furthermore, whether he will get interest on the inactive PPF account

    1. No he cant , a person can have only One PPF as far as I know .

  23. PAWAN JAJODIA says:

    Dear Sir,

    I want to know, if I opened a PPF account on 1-1-2013 when it will be matured.

    Regards

  24. hi Manish ,

    thanks for this informative article of PPF . your each and every article is very good and giving more knowledge to me . I really thanks to you, for sharing such valuable information to us . seriously you are doing very good job.

    1. Thanks Prashant !

  25. Vishal Jain says:

    I want to utilise my 80C limit. Should I invest in PPF or ELSS? please advice.

    1. Both come under 80C only, what is your risk appetite ?

      1. Vishal Jain says:

        I can take risk. I want to invest for long term. But ELSS may get out of 80C in future, right?

        1. How does it matter, for the amount you invest this year , you will get benefit only this year. So if you choose ELSS , then you get tax exemption right now this year, then it gets locked for 3 yrs . Next year if ELSS is not into tax exemption list, thats the problem for next year.

  26. Ami says:

    Hi,

    PPF investment and Property Investment, can comparison be done?

    Ami

  27. mukesh says:

    hi
    i have a query…my income is non taxable as being an nri , can i open ppf account and is it the best option for me considering that tax benefit is not of much use…..which are other optins for me

    1. You cant open a PPF acccount because NRI cant do that. Also your income in not taxable only if its below the limit

  28. Dr.Dilip Italiya says:

    THANK YOU MANISHJI,
    YOUR INFORMATION IS VERY HELPFUL TO ME , BECUASE I AM CONFUSE TO OPENING PPF ACCOUNT, NOW I AM VERY HAPPY THAT NO CONFUSION AND OPENING PPF FOR ME AND FOR EACH OF MY FAMILY MEMBERS…THANK YOU

  29. Ravi Sethia says:

    Hi Manish

    Have opened a PPF account at Sbbj bank for 15 yrs but i do not want to extend it so can we get the entire 100% money on maturity as iam not intrested in extending the period.

    Regards
    Ravi

  30. DHANESHWAR KUMAR MISHRA says:

    Dear Manish
    I opened a PPF A/c with SBI on 05.05.1999 in my name and another PPF A/c. with Post office on 21.12.2002 in my son’s name. I want to know tha maturity date of both the PPF A/cs. Please

    1. It will be 1st apr 2015 and 1st apr 2018

      1. DHANESHWAR KUMAR MISHRA says:

        MANY THANKS .

        1. DHANESHWAR KUMAR MISHRA says:

          One more question please. It means I have to deposite minimum Rs 500/- in the Fin. Yr 14-15 in SBI and Fin. Yr. 17-18 in Post Office which will be 16th year deposit, although the PPF A/c. Maturity will be 15 year. Please clearify the doubt.

          1. your point is not clear to me

            1. DHANESHWAR KUMAR MISHRA says:

              I open the PPF a/c in SBI on 05.05.1999 by depositing Rs. 5000/- Then I contineued to deposit Rs. 5000/- in each year. So starting from 1999 I completed 15 deposits in 15 years ( May 1999 to May 2013). PPF A/c. maturity is 15 years. If it matured on 01.04.2015 then one more deposit (it may be a minimum Rs. 500/-) will be required for For Fin yr 2014-15 or not? I think you understand my point. Thanks .

  31. Gibin James says:

    Is it necessary that we invest a fixed amount every year? For eg. Can I invest Rs.50,000/- this year and Rs.10,000/- next year and so on?.

  32. tva naidu says:

    Can i withdrawal my PPF amount before 15 years completion of my service?

    With warm regards,
    Naidu TVA
    Visakhapatnam

    1. Yes, but only 50% of the balance before 2 yrs !

  33. navin kumar says:

    i want to open PPF account. Kindly suggest, in which bank should i open the account. Pl. provide pros and cons for each bank( SBI vs. private)

  34. Ruchika says:

    nice blog πŸ™‚
    one question…I have a PPF account that was opened in 1989…so its been around 23 years….so if i invest 70K in this financial yr 2012-2013….when can i withdraw that money??

  35. Ansuman says:

    Hi Manish,
    First of all, many thanks for this wonderful article. I have a question related to age criteria : is there any upper limit on age? Can I open a PPF a/c for my parents (senior citizens) < 70yrs age?
    – Ansuman

    1. srini says:

      Hi Manish,

      Can I invest 1 lac in my PPF and 1 lac in my son’s PPF a/c (minor). So that i can park 2 laks in PPF a/c per year?

      -srini

      1. No you cant do that, the total can not cross 1 lac , why not ask your spouse to open the PPF account for child as guardian , then you can do it

        1. srinivasa murthy says:

          my Wife expired. No option.

  36. sreejith sivaraman says:

    Manish,

    I recently opened a PPF account and also wrote in a bit detail about the PPF account opening process in SBI in my blog:
    http://sreejithsblog.blogspot.in/2012/07/how-to-open-ppf-account-with-sbi.html

    Anyway thanks to your post that prompted to me open a PPF account.

    Thanks,
    Sreejith

    1. Good to hear that πŸ™‚ . Congratulations on opening the account , may be you can give a clickable link on your website πŸ™‚

      1. sreejith sivaraman says:

        Done :-). Some how forgot to give the link properly.

        Sreejith

  37. Vivek, Hyderabad says:

    PPF is one such great Safe-haven Financial Product I have ever seen. But, of late, the only thing I regret about PPF is Interest Rates. I have seen the peak levels of 12% Interest on PPF. From thereon, the interest has been on a downward spiral touching rock-bottom lows of 8%. Its a Shame that Returns on a “National Financial Product” is so abysmal. Its all because of our Greedy and incompetent politicians. The PPF acts as a “Cheap Fund Reserve” for our Govt. to use for their Schemes or other clandestine activities. I wish the Interest rates on PPF at not below 10%, given that its a National Financial Product with huge lock-in period (as long as average home loan tenure).

  38. Vasanth Kumar J says:

    Also Manish. Can you tell me how to calculate IRR for PPF ?

