The Public Provident Fund (PPF) along with other small savings deposits may see an increase in interest rates for the January-March 2023 quarter. The interest rates will be revised at the end of this month, as is customary to revise every three months. The interest rate of PPF stands at 7.1 percent for the October-December 2022 quarter. Interest rate for PPF was last revised in April–June 2020 quarter
Important features of PPF:
i) Minimum deposit Rs. 500 in a Financial Year and Maximum deposit is Rs. 1.50 lakh in a FY
(ii) Maximum limit of Rs. 1.50 lakh shall be inclusive of the deposits made in his/her own account and in the account opened on behalf of minor.
(iii) Amount can be deposited in any number of installments in a FY in multiple of Rs. 50 and maximum up to Rs. 1.50 lakh.
(iv) Account can be opened by cash/cheque and in case of cheque the date of realization of cheque in Govt. account shall be date of opening of account/subsequent deposit in account.
(v) Deposits qualify for deduction under section 80C of Income Tax Act.
Discontinuation of account
The PPF account would be closed if a minimum deposit of Rs. 500 is not made in any given financial year. Discontinued accounts are not eligible for loan or withdrawal facilities.
A discontinued account can be revived by the depositor prior to account maturity by making a minimum subscription deposit of Rs. 500 plus a Rs. 50 default fee for each year that the account was in default. Note that deposits made in relation to years of default from prior fiscal years are included in the total deposit for the year.
PPF maturity
After 15 fiscal years, omitting the fiscal year of account establishment, the account will mature.
The depositor has the following choices at maturity:
(a) By submitting an account closure form and a passbook to the relevant Post Office, you can receive your maturity payout.
(b) Can continue to hold the maturity value in his or her account without making a deposit; the PPF interest rate will apply, and payments may be made at any time or once per fiscal year.
(c) By submitting the required extension form at the relevant Post Office, the account holder may extend it for additional blocks of 5 years and so on (within one year after maturity).
Note that a discontinued account cannot be extended.
d) One withdrawal from an extended account with deposits may be made each fiscal year, up to a maximum of 60% of the amount credit at the time of the 5-year block’s expiration.
Death of PPF account holder
If the account holder passes away, the account must be closed and neither the nominee nor the legal heir(s) may make additional contributions. When an account is closed due to a death, the PPF rate of interest is paid up until the end of the month before the account is cancelled.
