April 22, 2016

Public Provident Fund (PPF) -20 unknown facts

Many of invest in PPF (Public Provident Fund). But we hardly know the basic rules. Hence, in this post, I try to summerize them in detail. These details are unknown facts to the majority of PPF investors.

Public Provident Fund

# Who can open an account on behalf of a minor child?

Only parents are allowed to open the account on behalf of a minor child. If both parents not alive or living parent incapable of acting, then a person entitled under the law is eligible to open an account on behalf of a minor.

Therefore, even a grandparents are not allowed to open PPF account on behalf of minor grandson/granddaughter when the parents are alive of the minor kid.

Keep in mind that let us say Mr.X and Mrs.Y are married couples. They have a kid named Mr.Z. In this case, either Mr.X is allowed to open account or Mrs.Y on behalf of minor kid Mr.Z. Both can’t open two separate accounts on behalf same minor kid Mr.Z.

# How much is the maximum limit one can invest?

We all know that currently the limit of investment in PPF is Rs.1,50,000. But keep in mind that this limit is combined limit of your own account and the account where you are a guardian. Hence, if you have your own PPF account and you opened an account on behalf of your minor kid, then the combined limit for your is Rs.1,50,000 only but not Rs.3,00,000.

# Accounts opened by HUF (after 2005) and NRIs (after 2003) knowingly or unknowingly

As per the amendments HUF and NRIs not allowed to open new PPF accounts effective from 13th May, 2005 and 25th July, 2003 respectively. If you opened the account knowingly or unknowingly after these dates, then the amount will be refunded without any interest.

However, note that the accounts already opened can be continued till maturity ONLY. No further extension is allowed to both HUF and NRIs.

# What if you deposit more than the prescribed limit of Rs.1,50,000 in a financial year?

Any amount you deposit in your PPF account more than the prescribed limit of PPF for that particular year will not earn any interest. Also, this deposit will not be part of Sec.80C limit. Currently both PPF and Sec.80C limits are Rs.1,50,000. So you may not feel the heat of it. But in case the PPF limit kept it as Rs.1,50,000 and Sec.80C limit raised to Rs.2,00,000, if you deposited Rs.2,00,000 into PPF account means the remaining Rs.50,000 will not be eligible for Sec.80C deduction.

Such excess amount will be idle and will be returned to you by Accounts Office to the subscriber. Hence, never try to deposit more than the prescribed limit for that particular year.

# What if you opened two PPF accounts?

Legally you are not allowed to open two PPF accounts. One person must have only one PPF account. Suppose you knowingly or unknowing opened two accounts in Post Office, Bank or one in the post office and another in a bank, then the SECOND account will be treated as an irregular account. Even you can’t open another account if you already have one discontinued PPF account. You have only option to continue it with a penalty and minimum subscription. Such second account will not carry any interest. So in such situation what to do?

The solution is, you have to write a letter to Under Secretary-NS Branch MOF (DEA), New Delhi-1 through the Accounts Office giving detail of each account and request for combining of both accounts.

# Opening PPF accounts in joint names not allowed

Yes, PPF account can be opened either individually or as guardian of minor kid. But PPF account can’t be allowed to open as a joint account.

# What to do when minor kid attains the major of PPF account?

When the minor kid attains the majority, then he will be treated as account holder of PPF but not the legal guardian. Such major kid should submit the revised application form for opening account and nomination form. His signature on the application form will be attested by the guardian who opened the account of the minor or by a respectable person known to the Accounts Office.

# Nominees not allowed to deposit in PPF account after the death of account holder

In case of death of account holder, nominees or legal heirs not allowed to deposit into PPF account. If they deposit the amount, then such amount will not earn any interest and will be refunded back at the time of account closure.

# Loan or withdrawal on discontinued account

Loan or withdrawal will not be allowed on a discontinued account. To avail loan or withdrawal facility, you have to continue the account by paying the prescribed penalty and minimum subscription for the discontinued period.

# When you will get back the amount from your discontinued PPF account?

If your PPF account is discontinued, then you will get the amount along with interest only at maturity. As I said above, even withdrawal or loan facility is not allowed to such discontinued account. You will be allowed to continue such discontinued account only during a tenure of 15 years of PPF account. You can’t activate it after maturity. Such accounts will earn interest up to maturity ONLY.

Keep in mind that such discontinued account will earn interest on every year till maturity on the balance available for each year.