  39. Vasanth Kumar J says:

    Hi Manish,

    I heard PPF account will be active only for 15 years and after that it can be extended for 5 more years..what after that? can i close this PPF account and open a new PPF account??

    Regards,
    Vasanth

    1. Yes you can open a new one , but why do you wnt to open it again , you can extend PPF for anynumber of times

  40. Akhil kakkar says:

    Dear manish,

    Could you please suggest upon the maximum period money can be kept in PPF account.

    1. Unlimited .. You can extend it for 5 yrs period any number of times after maturity

  41. I had opened PPF account on 05.05.1995 and extended for 5 years. Now the balance is Rs.651000/- as on 30.04.2012 and want to withdrawal partly. What amount can I draw please intimate.

    1. Kailas

      After the maturity , you can only withdraw 60%

  42. sundesh says:

    Hello Manish,

    I am not sure if this thread is still active to get the reply. I have query. My Wife is a Home Maker and not working. I want to open a PPF account in her name in SBI and then invest in it. Can she claim 80C benefit while filing returns for the same? this will indirectly benefit me as well. Would this be appropriate? Is there any Tax implication on me? I only have a EPF account and not a PPF account.

    Thanks
    Sundesh

    1. Sundesh

      Legally , the money source is of main importance and as the money will come from you , the taxation will be in your hands , not your wife .

      1. Sundesh says:

        Thanks Manish for quick response.

        Since I will be transferring the money to my wife’s account, will it be treated as an income to her? Should she pay any tax on it? I just want to make sure that there is no double tax cut. Is she supposed to declare this money? Wud it fall under gift category? Was a bit confused on this part.
        could you please help me clarify this

        1. Sundesh

          Truely speaking , no body from tax department will actually bother to look at this, but tomm suppose if some one comes to your wife and asks her the source of that money , she will have to give some answer , at that time she will say that you transferred that money to her (which can be proved also) . So then some one can question, that the source of money was from you and hence its going to be your income and you were suppose to pay tax on it and why didnt you do it ?

          That time you should be ready with the answers . Practically speaking , that “some one” will hardly come ever and the chances of that happening is 0.01%

          Manish

  43. Bwaj says:

    Hi Manish,

    I am planning to open a PPF account in SBI. I have some quries about this.

    1. At present what is the intrest rate of PPF
    2. Is it there in other banks (like HDFC,ICICI,AXIS…)
    3. If so what is the intrest rate over there or is it coomon as per Indian Govt. rules
    4.What would be the best time time to open a account (like Finc. year end or start)

    Thank in advance.

    -Regards,
    Bwaj

    1. Bwaj

      1. 8.6% and 1 lac per year

      2. SBI , Post Office and all the State bank of XYZ kind of banks

      3. Its common .. PPF account is always same , where oyu open does not matter

      4. Anytme .. earliar is better

      Manish

      1. Bwaj says:

        Hi Manish,

        Thanks for the quick reply.

        -Regards,
        Bwaj

        1. ATS Preeth says:

          Now, PPF can be opened via ICICI Bank also.

  44. Sunil Rana says:

    Hi Manish

    My question is that if i open an PPF account it is important to to deposit the same amount in the account that I deposit in First time or it can be variable ……..please suggest me …..

    1. Sunil

      It can be different everytime .. no issues on that !

      Manish

  45. Hitesh says:

    Dear Manish,

    As per my goal for retirement, i have time span of 30 yrs for this goal and i wish to use my ppf account for this which i have just opened in 2011. Now when my ppf account matures after 15yrs, how can i use my ppf account for next 15 yrs ?
    is it possible to get an extension of 15 yrs in one go or in parts and if not then do i need to open a new account again.. ?

    Regards,

    Hitesh

    1. Hitesh

      Its very simple .. you can extend your PPF for every 5 yrs .. so you will have to extend it for 3 times

      Manish

      1. Hitesh says:

        During the extension , the interest will be calculated on the accumulated amount for 15 yrs or will it be treated as fresh

        1. Nitin Sontakke says:

          Hello Hitesh,

          So long as you extend the account by 5 years (you can do it as many times as you wish), it is the same account that you opened now and you will get the THEN declared percent of interest on WHOLE of the balance. Essentially (even if you are not asking) there are 3 ways it may go after 15 years.

          1/ Extend the account by 5 years and keep depositing so far as possible – Highly recommended.
          2/ Do not extend the account and do not close it and keep withdrawing only the interest which gets deposited at financial year end. – When option 1 is no longer viable.
          3/ Close the account and get the whole amount. – Not recommended and defeats the whole purpose of PPF

          Hope it clarifies.

  46. KCN says:

    I closed my PPF account after 21 yrs. I had not paid anything in for a year, and was advised to close and withdraw. Looks like it wasnt a good idea.
    I am 60. Can I start a new PPF account. Is it worth it. I am still in 30% bracket and may be for at least another 10 years. By nominating my children I give them something. If I live beyond 75 I get something when there may be no more income. Your comments will be appreciated.
    You havent commented on NPS. It has an equity link, and once politics are sorted out there will be a minimum return. Only issue is its EET. There may also be an option for employees to contribute as all Govt employees are in it from 2004.

    1. KCN

      The best thing right now for you would be Senior Citizen saving scheme and otherwise , plain Fixed Deposits .. dont complicate it a lot now .. Dont open PPF account .. for your condition it has too much of lock in period .

      Manish

  47. rajender says:

    very good article on ppf thanks

  48. Ganga says:

    Now i want to save money bt i am confused between Mutual Fund/Recuring Deposit and PPF, Plz reply which is better and How?
    If in future we will change our state then it will effect or not?
    Percent of interest is fixed in PPF or it will change?(Increase/decrease)
    if i will deposit 2000 per month then wht i will get after 15 years?
    Can i withdraw the amount in between if i required?

    Plz reply I want to start invest From January 2012 if it is better option.

    1. Ganga

      PPF and RD are safe investments and their return is around 9-10% .. Mutual funds are little risky but they can give you better returns like 12-15% in long run. These things will not affect you if you change STATE . Use our calculators to calculate things – https://www.jagoinvestor.com/calculators/html/

  49. Pushpa says:

    Hi Manish,

    I have a query related to interest calculation for PPF.

    what is the benefit of depositing amount monthly in the PPF account and wholesome at the end of Financial Year.

