Want to open a PPF account in a bank ? Know here documents required for opening PPF account to get tax exemption on your investment under Section 80C of Income tax : PPF or Public Provident Fund Scheme is most popular, long term investment option by Government of India that offer safety of funds with attractive rate of interest and returns that are fully exempt from tax. The tax free saving scheme was introduced in 1968 by Ministry of Finance to mobilize small savings by offering an investment with good return combined with income tax benefits.
PPF enjoy the EEE tax treatment (Exempt on investment, Exempt on interest earned, Exempt on maturity proceeds). PPF has a long maturity period of 15 years which can be further extended by 5 years.
How to open a PPF account in a bank ?
You can open Public Provident Fund (PPF) account at any nationalised authorized /designated bank branch, post offices etc. Some private bank branches are also authorized to open PPF account.
The account is very simple to open just by filling the application form of bank branch you want to open in. Submitting along with requisite documents and depositing the minimum pay in at designated bank branch.
Step 1 : Select the Bank in which you want to open your PPF account . Visit website of that bank to find list of designated branches authorized to open PPF account.
Step 2 : Get the application form from designated bank branch and submit it after filling complete form along with required documents.
What are documents required to open PPF account ?
- Filled in PPF Account Opening Form (available at designated bank branch) along with Nomination form or download it from here
- ID Proof like – PAN card, Passport, Voter ID, Driving license
- Address Proof
- Two recent passport size photograph.
- Pay – in slip to transfer initial deposit amount in PPF account.
However bank may also ask for additional documents if required as per bank policy.
Important Note :
- Before going to branch, carry along with you all original documents for verification purpose.
- Documents should be self attested.
Step 3 : Get the passbook issued after PPF account opening. The transactions or amount deposit in your PPF account is update in passbook which is required for claiming tax deduction under Section 80C of IT act.
Key Features of Public Provident Fund Account :
- Interest Rate : Interest rates are announced by Government of India annually. The current interest on PPF scheme is 7.8 percent.
- Tenure : 15 years.. which can be further extended by 5 years.
- Initial Deposit amount : ₹100/- to be deposited as initial deposit amount while opening of PPF account.
- Annual Deposit Amount : ₹500-₹150000/- in a financial year. Deposit should be made every year, for 15 years to keep the account alive. You can deposit in your PPF account by Cash, DD, Cheque, Online Mode etc.
- Withdrawals from PPF account : PPF account has a lock in period of 15 years and withdrawals can be made only after maturity period. However, Pre-mature withdrawals are permitted from start of 7 years. The maximum amount that can be withdrawn pre-maturely is equal to 50% of the amount that stood in the account at the end of 4th year preceding the year in which the amount is withdrawn or the end of the preceding year whichever is lower. Full amount can be withdrawn after 15 years and all is tax free, including the interest amount as well.
- Tax benefits : Deposit made in PPF accounts qualify for tax deduction under Section 80C of IT act. You can enjoy tax benefits up to ₹1.5 lakh per financial year. Interest earned is also exempt from tax and maturity amount are also exempt from tax.
- Nomination : Nomination is allowed in PPF account. You can nominate your nominee while opening PPF account.
- Loan : You can avail loan facility against funds held in PPF account from year 3 to 6 year.
- Unlike Saving Bank account, Joints accounts are not allowed in case of PPF.
- Renewal : Account can be renewed in a block period of 5 years after maturity.
- Account Transfer : PPF accounts can be transferred from one bank branch to other bank branch / post office and vice versa.
Eligibility to open a PPF account – who can open PPF account
All Indian resident individuals are eligible to open PPF account under Public Provident Fund Scheme.
A person can open only one PPF account in his/her name. There is no upper age limit for opening this account.
PPF accounts can also be opened for minors. Minors are those below the age of 18 years. However, the maximum limit of Rs.1.5 lakhs per year applies to deposits made in the minor and the major’s/guardian’s account, collectively.
Foreigners and Non-resident Indians (NRIs) cannot open a PPF account. However, account-holders who leave the country and obtain non-resident status after having opened a PPF account can continue to maintain their accounts until it matures i.e. until the end of the account’s 15 year term. NRIs are restricted from extending account tenures at maturity.
HUFs cannot open a PPF account, effective 2005. Those accounts opened by HUFs before May 13, 2005 can be continued until maturity without further extensions. An individual cannot open an account for an HUF (Hindu Undivided Family).
As the scheme was introduced to encourage small savings from income class people so minimum deposit required are very low and affordable. The tax free saving scheme is very easy to subscribe, provide safety of funds and tax free return which makes it best option for retirement planning.