# Opening new account after maturity of existing PPF account

You are allowed to open new PPF account after maturity existing PPF account only if you not extended it. If you extended for another block of a year (whether with or without contribution), then you are not allowed to open one more PPF account.

# Repayment of loan on PPF

I already wrote a detailed post on how and when you can avail the loan on PPF at PPF-Loan and Withdrawal and  15 Rules of availing Loan against PPF (Public Provident Fund). You have to repay the principal within 36 months. You can repay the loan either in a single lump sum or in installment if you not pay the principal within 36 months, then the interest rate on such loan will be 6% instead of 2 %. Such interest will be automatically debited from PPF holder’s account.

In case of death of account holder, the it is the responsibility of nominee or legal heir to repay the interest rate.

# Nomination facility of PPF account

You can nominate one or more nominees to your PPF account. However, nomination not allowed to an account opened on behalf of minors. You can change or cancel the nomination at any point of time during PPF account period. It is purely free service. There is no cost to this process. If the nominee is minor then the account holder can appoint the guardian. You can’t nominate a trust to your PPF account.

Also after the death of account holder, PPF account will not stop to earn interest on such balance. The interest is payable till the end of the month preceding the month in which payment of the deposits is made to the nominee/legal heirs of the deceased subscriber.

Nominees are not allowed to continue the account. However, they are free to open the account on their own name. Because PPF account is not transferable.

The nominee does not get the right of ownership. He is only authorized to collect the money on the death of the subscriber and keep it with him as a trustee for the benefit of the persons who are entitled to it under the law of succession. Such payment to nominee does not deprive the legal heirs and holders of succession certificate to receive the amount in the hands of the nominee.

The account holder has to mention the % of share in case the nominee is more than one person. If such % is not mentioned then the amount payable will be shared EQUALLY among all nominees.

# What if in case of death of guardian or minor kid?

  • In case of death of guardian-As per PPF rule, the guardian is not the account holder of PPF but a minor kid is treated as an account holder. Hence, in the event of the death of a guardian, the account will not CLOSE. Hence, surviving natural guardian or a guardian appointed by the competent court may continue the account of minor after producing necessary guardianship certificate.
  • In case of death of minor kid-As I said above, minor is the actual account holder. Hence, the account will close. Guardian of the account will not claim the amount. But he acts like a facilitator for transfer of fund the legal heir of a minor.

# Whether women can change the name after her marriage to PPF account?

Women are allowed to change the surname after their marriage. For this, the woman PPF account holder must give a written request and the evidence of marriage

# Attachment of PPF account under any decree or order of court and Income Tax Department

As per Section 9 of PPF act, PPF Account can’t be attached under any decree or order of the court to recover any debt or liability incurred by the account holder. However,  Income Tax Authority is free to attach and recover the dues of an account holder.

# Tax Benefits for the deposit in PPF account after the maturity of 15 years

You will enjoy the same tax benefits even after maturity also ONLY if you exercised the option of extending it with a contribution. However, if you not closed the account or opted for an extension without contribution, then any contribution made to such accounts will be eligible for tax benefits under Sec.80C.

# Tax Benefits under Sec.80C

You will enjoy tax benefits for the amount you deposited into your, spouse and kids (MINOR OR MAJOR) up to the specified limit of Sec.80C.

Interest earned yearly is tax-free. Hence, it is not considered as an investment for a fresh claim under Sec.80C. Also, note that the loan repayment towards PPF account will not form the part of Sec.80C benefits.

# Power of Attorney facility not available for PPF account

The Power of Attorney can neither open the PPF account nor operate it on behalf of an account holder.

# Cheque or DD realization date is the deposit date

In case of deposit through cheque or DD, the realization date of an amount will be treated as the deposit date. Hence, let us say you deposited the cheque or DD into your PPF account on 4th April, 2016 but the amount actually realized on 10th Apri, 2016 means the deposit date for interest calculation will be not 4th April, 2016 but 10th Apri, 2016.

Few of other PPF accounts which you may like to read-

127 Comments

  1. Hi sir, i had opened ppf account in post office on 02.04.2019 while on march 2020 it completed 1yr. On march 31st2020 interest of only 6 months was credited in my ppf account.
    I went to postoffice to check he said it has been calculated from finance team which sits at delhi.
    Please help me out where to check and raise my query for remaining interest to get me back.