    This interest is credited into the account at the end of each year. The investment as a monthly contributions would earn simple interest or 8.6%?

    I think same query was posted by Meher also. But i did not get answer from the link you provided as reply. Please clarify.

    1. Pushpa

      The interest on PPF is calculated on monthly basis, you keep getting interst on the min balance between 5th and end of the month , this happens for each month and then total interest is added back in the Principal amount at the end of the financial year .. so its better to put the money at the start of each year to earn maximum

      Manish

  50. leena says:

    Hi Manish,

    Can you please advice in which month should we invest in PPF to get the maximum benefit ? How the interest is calculated in PPF ? Is it yearly or monthly recurring basis ?

    For ex : If I want to deposit 25000 in my PPF account per anum, which month should I deposit it to get the maximum benit ?

    Awaiting reply.

    1. Leena

      you should do it before Mar in that case .. its calculated on monthly basis

      Manish

      1. Muthu Krishnan V says:

        The FY is from apr 1 to march 31 of next year. If one invests on apr 5 every FY (or the last working day between apr 1 and apr 5), it would be most beneficial for that year. Note that investments after 5th of every month will attract interest only from the next month and investments on/before 5th of every month will attract interest from the same month itself.

  51. Srinivasmurthy says:

    Manish,

    If I open a PPF account in my son’s name (minor – 7 years), can I get income tax exemption for the investment made?

    1. Nitin Sontakke says:

      To answer simply, yes.

      However, if your Section 80C is already crossing 1L, you will not (technically) get any tax benefit.

      Although, this may not help YOU now, it will help your son in long run.

  52. Pankaj jain says:

    Dear, May pl clarify folloing:
    We have 4 ppf a/c in the name of self, wife and two children- one major and other minor. Wife was employed erlier and have seperate account. Children studining.
    If I deposit money in children’ account as they do not earn as yet, will it be wrong in the context of tax law???

    1. Pankaj

      No it should be fine

      1. Pankaj jain says:

        Thanks Manish for prompt response….. in fact I still need clarification from tax point of view. I fall in the category of 30% tax and further, I dont get any tax benifit since limit of 1 lakh is already over due to cpf contribution etc. I want to simply put the money in children’s account as saving for them. i know, now new limit is Rs one lakh which is for self and minor children in total. The depoist in major child’acccount should be sort of gift which do not attract gift tax. Basically, this way we are expanding our ppf saving limit by having multiple account in family. But, question is, interest in this account of major child, whether it will need to be included in the return. I seek you considered opinion.

        1. Pankaj

          If its over an above the taxable limit , then you will need to show it in return , but now right now , it has to be shown when you get the PPF money .

          Manish

  53. Rekha says:

    if i open an PPF account now and i am investing..but next year if settle abroad like Europe countries or USA..can I deposit money in PPF account..

    1. Rekha says:

      Thank u Manish for ur prompt reply

  54. Bikram Keshari Mall says:

    Article is very good. In my opinion everyone should open a PPF account in view of the future.

    Thanks

  55. Srinivasmurthy says:

    Manish,

    I understand that PPF is a good option over a long term. But considering the current inflation hitting double digits, is it still a good investment

    1. Srinivasmurthy

      No , you have pointed out a good thing , one should not be overdoing his investments in PPF .. You should have a limited exposure in PPF . It all depends how much you are investing overall in PPF compared to your total investments

      Manish

  56. kiriti says:

    I am new to this PPF system and so please help me out in this.For example I open my account today what happens to my account after 15years.I mean if I invest anything from the 16th year there is no lock-in period?

    1. Kirti

      Lock period is only from the data you open the PPF account, after that its not there

      Manish

      1. Nitin Sontakke says:

        Well, that’s not quite correct technically.

        After initial period of first 15 years, upon each subsequent renewal, there is a locking period of 5 years.

  57. Nitesh says:

    Hi Manan,

    I am having PPF account in SBI.Using online i.e. Transfer fund into PPF account and also can view statement online.But whenever you need to withdraw amount you need to approach the same branch.So I think you can open new account in SBI and ask them to provide online access.

    1. Nitesh

      I dont think you can take out your PPF money online , its not a bank account from which you can do online transfer

      Manish

      1. Nitesh says:

        We can deposit into PPF a/c online.I am having both Saving & PPF accounts in SBI & always transfer amount into PPF from my saving account through online.Also having online access of PPF account so I can view & takeout statement of PPF account any time.

        1. manan says:

          Thanks Nitesh ,

          This was what I was looking for depositing the money from my SBI saving account to PPF account online.

  58. manan says:

    Hello … I have my ppf A/c in IDBI bank .I want to transfer it to that bank which provides online mangaing of PPF ..Kindly guide me with which bank I should open and what will be the process… . πŸ™‚ Thanks in Anticipation …

    1. Manan

      You can only have a read only view of your PPF account and able to deposit money into it , but it would not be possible to withdraw the money from PPF account ,any bank which gives online transfer to some account can acheive this, even your IDBI would be able to do that

      Manish

      1. manan says:

        Hello

        I just want to deposit money in ppf account online and Idbi doesn’t provide facility .

        1. Manan

          So you are saying that IDBI does not have netbanking or it does not allow you to add PPF account online ?

          Manish

          1. manan says:

            It is having net banking facility but ppf account cannot be added in that .. πŸ™

            1. Manan

              I am publishing an article tommorrow on this , but incase your bank is not able to add PPF account as third party , then it might not be possible , bad luck

              Manish

  59. Vikaas says:

    Dear Manish,

    I read all the data and also gone through your video for calculations.
    I am satisfied fully with my queries about PPF and EPF.
    I have to open an account for me n my wife so what documents i need to open the accouns and where to open the account (Which bank)?

    Kindly reply with any suggestios appreciated.

    Vikaas

    1. Vikass

      You can open an account with SBI , see this article on the procedure : https://www.jagoinvestor.com/2010/02/how-to-open-a-ppf-account-at-sbi-bank.html

  60. Sylvestor says:

    Nice article. I am left with following questions.
    Your response is highly appreciated.

