PPF is one of the most popular tax saving investment. Most of the people are aware that it is totally tax-free. You can invest up to 1.5 lakhs but you have to wait till 15 years for maturity. You can open a PPF account in SBI or any other authorized bank. The post office also gives the PPF account facility. Besides the main features of PPF, there are many other hidden rules of PPF, which you must know. Let us learn all of them. If I forgot to add any please do add in the comments section.
1. Only One Account In a Name
PPF is a government scheme and it gives the best tax saving path. But With this facility, there are many limitations as well. You can have a bank account as much you want. But you can have only one PPF account.
2. Joint Account Of PPF Is Not Possible
You can open a joint bank account but you can’t open a joint PPF account. However, you can open a PPF account for your minor children.
3. HUF Can’t Open a PPF Account.
HUF enjoys similar rights of an individual. You can have a PAN and an account in the name of Hindu Undivided Family. But now you can have a PPF account for the HUF. Before 2005 it was possible.
4. You Can Change Name on PPF Account
The female depositor can change the name in her PPF account after the marriage.
Hidden Rules of PPF About the Loan
5. You Can’t Take Loan After 6th Financial Year
We know that one can take loan against PPF balance. But this facility is not available after 6th year. You can take a loan between 3rd to 6th year.
6. No Fresh Loan Before Payment Of the Previous Loan
But PPF is not a cash machine. You can get a second loan only after the payment of the first one.
7. Loan At Nominal Rate Of 2%
Since you are taking a loan against your PPF balance the interest rate is very low. It is nominal 2%.
8. Repay Loan Within 36 Months Else Pay 6% Interest Rate
The one interest rate is only for the limited period. If for any reason you would not be able to pay back the loan, The interest rate of 6% is charged.
9. No Tax Rebate On Loan Refund
The principal amount of the loan will be repaid by the subscriber through pay-in-slip with a specific remark.
Hidden Rules of PPF About The Maturity
10. After 15 years You Can Continue PPF Account
PPF matures in 15 years, But you can continue this account for your lifetime. After 15 years It can be extended in blocks of 5 years.
11. After Maturity, There Is No Need Of Yearly Contribution
After completion of 15 years lock in period, some condition is waived. You need not to deposit PPF contribution every year.
12. Premature Closure of PPF account
You can close PPF account before the 15 year lock-in period. This facility is available in case of medical emergency or higher education. The account should be 5 financial year old. If you close PPF account prematurely, the interest rate gets reduced by 1%. This reduction is applicable since you have opened the account.
13. You Can Withdraw Your Amount Any Time After Lock-in Ends
PPF has lock-in period of 15 years, but it does not mean that you should withdraw maturity amount immediately after 15 years. You can continue your account as long as you wish. You will get the interest. You would be able to withdraw your PPF amount anytime after the 15 year period.
Fill Form H for further subscription
If you want to contribute after the 15 year period, fill form H within a year of maturity. With the start of further contribution, the 5-year lock-in condition would apply. However, in the meantime, you can withdraw 60% of the initial amount. You can withdraw the fund in instalments also, but only once in a year.
14. Courts Can’t Attach PPF Account
This is the biggest safety government has given to this account. Since the PPF account is a scheme for social security, government has given it some immunity. No court can attach your PPF account. It means no one can claim PPF amount if someone defaults. However the government can recover tax from the PPF account if the situation arises. Also, wife or husband can claim maintenance from the PPF account.
15. You Can transfer PPF account
PPF account can be transferred from the post office to bank. You can also transfer your account from SBI to ICICI Bank or vice versa. The transfer of PPF account is free of charge and you will lose nothing.