    Reply
  2. I have Two PPF Accounts One opened in PNB Bank 2017 Invested Amount Rs 1.30 lakh & One opened in 2018 In HDFC Bank Rs 500 by mistake? IF I Forget my HDFC PPF will It create Problem in future to Withdraw Amount From PNB PPF at maturity?

    Reply
    • Dear Aman,
      It will create a problem. Hence, better to request for the closure of the second account.

      Reply
  3. Sir what to do for getting my money which have deposited in post office exceed 1.5 lakh in post office.

    Reply
    • Dear Heme,
      You have to write a letter to Under Secretary-NS Branch MOF (DEA), New Delhi-1 through the Accounts Office. Otherwise, contact the Post Office immediately in this regard.

      Reply
  4. Hi Bsavaraj,

    My father and myself opened [either or survivor] mode savings account in ICICI bank.Here first holder is my father and myself was second holder.Can my father open a PPF account in this [either or survivor] account online since he is primary account holder
    FYI, I have separate individual account as well as PPF account in m name in single mode

    Reply
    • Dear Sandeep,
      Why to complicate? Why not savings account in his name only and then open a PPF in his account?

      Reply
      • He is unable to manage transactions some times so i joined as a second holder in either or survivor mode..since i already have a PPF account in different account in single mode..no can my father open PPF in this Either or survivor mode of account since he is a primary holder? lease confirm

        Reply
  5. Dear Sir…
    1)At the end of the maturity shall I withdraw full amount or 60? only?? 2)Is there a Compulsion to keep 40? rest which will go in annuity??
    3) What if there is a sudden death then the whole matured amount will be transferred to nominee??

    Reply
    • Dear Aradhana,
      1) You are allowed to withdraw full 100%.
      2) There is nothing called ANNUITY in PPF.
      3) It will not automatically be transferred. The nominee has to approach the bank or post office where your account is and then after the process, they transfer the amount to the nominee.

      Reply
      • Thanks Sir… Just to clear my doubt that PPF will have same features like NPS where 40? corpus goes to annuity…

        Reply
        • Dear Aradhana,
          PPF is not pension or retirement product. Hence, there is no such obligation you re-invest the maturity proceeds.

          Reply
  6. Hi Sir..How much % will be paid to me by Bank or PO after maturity if I close the PPF account in that year..is it full or partial.

    Reply
      • Sir the year of Maturity

        Reply
  7. My individual PPF account (in SBI) is matured on 31/03/2016 & as per your article we can keep PPF account for next 5 years without contribution to enjoy interest, so I have keep this account as it is & amount is lying in PPF account. Now SBI sent a letter to either extend or close this PPF account otherwise bank will close this account, so Please let me know what should I do now.

    Reply
    • Dear Vijay,
      Inform them that you are opting for default option (extension without contribution). They need some basic understanding of how PPF works.

      Reply
  8. If I have two insurance of total aanual premium 25000 , can still i deposit 150000 annually in PPF accounts anyay ?

    Reply
  9. I have a query, i am a marine engineer by profession and i enjoy NRE status. Am i eligible to open a PPF account. I enquired with SBI but they cudnt give me any satisfactory answer. Please help.

    Reply
  10. I have opened PPF account of my HUF on 20/03/2000. It is matured on 31/03/2015. I have not extended it. The amount is lying in PPF account. Please let me know how long can I I keep this amount in PPF (HUF) account and earn interest.

    Reply
    • Deepak- Post maturity your PPF account will earn savings accounts interest rate. Hence, it is best to withdraw immediately.

      Reply
  11. Hi

    Any experience on how many days does it takes to get amount (60%) credited from SBI PPF account once you submit the application ?

    Thanks

    Reply
  12. Do you suggest any better SIP for short period like 1 year? I wanted to invest monthly 15,000.

    Regards,
    Koteswara Rao

    Reply
  13. Respected SIR
    My brother opened a PPF account before he became a NRI. He continued the account as manger said it was fine to maintain the account since he became NRI after he opened the account.

    After he became NRI my mother made online transfer to that account on yearly basis, instead of contribution via nro/nre savings account as per rule which we just came to know now

    He wants to close his PPF account now due to october 2017 notification.?

