PPF - Public Provident Fund

This is the second post of the series and covers PPF.

1. What is PPF?

PPF stands for Public Provident Fund.

It is a voluntary form of saving. Any individual, even non-earning ones, can open PPF account in their name.

It can be open in any National Bank or some selected Post Offices.

There can be only one PPF account in name of any individual. Joint PPF accounts are not allowed.

The minimum amount that has to be deposited is Rs 500 and maximum can be Rs 70000.

Up to 12 transactions are permitted per financial year.

If deposits are not made in a PPF account in any financial year, the account will be treated as discontinued. The discontinued account can be activated by payment of the minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.

2. What is interest rate of PPF?
Interest rate for PPF accounts is fixed by Central Government every year in March / April.

3. What is the lock in Period?
Lock in period is 15 years from the time first time this account has been opened.

4. How to get the money back?
Full amount can be withdrawn after the lock in period.
After lock in period, it can be operated for another 5 years.

5. Is interest accrued on savings is Taxed?
No income tax will be applicable on money withdrawn after completion of lock in period. So, in a way interest is not taxed.

Further Readings:
Rediff
TaxGuru