    1. I think PPF interest is calculated annually? Please correct me.

    2. If I open PPF account in the Oct 2011 with Rs. 1000/-, will I get interest on 31st March 2012 or on 31st Oct 2012?

    3. In the above case, if I get interest on 31st March 2012, then is it not a good idea to deposit money only in the month of March?
    (meanwhile invest it somewhere else and earn returns)
    I mean to say how about depositing money in PPF just before they calculate annual interest?

    4. I think on maturity PPF can be extended for next 5 years ONLY ONCE. After this extension, you have to mandatorilly withdraw your money. Please correct me.

    1. Nitin Sontakke says:

      Here are the answers to your questions.

      1/ Interest is calculated monthly but deposited yearly on 31st March.

      2/ As per above, you will get interest on 31-March-2012 (from Oct, if you deposit before 5th of Oct, to March otherwise from Nov to March).

      3/ It works exactly the other way round. Deposit the money before 5th April every year. You will get interest for whole year.

      4/ After maturity of account for the initial period of 15 years, you can extend it for 5 years as many times as you wish.

      Hope it clarifies.

  61. manan says:

    Hello Manish

    I have finally opened a PPF a/c …… after reading your blog…Thanks for a wonderful blog … and i must appreciate you are doing a wonderful work …..

  62. Satendra says:

    But if i lost my job and dont able to pay them any amount so then what happen. or bymistake it happen that i died so what happen then

    1. You need to pay 500 each year . I think thats not a big amount , if you die ,your nominee will get the money

  63. sravan says:

    Manish,

    THANKS …a TON
    when my friend said to invet in PPF’s I thought it was very old & traditional way of investing….but when I got this blog…it was awesome…

    Regards,
    Sravan

    1. Sravan

      Good to hear that πŸ™‚

  64. Gopi says:

    Manish, Last year I opened ppf accounts for my wife, myself, daughter who is eight years old and son who is 3 years old. I put 70000 rupees into each of the 4 ppf accounts thinking that it is allowed. I am the only earning member of my family.

    Later I came to know that this is not allowed and I am allowed to invest only Rs.70000 in total distributed to 4 accounts and not Rs.2.8 lakhs as I did last year. I guess I will get the ppf benefit with interest from only my account and the other three acounts I will just get the principal without interest after 15 years even if I continue to invest Rs.70000 every year into each of the 4 accounts every year which would be a waste.

    Are you in agreement with what I understood? Thanks for your help

    1. Gopi

      yes , thats right , But if your wife accounts gets monuyey from her pocket , that can be treated as seperate money . Cant she put 70k from her resources . Its a matter of time when PPF guys come to know about it , may be it might be earning the interest right now (find it out) , but its not allowed, even many NRI’s open PPF when they come to india which is not allowed .

      1. Sandeep says:

        As per http://www.rediff.com/getahead/2005/mar/08ppf.htm,
        “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.”

        Regards

        1. Sandeep

          THat looks a mistake from Rediff .. NRI’s can only Continue their PPF which they already opened when they were not NRI and the payments has to be from NRO account, however NRI can not open a fresh PPF account at all .. I see the wordings on RBI website like this

          http://www.rbi.org.in/scripts/FAQView.aspx?Id=52

          Note : NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).

  65. US Verma says:

    Public Provident Fund is really good to make money for older days.Although rate of returns is slightly less than others scheme available in market but in PPF maturity amount is totally tax free which compensate the maturity. It is safer and has no risk for ones money. One should open PPF account as early as possible in the life.
    with thanks,
    Er.U.S. Verma
    Gorakhpur

    1. US Verma

      Thanks for your comment πŸ™‚

  66. Masroor says:

    Hi Manish,
    EPF or PPF….Which one to choose if i am employed in private company??Which one will give better returns???u dnt have search option on ur blog….have u written anything to explain EPF vs PPF for this financial year??

  67. pragya says:

    SIR ,
    We want to know what is the mode of payment or if we want to invest 50k in a year , then give us idea in break up way , that would be easy for us . and where in bangalore we can open the ppf a/c

    Thanks & Rgds
    pragya

    1. Pragya

      I didnt understand what breakup do you need ? PPF will be there with govt , and you get interest on it .

      You can open a PPF account in Post office or any nationalised bank (generally SBI) .

      Manish

  68. avinash agrawal says:

    wonderful concept dude…really liked the explaination……

  69. MANAN says:

    hi manish

    its a very nice blog and i learnt plent of things frm this . I would like to know whether ppf account can be opened in IDbi bank ??

    with regards
    manan oza

  70. Leena says:

    I wanted to know more about the Nomination and repayment after death of subscriber for PPF account .. Can you let me know the details about it ?

    Thanks.

    1. Leena

      Its not some thing veyr much available in detail , But if you should arrange for death and succession certificate in worst case

      Manish

  71. Shahid says:

    Hi…I am new to this site….was searching abt PPF and finally landed here ..
    I am quite confused about few issues that need to be resolved…Could someone answer these questions.

    1. what is the difference if I am making a payment of say 24,000 for first year all at once and if I pay in the installments of 2000 per month.

    2. As I am not having any account in SBI at my home town ,I am making a PPF in Delhi… and is it possible to make all transactions from my Home Town if required .. withdrawing money after 5 yrs say at my home town while my PPF was made in Delhi.

    3. If I am taking a PPF saying that will be paying 24,000 per annum and start paying less amount comparatively …will there be a problem..

    Anyone with idea about these issues answer my questions…

    Thanks in Advance…. πŸ™‚

    1. Shahid

      1. Interest on PPF is calculated monlthly so in first case you will get less interest , but in second option u start getting more interest

      2. You can make online payment , but if you want to do offline payment , then you have to do it in the branch only .

      3. No issue

      Manish

  72. Anand says:

    U have given a new angle and strong reason for everyone to open a PPF account.
    Till now I used to invest regularly in NSC (making ladders) and ignore PPF (coz of lock-in). With this blog m only hitch has gone for good. opening PPF ASAP!!!