    Will there be any problems ? Please advice

    Reply
  14. for the last three years (2015 Jan-2017 Dec), i was operating a PPF account in SBI. But when i got transfered my job to native place i was asked to open an EPF account in Post office by my Employer. I opened the same in this Month. But later now i found it is not possible to operate two accounts simultaneously. what should i do? Plz reply

    Reply
    • can i transfer my outstanding balance of previous account to the later.

      Reply
      • yes the new one

        Reply
          • Sorry sir , its PPF account

            Reply
            • Sijo-Refer above post. You have to close the latest account immediately.

              Reply
              • And then if i want to deal with PPF account in post office which is near to my working place. any further step

                Reply
  15. my father had opened a ppf a/c with bank of india in the year 1992. He had put rs 500 only once till today. Now he wants to withdraw the amount. I do not know the procedure for the same. Can u help me out? Also, will the a/c earn interest till present date or only 15 yrs? As he has not even extended the same.

    Reply
    • Hiren-First go and visit the bank and check the status. I think post maturity, it was extended for block of 5 years with an option of without contribution.

      Reply
  16. Hai, first financial year am investing 100000 RS this amount eligible for 80c but this eligible for further years or not?

    Reply
    • Mani-Each year you have to invest freshly to avail tax benefits under that particular FY.

      Reply
  17. Need your clarification :
    My son was paying 1.5L under 80c from last 4-5 years.

    Can he discontinue to have better returns from other avenues like ELSS etc.

    What could be after effects of this shuffle. Need to have professional ideas. Pls update & explain .

    Reply
      • PPF ruled permits to pay minimum of Rs. 500/- annually to keep it continuing account.
        1,49,500/- can be parked without compromising rules of PPF.

        Above are my feelings, correct me, if I am wrong.

        Reply
        • Aalok-If that is the case, then all do the same. If you not rely on my findings, then you can cross check with Post Office or Bank of the concerned.

          Reply
  18. Sir , I have a query
    My mother has a PPF account since 2000. After completing 15 years she extended it for another 5 years. It is maturing on Apr 1 2020.
    She passed away on Oct 6 2017 , I am the legal nominee . Will the amount continue to earn tax free interest till Apr 2020 if i do not close her account
    Thank you

    Reply
    • Anuj-Refer the section of above post “Nomination facility of PPF account”.

      Reply
  19. Dear Basavaraj,

    I have two ppf accounts. One in the bank and one in the post office. Currently, I m putting my savings into the bank ppf account and the post office ppf account is inactive.

    Can I continue the same or should I close the post office ppf account? Please advice

    Reply
    • Amit-You must close one PPF immediately (especially the second one).

      Reply
      • Thanks for your swift reply sir.
        Can you please advice me on what to do now.
        As far as I know, ppf accounts can’t be closed under special conditions. So how can I close it? Please advice

        Reply
        • Amit-You have to write a letter to the concerned stating the reason for closure.

          Reply
  20. Dear Basavaraj ji
    My father had opened the PPF account in Jan 2017 and nominate my minor son 4 years old ( me as his Guardian ). As he expired in March 2017 please guide me what would happen the amount lies in that account:
    1. Amount would be transfer to my son saving bank account operated by me??
    OR
    2. Or it will remain lie there and my son will get only after get gets mature after 14 years??
    Please Guide

    Reply
    • Amit-You can’t continue the account. You have to close it and the amount will be credited to your son’s account where you will be a guardian.

      Reply
  21. The GPO Mumbai tells me that in respect of my father’s PPF account they will give me only savings bank interest post 15/7/2017 , the date of my father’s death, if i close the account today. This is contrary to what you have mentioned above.That PPF account does not cease earning interest on death.I am confused.

    Reply
    • Alok-Let them give in writing. They don’t know the rules and hence airing such views.

      Reply
  22. Me & my wife’s account are running in extended maturity i.e. one is in 2015-2020 block an(account opened in 1989) and other is in 2016-2021 block (opened in 1996). In the current block I have already made one withdrawl from each of the account. Now I want to close both the account, my query is-
    1. Can I close?
    2. Whether I have to tell bank that on what ground I want to withdraw

    Reply
  23. Hi,
    I opened PPF account in SBI with wife’s name on 3rd March 2017. Initial deposit on 3rd March 2017 is Rs. 1000/-. On 7th March 2017 and 8th March 2017 , i deposited Rs. 1,49,000/-. But on 31st March 2017, i got interest of Rs. 7/- only. Now my question is: interest for this Rs. 1,49,000/- will be given on 31st March 2018? Bank employee says along with interest amount of FY 2017-2018. Is this true?

