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All you need to know about PPF

May 24, 2019
With a view towards encouraging savings and inculcating financial inclusion among all the sections of the society, the Indian government launched the PPF scheme in 1968. Although, initially it was done exclusively for the workers of the unorganized sector, however, today it has become a favored financial tool for the general sections of the society. This is because of the various advantages that a PPF account offers in terms of long term savings and monetary security. Following is a list of important things that you need to know about PPF:
  1. PPF comes with a lock-in period of 15 years. This means that it is a highly credible long term financial savings option and as such is ideal for long term futuristic financial goals.
  2. In order to open a PPF account, you just need to visit the nearest post office and fill in the required form for setting up the account. Even several banks (nationalized banks) offer the facility to set up the PPF account. After the due process is completed, the concerned officials with set up your account and you will be given a passbook containing a list of the transactions with details.
  3. An individual can operate only one PPF account and in case any separate account is found to exist, it will be made non-functional. Even if as a parent, you create a PPF account for your dependent child, the ownership of the account cannot be claimed jointly.
  4. Although partial withdrawals are not allowed, yet an amount to the tune of less than or equal to half the balance amount for the previous financial year can be withdrawn for specific purposes. Also, a PPF account has a specific market cash value i.e.  loan can be taken out against a PPF account.
  5. Once the term matures, you can choose to either withdraw the entire accumulated amount as a lump-sum payment or you can choose to seek an extension of five years on the account.
  6. Under Section 80C of the Income Tax Act, 1961, a maximum amount of Rs 1.5 Lac in a given financial year is eligible for tax exemption. Besides, the returns are also eligible for tax exemption and wealth tax is not admissible.
  7. In case of demise of the account holder during the policy term, the account cannot be operated or extended by the nominee(s) of the policy holder.
  8. A PPF account cannot be transferred in the name or authority of any other person by the account holder.
  9. There is one restriction on the eligibility of those who can open the account though. For instance, minors and Non-Resident Indians are not permitted to set up PPF accounts.

HDFC Life offers various saving and investment plans that seek to multiply your financial coverage and allow your funds to grow so that you can earn optimum benefits over a period of time.

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