  73. sir…i think if NSC is giving more return because of equity component in to it …we should invest in NSc…rather than ppf which has 15 yrs fixed period…and in coming years rate of return would fall from 8 % to somewhere we can excpect 6-/ %….

    1. Kamljit

      Did you say NSC ? NSC does not have any equity component in it !

      Manish

    2. Anand says:

      t just takes 500 bucks to keep PPF alive. think abt it and decide.

  74. sumithra says:

    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 πŸ™‚

    So you have to decide which one suites u .

    sumiythra

    1. Sumitra

      Good one πŸ™‚

      Manish

  75. Rakesh Samart says:

    Can we deposit RS 100000 per year in a PPF account based upon the judgement of karnataka court? But, I think that the local authorities would not consider this. Can we get a copy of the court order?

    1. Rakesh

      Which judgement are you talking about , give me the link or more information πŸ™‚

      Manish

      1. Rakesh Samar says:

        Manish: Read the bolog of May 15th 2010, a copy of which is pasted below for easy reference:

        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:

        As the author of the article clearly mentions, β€œwide publicity to the compliance of the court’s order needs to be given for the benefit of taxpayers and to avoid contempt of court.”

        1. Rakesh

          As its clearly written “There is no information so far from the PPFS authorities to show that the limit has been increased to Rs 1 lakh as directed by the High Court. ” . I do not understand a lot of law , but just because high court of karnataka thinks that 70k limit should be increased to 1 lacs in PPF, its not going to happen as they high court of karnataka is no one to decide that . If thats a big thing to contest ,it would move to Supreme court and then only anything will happen . By the time all this happens , anyways the PPF limit will cross 2 lacs πŸ™‚

          Manish

  76. Rahul says:

    Hi all
    plz let me know if i am withdrawing money from PPF after locking period (5 or 6 yrs as may the case be) then will there be some penalty charge,and how much i can withdraw?

    Regards
    Rahul Singh

    1. Rahull

      One withdrawal, once a year, is allowed from 7th year onwards. You can withdraw an amount not exceeding the lower of:
      a. 50% of the balance at the end of the 4th immediately preceding year
      b. 50% of the balance at the end of the immediately preceding year

      For more : https://www.jagoinvestor.com/forum/ppf-when-can-one-withdraw-and-how-much/171/

      Manish

      1. Rahul Singh says:

        Hi Manish
        please let me , can i apply online for opening a ppf account and what are the formalities required for that and how much time it takes to open a ppf account.

        Also,i want to know that can i transfer online money into ppf account and check the status of same and is there any difference between opening a ppf account in Post Office and S.B.I in terms of services offered?

        Thank You

        Regards
        Rahul Singh

        1. Rahul

          You cant open an account online ,you have to do that offline only .

          once its open you can transfer the money to PPF account to your netbanking . It would be wise to open it in SBI instead of post office for this reason

          Manish

  77. Neeraj says:

    Hi Manish,

    I am planning to deposit certain percentage of my salary in to the PPF account (Ex. 5%). The amount I deposit would vary every month. So I would like to know the formula for calculating the maturity amount for uneven deposits. I remember you had told the fomula for Even deposits.

    Regards
    Neeraj

    1. Sunil Date says:

      FV function (available in Excel) will have to be applied to each installment, since the amounts are variable. Alternatively you can calculate the FV of each installment in year 1 till the next 1 Apr and then take the FV of the lumpsum amount to the next 1 Apr, while adding the FV of each installment in year 2 till the 1 April. Its going to be complicated. You may also average out the variable installments and then apply the fixed amount formula as an approximation.

  78. Neeraj says:

    I would like to thank you Manish for such a useful blog .
    After reading this blog I have got an PPF account opened.
    πŸ™‚
    Neeraj

  79. Sachin says:

    What is the minimum amount need to be deposited in PPF account to keep it active, Rs 500 or Rs 1000 ?
    If anyone opens PPF account by depositing Rs 1000, then he need to deposit any extra minimum required amount on that same year for keeping ppf account active ?
    What are the months considered for year consideration ? That is from APRIL TO MARCH or JANUARY TO DECEMBER

    Thanking you,

    Regards,
    Sachin

    1. Sachin

      The minimum you need to deposit in PPF account is just Rs 500 . If you deposit 1000 , then you are good for whole year πŸ™‚ . the year taken is from April – March

      Manish

      1. Sachin says:

        Thanks manish,
        If anyone opens new PPF account by depositing Rs 1000, then he need to deposit any extra minimum required amount on that same year for keeping ppf account active ?

          1. navin says:

            hi

            I opened ppf account in 2004 and deposited money till 2005, Does it mean my account is inactive.how may i make it active or withdraw partial money

            1. Yes its inactive now , you will have to deposit a penalty of Rs 50 + Rs 500 for each year of contribution so , for 8 yrs, you need to pay 4400 in total and then it will get active

  80. Pankaj says:

    you can use it as a investment product which gives 8% assured tax free returns.

    This contradicts what you say in ITALICS at the end of the article i.e. This Rate of Interest is subject to change every year or at regular interval of time; and it makes confusing reading too; if it reads in conjunction with MF – Equity which says investments in MF (equity) is good for horizons of more than 3-5 years, so instead of PPF, which carries meager 8% returns, my choice would then favour MF (equity); as in MF too I have option of partial / full withdrawal that too tax free after 1 yr lock in period

    1. Pankaj

      Yes . .its my mistake to mention it in such a way that it confuses , I will change it . thanks for pointing this out

      Manish

  81. Shankar says:

    Dear Manish,

    Many Thanks for writing this userful Post.

    Kindly request one clarification.

    After 15 years of PPF,
    How much money can be withdrawn and still proceed for renewal?

    After 20 years of PPF,
    Can I withdraw a small portion of amount and continue to renew for 5 more years?

    – Shankar

    1. after 15 yrs , you can withdraw any amount and continue it ..

      Manish

  82. Leena says:

    Hello Manish,

    Can you please confirm if it is possible to change the PPF account name after marriage if we show the marriage certificate ? because I had a word with the bank people wherein they said no ..