    Thanks,
    Koteswara Rao

    Reply
    • Koteshwara-For the month of March and for FY 2017-18, you will get interest only on Rs.1,000 as you deposited the money after 5th of that month. However, the whole balance as on end of 31st March 2017, will earn interest from 1st April 2017.

      Reply
      • Thanks for your reply.. So you are saying interest of FY 2016-2017 will be paid along with interest of 2017-2018.. is it? i deposited 1.5 lakhs on 20-Apr-2017 and 21-Apr-2017 for FY 2017-2018 in SBI PPF account.

        Regards,
        Koteswara Rao

        Reply
  24. In case of married Daughter, Father has deposited the Rs. 60000/- in PPF Account of his daughter in FY 2016-17. Who will get the tax benefit u/s 80C?.

    Reply
    • Deepak-As per Sec.80C rules, you can claim on your child investment in PPF (minor or major). However, clubbing of income provision not arise here. Hence, whatever the earning are there from PPF, will be considered as her income but not your’s.

      Reply
  25. Dear Basu ji Thanks for the valuable information ,but I have a very small query that is it possible to change name of guardian in Minor`s PPF account( i.e to put mothers name in place of fathers name)

    Reply
  26. Hi Basu What is rule if you are not able to deposit the money in PPF after 2-3 years but you will not stop it and let be continued for 15 years

    1. You will keep getting interest on sum deposit ?

    Reply
    • Shahnawaz-Yes you will get the interest up to closure. But such accounts are considered as an inactive account. If you want to invest, then by paying the penalty you have to activate and invest.

      Reply
  27. Namaste sir,
    I opend a ppf account on 02/05/2017 and my question is with this can I get income tax exemption current financial year? Please reply

    Reply
    • Abhijeet-Yes, as the account opened in current FY and whatever you deposit during this FY can be claimed for tax benefits while filing IT Returns.

      Reply
      • Thanks sir.

        Reply
        • Sir
          When I opened ppf account monthly limit was 1000 per month amount what I was fill-up in the opening form. So if I deposit more than 12000 this financial year would be any problem..

          Reply
          • Abhijeet-There is no such limit but make sure that FY limit must not cross Rs.1,50,000.

            Reply
  28. Hi,
    I am opened ppf account for me in the month of July 2017 with initial amount 500rs, I want to pay 1.5 Lac at a time every year. I read many blog that best time to open ppf in the month of april, but i am opened July, so how much reaming money i need to pay before april 2018? Can i pay 1.5 lay in august 2017 and again i will pay 1.5 April 2018 is this ok?

    Thanks,
    Nasim

    Reply
    • Nasim-You no need to worry about such things. If you already started in July-2017, then up to 31st March 2018, you have to pay remaining Rs.1,49,500 (Rs.1,50,000-Rs.500). The maximum limit of Rs.1,50,000 is for each financial year.

      Reply
      • Thanks for replying my massage, one more question, up to 31st March 2018 i have to pay Rs.1,49,500, then can i pay another 1.5 lac in the month of April 2018? because i want to yearly basic. is this correct?

        Reply
        • Nasim-Yes, you can on or after April 2018. That will be considered for FY 2018-19.

          Reply
  29. Hello Sir

    A very insightful article and lot of useful information at one place regarding PPF rules.

    I seek one technical help from you. Case below:

    I opened a PPF account in 2008 with Rs. 500 in SBI Navi Mumbai branch. However, I was transferred to a remote location in 2009 and I could never make another deposit in that account till date. Since PPF at that time could not be operated online, I approached the bank in 2010 for request for closure. They told me to deposit my passbook for same but I had lost it. So I left the case.

    Later in 2012 when online deposit facility opened, I opened a new PPF account in ICICI bank in which I regularly filled upto max 1L & later 1.5 L till date (online). Currently old SBI account has 800 Rs. after interest accumulation in past 6 years.

    I thought that my old SBI account would remain defunct & I will close it later by submitting passbook which I found only recently.I only now realised that I cannot close PPF account after reading your article.

