I herewith sharing what i have learned about the small saving scheme plan the PUBLIC PROVIDENT FUND SCHEME!
Only individuals can
open PPF, Referring the amendments to various
Small Savings Schemes, PPF is restricted only to individuals. Not to be opened by juristic persons
(HUFs, Trusts, etc.) i.e. persons other than individuals (through single or
joint accounts or deposits by guardians on behalf of minors and persons of
unsound mind as per rules) on or after May 13, 2005 are not allowed to open PPF
account, However, all the accounts which were opened earlier by HUFs will
continue to earn interest till their maturity. What ICICI says is “Only one PPF account can be
maintained by an Individual, except an account that is opened on behalf of a
minor”
Minors:
PPF account can be opened on behalf
of minor son/daughter either by the mother or father; however the mother and father
both cannot open PPF accounts on behalf of the same minor.
Grand-parents cannot open a (PPF)
account on behalf of minor grand-child; however, in case of death of both the
Father and Mother, Grand-parents can open PPF account as guardians of the
Grand-child.
NRI:
The
Non-Resident Indians (NRIs.) are not eligible to invest in any small savings
schemes including Public Provident Fund (PPF).
PPF Interest
Rate: Fixed interest rates (no floating rates), according to RBI
clarification notification, which states as “It
has been clarified that the rate prevailing at the time of investments will
remain fixed and unchanged till the maturity of the investment”.
Amendment notifications:
The PPF Scheme
was notified first vide
notification G.S.R.1136 (E), dated
15.06.1968
And further
amended vide following notifications:
Notification
|
Dated
|
G.S.R.
368 (E)
|
1.8.72
|
G.S.R.
217(E)
|
9.3.79
|
G.S.R.
271(E)
|
16.3.83
|
G.S.R.
54 (E)
|
7.2.84
|
G.S.R.
895(E)
|
23.6.86
|
G.S.R.1013
(E)
|
20.8.86
|
G.S.R.793
(E)
|
29.8.89
|
G.S.R.
477(E)
|
25.5.94
|
G.S.R.
489(E)
|
6.7.99
|
G.S.R.
908 (E)
|
6.12.2000
|
G.S.R.
679 (E)
|
4.10.2002
|
G.S.R.768
(E)
|
15.11.2002
|
G.S.R.
585 (E)
|
25.7.2003
|
G.S.R.690
(E)
|
27.8.2003
|
G.S.R.755
(E)
|
19.11.2004
|
G.S.R.291
(E)
|
13.5.2005
|
G.S.R.956
(E)
|
7.12.2010
|
|
|
Amendment
powers to PPF are stated from: In exercise of the
powers conferred by sub-section (4) of section 3 of the Public Provident
Fund Act, 1968 (23 of 1968)
Latest Public Provident
Fund (Amendment) Scheme, 2011
(Come
into force on the 1st day of December 2011):
1.
Maximum amount for financial year change from Rs.70,000/-
to Rs.1,00,000/-
2.
Interest on loan from PPF will be charged as 2% per
annum instead of yearly 1% per annum
Links for PPF Act & Rule:
Important facts of PPF
1.
It can be opened at designated post offices throughout the country
and at designated branches of Public Sector Banks & few private banks
(ICICI bank
has been authorized to collect funds for PPF at branches mandated by the
Ministry of Finance 1 July 2005 throughout the
country.
2. The
account matures for closure after 15 years.
3. Account
can be continued with or without subscriptions after maturity for block periods
of five years.
4. Nomination
facility is available.
5. Maximum
number of deposits is twelve in a financial year.
6. Account
can be transferred from one post office to another post office, from a bank to
another bank; and from a bank to post office and vice-versa.
7. Depositor
is provided with a pass book with entries of the deposited amounts, interest credited
every year and other particulars duly stamped by the post Office.
8. Interest
at the rate, notified by the Central Government from time to time, is calculated
and credited to the accounts at the end of each financial year.
9. Income
Tax rebate is available; interest credited every year is tax-free.
Proof for tax exemption:
Post
office is operating PPF in manual mode only, passbook is issued upon account
opening, and challan can be obtained from accounts officer upon every
investment to PPF. Same is with SBI, only difference is they provide online
access for your PPF, you can operate it either manual (physically visit branch
and deposit in PPF account & get challan) or through online. ICICI is not
providing passbook by default, but can avail upon special request. Comparison
of available system between PO, SBI & ICICI is as below, which can be used
as proofs for tax exemptions.