    Awaiting reply.

    1. Leena

      If they say it cant , i think it cant be done . Not sure on this but .

      But why do you need the change ? Let it run the same way

      Manish

      1. Sunil Date says:

        Logically it has to be possible. It is likely that the bank staff are taking a easier route by negative reply. I suggest that you submit it in writing to the PPF authorities through the bank, with a certified true copy of your marriage certificate. Reply to the written request will be the actual position. Don’t forget to take an acknowledgement from the bank on your copy of the request.

  83. Jasvinder Singh says:

    Hi Manish
    thnx fr such valuable posts. Just wanted to ask u which investmnt option wud be better .. PPF or sm pension plan (or anythng else u wud suggest). Have zero knowledge abt all these. I hv just started earning and looking from a perspective of tax savings and a handsome money after sm years.

    1. Jasvinder

      Dont invest anywhere for some weeks , invest in learning πŸ™‚ things .. Pension plans by insurance companies are no no

      Manish

  84. C Prakash says:

    If I am contributing 60,000 into my EPF, can I still deposit 70,000 into PPF ? Would the PPF investment be generating 8% in this case also ? Would it still be completely tax free at maturity or in premature partial withdrawals ?

    1. C Prakash

      Yes, PPF and EPF are totally seperate . Just make sure that your limit is not crossing 1 lac , unless you want it πŸ™‚

      Manish

  85. Pankaj says:

    Hi Manish,
    I read that in proposed DTC tax saving investment of 1 L is going to be limited only for PF/PFF etc. I am wondering if there is any increase in max cap of 70K annual deposit in PPF account? Also today I read news that intrest rate on PF is raised to 9.5% is that applicable to PPF also? If not where can we get info on updates to PPF intrest rates if any?

    Thanks,
    Pankaj.

    1. Pankaj

      No there is no increase in PPF limits

      Manish

  86. manan says:

    I am a student . and my age is almost 22 years ..so is it advisable to have ppf account right now .. or shall i delay it by 2-4 years…

    what is the minimum amount that i need to intially deposit while opening of an account. and is it possible that i deposit rs 1500 this month and any lump-sum amount .when ever i want .. within a gap of 2-3 months … ??

    1. Manan

      Yes you can have PPF account, and you just have to pay atleast 500 per year to keep the account running.

      Manish

      1. manan says:

        sir which is the best bank where can i open a ppf account ?? and how interest is calculated ?? and is the Interest going to hike ??

        1. SBI is most famous , but truely speaking it does not make any difference from where you open PPF accoutn , as its mentained by Govt and same rules applies .

          How do i know if its increasing πŸ™‚ . the decision is taken by govt

          Manish

  87. Monorom Deb says:

    I wish i would have gone through this article. i have understant the usage of PPF account. I am gonna open PPF account immediately and i would ask every one to open PPF account. Its a very good scheme.

    The idea given in this article is brilliant.

    Thanks buddy

    1. Monorom

      Just make sure you dnt overdo the PPF investments , be in limit and make sure your asset allocation is what you require .

      Manish

      1. Monorom Deb says:

        Thanks buddy i will definately take care about that, thanks for ur concern.

  88. rajiv says:

    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

    1. 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

  89. Ravi Gupta says:

    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

    1. Ravi

      No , you cant open it jointly , there is no concept like that

      Manish

  90. shyam says:

    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.

    1. 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

      1. Shyam says:

        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! πŸ˜‰ So, would be great if you could tell if i can get another 5 year extension.

        1. 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

          1. Ravi Gupta says:

            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

            1. Ravi

              yes we can , Read more on the article comments called “How to open PPF account in SBI”

              Manish

  91. Kunal says:

    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.

    1. 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

      1. Kunal says:

        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.

        1. NPS is not taxable at maturity now

  92. Jigar says:

    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

  93. Mehar Jethra says:

    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

    1. 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

      1. Mehar says:

        Hey Manish,

        Thank you for your post.

        I am glad I found you……err I mean your post.

        πŸ™‚
        Mehar

        1. haha

          thanks πŸ™‚ . Keep coming

          Manish

          1. Mehar says:

            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

  94. Pingback: Public Provident Scheme « Profit Street
  95. Gopal says:

    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 πŸ™‚

    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 πŸ™‚

    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.

    1. Gopal

      Cheers πŸ™‚ . Keep coming . I am sure we have lot of learn from each other in coming days

      Manish

  96. Kishore says:

    Hi Manish and Others…
    I found a great information here while searching for PPF account benifits. Thanks for all that ! πŸ™‚

    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

    1. Kishore

      You can do monthly investments in PPF , actually maximum of 12 payments are allowed πŸ™‚ . So you can pay every month .

      Manish

      1. Neeraj says:

        Hi Manish….. Congratulations to you.. This Blog is very helpful.

        My questions is- You have said that we can make 12 payments in a year in a PPF account. Do they have to be the same amount (ex. 5000 per month) or can be different (ex. 2000, 5000 etc) ?

        Neeraj

        1. Neeraj

          It can be different amount, note that 12 is the max you can make , its not compulsory to make exactly 12 payments, you can just make 1-2 payments also if you want.

          Manish

  97. KHANNA says:

    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 ?

    1. KHANNA

      Not very sure on this , i think they should be able to continue and they can now take the tax deductions .

      Manish

  98. Gaurav says:

    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

    1. 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

      1. Gaurav says:

        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.
        Additionaly, please suggest any other investment plan, safe as well as profitable πŸ™‚ (Some what like PPF)

        Gaurav….

  99. Nirmal says:

    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

    1. 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

  100. Harish says:

    Thank you Manish πŸ™‚ 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. πŸ™‚

    1. 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

  101. Harish says:

    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 πŸ™‚

    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 πŸ™‚

    1. Harsh

      Thanks for your honest comments πŸ™‚ . 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

  102. A S Bhalaik says:

    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?

    1. 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

  103. Rashmi says:

    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!!!

  104. naveen says:

    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

    1. 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

  105. Prasad says:

    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

    1. 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

      1. Prasad says:

        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

  106. NKanani says:

    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!

    1. 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

      1. NKanani says:

        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!!)