    As per you, I need to write to MOF. Can you please help in the following question:

    1) Can the application be done by me via E-Mail or I need to go through ICICI bank to MOF?
    2) DO you think, the above case will be considered as a genuine case and my PPF accounts can be amalgamated into one.
    3) Is there any risk of my 2nd (ICICI) PPF account (having all my full deposits) being declared illegal and whatever interest I gathered since 2012 will be taken back- will be huge setback?

    Thank you in anticipation.

    Regards
    Vaibhav

    Reply
    • Vaibhav-1) You no need to go through bank.
      2) They will not merge two accounts. But they close one account.
      3) It may happen. But first write to them about the issues which prompted you for opening second account. Let us hope for the best 🙂

      Reply
      • Thanks for your reply. Will check with the bank and let you know.

        Reply
  30. can i close the ppf account during extension period (with contribution first block of 5 years) and 60% withdrawal taken.closure is possible or not

    Reply
  31. hi,
    I am Yashwant. My wife is software engineer want to open a PPF account on her name for tax benefits. Her salary account is in HDFC Bank . what are the options available if we want to withdraw the full money from PPF account before maturity say after 05 years

    Reply
  32. My daughter in law is an NRI and had opened PPF account before becoming an NRI,
    as she is an NRI, can I transfer PPF account from post office to SBI on her behalf with POA,
    I do keep depositing money from her bank account to her Post office PPF account.

    Reply
    • Anil-Yes, she can transfer. But not sure of POA allowed to transfer. Check with banks.

      Reply
  33. Hello,
    Can one withdraw EPS amount without withdrawing EPF

    Reply
  34. This is a case of death & no nomination is there in PPF account , So, Now who will recieve the money in account . As well wife is alive on date also all sons & daughters are married . In this case how the money can be withdrawn. What are the requirements need in this case?

    Reply
    • Rohit-The deceased wife will be eligible to receive the money. You have to approach the bank or post office for the same.

      Reply
  35. Hello,

    Thanks for the information.
    I have one query, I opened my PPF account around 3 years back and now I am working outside INDIA ( i.e NRI ).
    Also what is the maximum limit for female to deposit in PPF.

    So the same facilities can be availed on my PPF account or should I discontinue it.

    Regards.

    Reply
    • Pankaj-You opened the account when your status was resident Indian. Hence, you are allowed to continue the account till maturity. There is no special privilege for women to deposit in PPF. The maximum limit for male and female is same for PPF investment.

      Reply
  36. Sir , I have left the organization in 2007 but i couldn’t withdrawn my PF , whenever i submitted the form for verification with previous employer there signatory has been changed and i couldn’t able to get my pf amount. they are not cooperative with me . Now i am working with current employer is there any provision to get the PF amount without involvement of previous employer.

    Reply
    • Avinash-If you are currently working means, you have only one option to transfer to your current EPF account. Apply for that.

      Reply
  37. Thanks for the nice article! i have a small query. I have 2 minor children, both with their own respective ppf accounts, pan no. and bank account. I have been diligently contributing the maximum amount every year in their ppf account to build up savings for them for use for education etc. So most recently i contributed 1.5 lakh each to their respective accounts as a gift from me and i contributed 1.5 lakh to my ppf account also. I claim only my 1.5 lakh contribution towards my ppf for the 80c purpose. The children’s account passbook shows interest credit every year just like my account passbook.

    Your first point confused and worried me. Is your first point related only to 80c or do you mean to say I can not contribute to my kids ppf account?

    Reply
    • I too have the same issue!

      Reply
    • Ajay-The combined your, and both kids account must be only Rs.1,50,000. It must not be more than this. Please read the exact wordings of rule “Any individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund (thereafter referred to as the fund) any amount not less than Rs.500 and not more than Rs.1,50,000 in a year.”. This is what I pointed. This is related to PPF and not about taxation.

      Reply
      • Thank you for your prompt response. Would it make a difference if the kids were to make the contribution from their own bank account directly? To clarify, I would not deposit a cheque from my account into their ppf account. They have their own bank account balance that they would use to pay their ppf contribution.

        Another point I would like to make is that no where in their ppf passbook am I or my wife mentioned as a guardian.

        Reply
        • Ajay-Source of money important. Whether your kids have their own income? If they are minor kids, then the account must be opened with guardian. I feel something wrong here.

          Reply
          • kids do have their own source of income which is the interest on tax free bonds that they have in their demat account. they can use this tax free interest to contribute to their ppf. Would that work?