Proof
|
Post Office
|
SBI &
Group banks
|
Online PPF ICICI
|
Deposit
Challan
|
Available
|
Available
|
No
|
Passbook
|
Available
|
Available
|
No
(but
can avail on special request)
|
Online
Statement
|
No
|
Yes
|
Yes
|
Interest rates over time:
Interest rates are subjected to change over times, and PPF has long list
of change in interest rates since its inception in 1986. Its stared with 12 %
(astonishing, when comparing to today’s inflation!). Interest rate history is
as below.
Period from
|
Period to
|
Interest rate (%)
|
01.04.1986
|
14.01.2000
|
12
|
15.01.2000
|
28.02.2001
|
11
|
01.03.2001
|
28.02.2002
|
9.5
|
01.03.2002
|
28.02.2003
|
9
|
01.03.2003
|
30.11.2011
|
8
|
01.12.2011
|
31.03.2012
|
8.6
|
01.04.2012
|
Present
|
8.8
|
Common documents
required to open PPF account:
- Form A has to be filled by customer.
- Passport size photograph
- Copy of PAN card
- ID proof (normally not required but keep it for hassle
free opening)
- Residence proof – Passport/ Electricity Bill
Transferring:
PPF is commonly opened in some compulsion or in urgency during tax
calculation period, and doing so we may end upon opening PPF in wrong
destination, most of the employees open their account where they posted at that
time, but find operating it when they get transferred or relocated to different
work location. It is not difficult if you have PPF account which can be
operated through online(like in SBI or ICICI), but if you have no online access
then you may find yourself defaulting in deposit of minimum amount to be
deposited in PPF for a financial year. In that case better is to transfer the account
to you most convenient place, I suggest to open PPF account in your home town (you
will go to your
home at least once in a year know!).
PPF
can be transferred from PO to Banks (banks nominated to operate PPF) and
vice-versa….
Procedure:
Go
to the accounts office (PO/Banks) were you hold PPF account and do the
following
1.
Fill the Form SB-10(b)
a) Make
sure about your current balance, if you haven’t deposited the subscription amount
for current year better you deposit it before applying for transfer
b) Make
sure about address of the branch or post office were you want to transfer the account
c) Make
sure about your specimen signature
2.
Get photocopy of your id proofs
(PAN/Address proof/Photo ID proof)
3.
Take
passbook with you(for accounts in PO&SBI), keep photocopy for safety
purpose
4.
Submit
it the accounts officer; get the receipt of
submission duly signed with stamp.
Account officer
will no pile all documents relating to your account (account opening forms, nomination
form, certified copy of the account, specimen signature etc.)
Once the
documents are ready, he will get the approvals from his higher officials
After signatures
from official, cheque will be drawn for your outstanding amount, and the entire
documents along with the cheque will se sent to the branch were you whiling to
get transferred
5.
Wait
for a day or two and go back to the accounts office and inquiry about the
progress.
6.
If
it’s been dispatched from the current branch, go the branch were you want to
transfer and get the latest the status, if its reached the branch then you will
have to do the followings
a)
Fill
the Form A
b)
Have
PAN card photocopy
c)
Have
1 or 2 passport size photographs
7.
Account
is transferred now!!!
Default
in a year:
If failed to deposit the minimum subscription of Rs.500/- for a
year/more than a year, then subscriber can deposit the minimum subscription
amount (with additional investment if desired) + default fee of Rs.50/- for
each year of default. But it is subjected to the condition that the total
deposit during the year in which defaulted subscription is deposited should not
exceed the maximum deposit ceiling. (Which is Rs.1,00,000/- as of now). PPF
will not be treated as discontinued.
Illustration: Subscriber A opened PPF account in PO on 30th
April 2009, but failed to deposit the minimum subscription amount of Rs.500 for
next two financial years (April 2009-March 2010 & April 2010-March 2011),
and he went PO on 30th March 2012 to deposit subscription amount, I
this case he will have to pay Rs.1600/- (if he deposit only the minimum
subscription amount), break up as follow.
For financial year 2009-10: 500+50=550
For financial year 2010-11: 500+50=550
For current financial year (2011-12): 500 (deposited on the last day of the year, no default fee!)
Total: 1600