        1. NKanani says:

          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!

  107. Santosh Agarwal says:

    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.

    1. Santosh

      Yes , that is correct , you will get all your money on maturity .

      manish

    2. Rashmi says:

      I think your ppf acc will mature on 31st March 2015!!!

  108. Riya says:

    Can a person have both EPF and PPF Account?

    1. Riya

      Yes , they have no relation to each other …

      Manish

  109. shyam says:

    can we take loan against PPF account balance?

    1. 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.

  110. Praveen Kamre says:

    Hi Manish,

    I wish i could read it earlier πŸ™‚ 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?

    1. Praveen

      Definately you can open 2 PPF , PPF is for each person πŸ™‚

      Manish

  111. Abhishek says:

    Thanks Manish for the information.

    Your blog really Rocks!!

    Abhishek

    1. Rahul says:

      Manish…

      I admire you…cant say anything more.. ! πŸ™‚
      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?

      1. Rahul

        Thanks for the appreciation πŸ™‚

        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 πŸ™‚

        Manish

        1. Sunil Date says:

          @ manish,
          you have ignored to comment on his his amount of Rs 1L.

          1. Ohh yes … Didnt see that thing . He cant go beyond the limits per year. . my bad

            Manish

    2. Thanks Abhishek

      Manish

      1. Rahul says:

        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 ! πŸ™‚

        1. pattu says:

          Rahul,
          β€œattaching 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.

  112. Abhishek says:

    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

    1. 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 : https://www.jagoinvestor.com/2010/02/how-to-open-a-ppf-account-at-sbi-bank.html + See all the comments

      Manish

  113. Kunal Vishwakarma says:

    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

    1. 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

  114. shafiulla baig says:

    Hi,
    I Want to open new ppfaccount ,pl teel me it takes how many days

  115. Finally, I opened a PPF account for me Manish πŸ™‚

    Hope that I build a corpus for me in the coming years πŸ™‚ If not, still I am atleast curbing the long 15 years day-by-day πŸ˜‰
    .-= Amandeep Singh´s last blog ..What is a β€˜Reverse Mortgage’ Scheme? =-.

    1. Amandeep

      Nice to know that . Where did you open that , bank or Post office ?

      Manish

  116. Pranjal says:

    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.

    1. 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

  117. Pranjal says:

    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.

    1. 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

  118. pattu says:

    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.

  119. pattu says:

    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!

    1. manish says:

      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

  120. Kunal says:

    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…..
    πŸ™‚ Kunal

    1. 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

  121. pattu says:

    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.

    1. manish says:

      Ohh great

      Thats a nice news .. I never knew we can do that . Nice stuff ..

      Manish

    2. mukul says:

      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 =-.

      1. pattu says:

        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

        1. Rony says:

          @ Mukul

          SBI is providing online access for PPF accounts.I got a online kit(password ) form SBI in Bangalore last year.They provided the online kit on request immediately and liked it with my account number. I could access the account in 2 hours time.There was no extra charge for the online kit.

          Third party transfers can be done form any online account having NEFT.I have have been doing it for quite some time.The procedure is same like any bank account.

          Another advantage of SBI I found was that I could update the passbook in a different branch close to to my current residence free of cost.Though I was told by my home branch that Rs 10 will be charged per non home branch updation of passbook.Deposits can be done using PF deposit slips at any branch.

          I think SBI PPF is better than Postoffice PPF as it is easier to manage SBI PPF because of online acces as well as any branch banking.

          1. Mukul says:

            @Rony
            Thank you for the information. If you see the date, it was a query posted year back. thanks to information on this blog, I was able to utilize this saving instrument.And I ensured that 3 other friends also did it.Thank you Manish.
            Mukul

  122. Kunal Vishwakarma says:

    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

    1. 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

      1. Mala says:

        Hi Manish,
        Operating PPF accounts in ICICI is a nightmare. There is no online option, no helpdesk, no customer care. You should go to the bank in person to do a transaction. I have been trying for a while to transfer my account but have not come across a source who will tell me how to do it.

        Thanks.

        1. Mala

          Did you enquire in SBI how you can transfer your account from ICICI to SBI ?

          Manish

  123. manish says:

    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

  124. Sagar Pawar says:

    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?

  125. AJ says:

    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,

    1. 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

  126. Mukul says:

    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 =-.

    1. manish says:

      Amazing point you bring in here .. I am noting down the point to write a post sometime on this πŸ™‚

      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

      1. Mukul says:

        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 =-.

        1. manish says:

          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

          1. Mukul says:

            Yes Manish, I have fowarded your blog as a recommended link to many in friends and family already.
            .-= Mukul´s last blog ..Decade recap =-.

            1. manish says:

              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 πŸ™‚ . I am sure this will be the case with you also . no ?

              Manish

  127. sujatha says:

    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.

    1. 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

  128. Mahesh says:

    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.

    1. manish says:

      Mahesh

      These is lot of confusion on this one . i will get back with more information on this one with some post . keep watching πŸ™‚

      manish

  129. bose says:

    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.

    1. 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 πŸ™‚ which is worse . So what do you think about taking Term Insurance in early stage of Life ? Do you have one ?

      Manish

      1. bose says:

        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.

        1. manish says:

          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

          1. bose says:

            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.

            1. manish says:

              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

            2. anil says:

              no, it is awesome with sbi netbanking. m using it. real time transfer.

  130. JB says:

    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.

    1. manish says:

      No . Interest rate can change .

      Current rate is 8% , In future it can go up or down depending on the govt decision .

      Manish

  131. An interesting and a clever way of looking at it Manish… πŸ™‚

    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… πŸ™‚

    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!!! =-.

    1. manish says:

      Yup . you got it ..

      Manish

  132. Murali says:

    Hi,
    Can I withdraw any amount in the middle from my ppf account? If so after how many years and how much?

    1. manish says:

      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

  133. Shantharam says:

    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

    1. manish says:

      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 πŸ™‚

      Thanks for info
      Manish

    2. Shobha says:

      Hi Shantharam

      I had opend an PPF account in 2006 with ICICI Bank, looking for the Online option on this. But even after 4 years now, it is still not online. Calling the Branch does not help either.

