Public Provident Fund (PPF) was introduced as a tax-saving instrument by the National Savings Institute in 1968. The small savings scheme helps cultivate a personal saving habit while giving reasonable returns along with income tax benefits.
The most attractive part of the PPF scheme is that it is guaranteed by the central government, making sure that your investments are safe. A PPF account can be opened at the post office or at a bank which is permitted to accept deposits under the scheme.
How to open a PPF account online?
The India Post does not have an online arrangement to open a PPF account with them. You can, however, open one at numerous banks online.
Note that not every bank is allowed to take such a deposit, but most of the popular banks do. The list of banks that provide the PPF facility may not all provide online facilities so you will have to check that first.
Additionally, you will need to fulfill the following conditions:
- You will need to hold a savings account with the bank
- Your net banking or mobile banking facility should be activated
- Aadhaar must be linked to your bank account
- The mobile number provided to the bank should be linked to your Aadhaar
PPF account opening process
In your bank's net banking portal, go to the PPF opening options in types of deposits. Ideally, you will not have to fill any extra forms as the bank would have already completed the KYC process and will have your details. Those personal details will automatically link to your PPF account.
The bank will then initiate your Aadhaar e-verification process which requires your mobile number to be linked to Aadhaar to receive OTP.
The Aadhaar verification completes your PPF account opening process.
Some banks even have automated crediting option where the set amount gets transferred to your PPF account on a set date. You can choose to opt for it.
Limits and benefits
- The minimum annual deposit required is Rs 500 and the maximum limit is Rs 1.5 lakh. This can be made in a lump sum every year or on a monthly basis.
- You cannot open a joint PPF account, however, you can open another in the name of a minor.
- The maturity period of a PPF account is 15 years and premature closure is not allowed.
- You can extend the PPF account to further 5 years within 1 year of maturity.
- Interest earned is tax-free.
- Deposits made to a PPF account are eligible for tax deduction under Sec 80C of the Income Tax Act.
- You can take loans against the PPF deposit after three years.
- PPF account can be transferred from the post office to banks.