            Reply
              • both kids are minors. So their income is clubbed with my income for tax purposes. However, since the tax free bonds provide for tax free returns that income gets excluded and is shown as increase in asset in their annual balance sheet and becomes their asset.

                Reply
                  • Thank you! I really appreciate your prompt and knowledgeable responses.

                    Reply
  38. NRIs are not allowed to open PPF accounts. However, if you had opened PPF account before becoming an NRI, you can continue making contributions till account maturity. An NRI cannot extend account with contribution after maturity.

    Can you please comment / confirm on the above statement.

    Reply
    • Sripriya-Yes, your understanding is correct. An NRI not allowed to extend account even without contribution. He/She has to close the account.

      Reply
  39. My wife is not earning, Can we both have two different account and deposit total 3 lakhs each year from my earning?

    Reply
    • Debendra-Yes. But for you tax exemption under Sec.80C will be Rs.1.5 lakh only.

      Reply
      • Thank you sir! Yes, I understood the tax exemption part. Basically, my main intention is to earn tax free interest. But, I have came across some article that if it is illegal to deposit in wife’s PPF account from my earning if I deposit 1.5 lakh in my PPF account. Some where i studied, I can give her loan in reasonable interest rate and she should regularly give me the interest which I should declare while filing IT return.

        One more doubt, if it is not illegal to deposit then after maturity who will have ownership on maturity amount.

        Reply
        • Debendra-Clubbing of income will arise. The earnings will be again your’s. However, the PPF is tax free income, you no need to worry.

          Reply
          • Thank you so much sir for clearing my doubts. I have two more questions related to NPS.
            1> Can I invest 50K in my wife’s NPS account and show the proof for tax exemption while filling my IT return, which comes above 1.5 lakh investment?
            2> While getting pension, who has to pay the tax on pension income. Why I am asking this question because most likely her income would be less then my income in that case she has to pay less tax but if I will do the NPS ac in my name then most likely I need to pay more tax while getting pension.

            Please kindly clarify these two doubts.

            Reply
            • Debendra-1) Do you feel that additional Rs.50,000 investing into NPS a great financial decision?
              2) Obviously, it is her income. So she has to pay the tax at retirement.
              But once again cautioning you, think twice before investing into such illiquid, Govt regulated, taxable at retirement product.

              Reply
              • Thanks for quick reply sir!. Yes,TRUE sir, it is not worthy to invest 50K in NPS. I will put 15K to 20K only. But, I am still not clear about one question, Can I show in her name invest in NPS for tax exemption while filling my IT return?

                Reply
  40. I would like to add one more unknown fact. PPF ACCOUNT always matures on 01st April of a year. If one opens an acoount on say 10.07.2003, as per common knowledge we would say that the account will mature on 10.07.2018 I.e 15 years. But this is not the fact. The PPF account opened on 10.07.2003 will mature on 01.04.2019 and not on 10.07.2018.
    So it is advisable to open PPF account in the month of March.

    Reply
    • Sujit-That is known to many. But thanks for sharing your views. It helps others who may don’t know. Thanks once again.

      Reply
  41. Extension after maturity is for block of 5 years. Isnt it?

    Reply
    • Harsh-Yes, it is in the block of 5 years with unlimited such extensions.

      Reply
  42. We have opened huf account on 20 march 2003.When can we close it.Pl adv us.

    Reply
    • Shah-If you opened the account on 20th March, 2003, then it will mature on 1st April, 2018. You can close after this.

      Reply
  43. I have a query related PPF. For example, I opened a PPF account 14 years back and I deposited 100000 rupees yesterday. My PPF account will get matured after 1 years(15 years will be completing). In this case, can I withdraw whole amount including 100000 rupees invested yesterday? Is there any tax on this 100000 as it is not going to complete 15 years.

    Reply
    • Kalyan-You mean to say that you deposited you deposited Rs.1,00,000 on 31st March 2016 and account is maturing on 1st Aril, 2016. So in that case whether you will be eligible to withdraw the amount including the amount you deposited on 31st March, 2016 right? The answer is YES. Also, you can claim for tax benefit under Sec.80c for that particular deposit.

      Reply
      • Thank you, Basavraj. So each deposit does not need to complete 15 years. Account needs to complete 15 years so we can withdraw whole accumulated amount, right?

        Reply

Submit a Comment

Your email address will not be published. Required fields are marked *

eleven + 18 =

Share This