PUBLIC PROVIDENT FUND (PPF) : Public Provident Fund (PPF) is one attractive tax
sheltered investment scheme for middle class and salaried persons. It is even useful to
businessmen and higher income earning people. The PPF scheme is very popular among
the marginal income tax payers. The scheme was introduced in 1969. The features of PPF
scheme are as noted below :
(1) PPF account may be opened at any branch of the SBI or its subsidiaries or at
specified branches of nationalised banks like the Bank .of Maharashtra, Bank of
Baroda etc. PPF account can be opened even in a post office on the same terms and
conditions. Such account can be opened by any individual or by HUF. Even NRI can
be opened PPF account.
(2) The PPF account is for a period of 15 years but can be extended for more years (five
years at a time) at the desire of the depositor.
(3) The depositor is expected to make a minimum deposit of ` 100 every year. In
addition, money can be deposited once in every month.
(4) The PPF account is not transferable, but nomination facility is available.
(5) The deposits in a PPF account are qualified for tax exemption under the Income-tax
Act (Section 80 – C). The balance amount in a PPF account is fully exempted from
the Wealth Tax. The PPF account is also exempted from attachment from the court.
(6) A compound interest at 8% per annum paid in the case of PPF account with effect
from 1-3-2003. The interest accumulated in the PPF account is also tax free.
(7) PPF A/c holder is eligible for one withdrawal per financial year after five years from
the end of the year in which the subscription is made. It is limited to 50% of the
balance at the end of the fourth year.
(8) On maturity, the credit balance in the PPF account can be withdrawn or the
subscriber can extend account for five years more.
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