      So Now i have decided to shift my PPF account to SBI Bank.

      Shobha

      1. I think it would be a good move ..

        Manish

  134. pattu says:

    “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

    1. manish says:

      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 πŸ™‚

      Manish

    2. Ashu says:

      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?

      1. 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

    3. anil says:

      tax exemption is only 70k, as per sec 80c, now 1lac.

  135. pattu says:

    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

    Part 2 (most important)

    Part 3

    pattu

    1. manish says:

      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

  136. Shantharam says:

    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

    1. manish says:

      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 πŸ™‚ . you will get the same interst and also the TAX exemption πŸ™‚

      Manish

  137. ananth says:

    Please notify about PF details

    1. manish says:

      Which PF details ? Please clarify ?

  138. Manish Chauhan says:

    @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

    1. steven says:

      NRI’s cannot open a PPF Account

  139. Siraj says:

    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..

  140. Manish Chauhan says:

    @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

  141. Anonymous says:

    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)?

  142. Red Indian says:

    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

    1. @ 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 =-.

    2. Unknown says:

      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 ?

      1. You are correct . Max is 70K

        Manish

        1. 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:

          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.”

    3. Dayaram says:

      rs 70000 per year become 10.5 laks in 15 years thats fine but how come it becomes 22.5 laks in ppf what is interest rate so that its become 22.5 laks please explains clearly ?

      1. Dayaram

        PPF rate is 8%

    4. Nitin Sontakke says:

      Hello,

      As stated elsewhere, there is a cap of 1L per tax paying person, per year for depositing money in PPF.

      As such, if there are 3 accounts (1 self, 1 spouse, 1 kid) and only one person is having income, max 1L be put in 3 accounts i.e. say, 80K, 10K and 10K, etc and not 1L per account.

      Hope that clarifies.

  143. Manish Chauhan says:

    @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

  144. Vishal says:

    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?

  145. Manish Chauhan says:

    @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 πŸ™‚ . Read this : https://www.jagoinvestor.com/2009/08/what-is-direct-tax-code-and-how-does-it.html

  146. Sachin Dixit says:

    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.

  147. Manish Chauhan says:

    @Angshuman

    Yes , One account per person is the rule πŸ™‚ . Regarding updates , I would suggest you subsribe to multiple channels πŸ™‚ so that you get the updates and are not dependent on orkut , try email and mobile subscription .

    Link : https://www.jagoinvestor.com/2009/06/subscribe.html

  148. angshuman says:

    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

  149. Manish Chauhan says:

    @Neeraj

    Many people do not realise that πŸ™‚ , its ok πŸ™‚

    @Nikhil

    You can learn the generic formula for this and can use it for PPF , mutual funds etc .. look at : https://www.jagoinvestor.com/2009/05/video-post-on-basic-formula.html

    Manish

  150. Anonymous says:

    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

  151. neeraj says:

    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

  152. Manish Chauhan says:

    @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 πŸ™‚

    So you have to decide which one suites u .

    manish

    1. Asif says:

      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.

      1. manish says:

        Yes Asif ..

        You are correct .. But no matter what 8.5% is more than 8% πŸ™‚ . And .5% can make a big difference .

        manish

        1. Garg says:

          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?

          1. Vinit

            No , EPF and PPF both are EET ,so you have to pay tax on maturity . You can save extra amount in EPF .

            Manish

            1. prabeesh says:

              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

            2. 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 πŸ™‚

              Manish

            3. Darshan Shroff says:

              Hi Manish,

              This is somehow news for me. I have been an avid PPF fan, call it middle class mentality or pure safe returns, from the very start of my career. However i was in the pretext that it’s gonna be EET post DTC and was hugely disappointed by the same. However its a good surprise to know its been made EEE again in the revised draft. Dont know how i missed it out. πŸ™‚

              Darshan Shroff

            4. Darshan

              Happens, you might not be updated with news πŸ™‚ .

              Manish

            5. raj says:

              I believe, any additional contribution to EPF comes under the category of VPF(Voluntary PF) and hence that contribution will garner the interest rate of PPF, that is 8% (current rate), not the rate of EPF (which is 9.5% for 2010-2011).

              Please correct me if I am wrong.

              Regards,
              Rajen.

            6. Raj

              I am now confused on this , Not very sure , I think you are correct , but let me get more info on this , I have started a thread on forum to get others views ! https://www.jagoinvestor.com/forum/what-is-the-return-on-additional-investment-in-epf/820/

            7. ashok says:

              I dont think this is correct, PPF falls under EEE but EPF falls under EET.

              I am not sure how it will be when direct tax will come into the picture…i guess it will be same… or EPF might get EEE.

        2. ashok says:

          Yes EPF gives more interest but that interest is not tax free, so effective interest is much lower than the interest in PPF.
          Call is yours.

      2. KRANTIVIR RAJPUT says:

        @Asif Bhai

        I finance every ‘paisa’ counts…..so Manishji has rightly told .5% will make a difference.

  153. Manish Chauhan says:

    @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 πŸ™‚

  154. Vipin says:

    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

  155. sumi says:

    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

  156. Anonymous says:

    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

    1. anil says:

      no,its totally wrong, one can have all 3.

  157. moh says:

    this is a very good concept, πŸ™‚ wish i thought about it 30 years back !

  158. Anonymous says:

    Instead of opening PPF, how about NPS ?

  159. Anonymous says:

    Nice idea πŸ˜€

  160. Anonymous says:

    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

    1. usha says:

      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 .

      1. sumithra says:

        i want to open a ppf account so give me a full detail of it when we put the money and how much we get please give me a full details of it

        sumithra

        1. Sumithra

          What details do you want ? Ask specific questions about it. For now just know that you get 8% returns and your money is locked in for 15 yr, but you can withdraw partially after 6th year

          Manish

        2. KRANTIVIR RAJPUT says:

          @Sumitraji
          Visit the url and calculate ur PPF returns:
          http://www.ratekhoj.com/ppf-calculator.php

  161. khalid says:

    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

    1. Madhu Perundiri says:

      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.

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