State Bank of India, the largest lender in the country allows customers to invest in public provident fund (PPF) accounts. SBI allows customers to open PPF accounts under the Public Provident Fund (Amendment) Scheme, 2016. The scheme was introduced by the National Savings Organization in 1968 to mobilize small savings. It offers an investment avenue with decent returns coupled with income tax benefits, said SBI on its website sbi.co.in. The biggest benefit of opening a PPF is in terms of its income tax implications. PPF has a status of EEE, which means exempt, exempt, exempt. This means that your contribution towards PPF, the interest that you earn and the maturity proceeds from it are all tax-free. A contribution of up to Rs. 1.5 lakh towards PPF in a financial year is eligible for tax rebate. This deduction can be availed under Section 80C of the Income Tax Act.
- ELIGIBILTY – Individuals in their own name as well as on behalf of a minor can open the account at any SBI branch, according to its website. As per extant instructions, opening of PPF accounts in the name of Hindu undivided Family is not permitted.
- INVESTMENT LIMITS – A minimum of Rs.500 subject to a maximum of Rs.1,50,000 per annum may be deposited in a PPF account. The subscriber should not deposit more than Rs.1,50,000 per annum as the excess amount will neither earn any interest nor will it be eligible for rebate under the Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.
- DURATION OF SCHEME – The original duration is 15 years. Thereafter, on an application by the subscriber, it can be extended for one or more blocks of five years each.
- RATE OF INTEREST – The rate of interest on PPF is determined by the Central government on a quarterly basis. Interest is paid on 31st March every year. Interest is calculated on the minimum balance between 5th day and the end of the month.
- LOANS AND WITHDRAWALS – Loans and withdrawals from PPF are permitted depending upon the age of the account and balances as on the specified dates.
- TAX BENEFITS – Income Tax benefits are available under Sec 88 of Income Tax Act. The interest income on PPF is totally exempt from income tax. Amount outstanding to the credit is fully exempted from wealth tax also, said SBI.
- NOMINATION – SBI allows for a nomination facility for PPF account holders in the name of one or more persons. The shares of the nominees may also be defined by the subscriber.
- TRANSFER OF ACCOUNT – The account can be transferred to other SBI branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charges.
- PREMATURE PAYMENT – Premature payment from PPF is allowed only after the account or the account of the minor account holder of whom he/she is the guardian has completed five financial years, where: a) The amount is required for the treatment of serious ailments or life threatening diseases of the account holder, spouse or dependent children or parents, on production of supporting documents from competent medical authority; b) That the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India & abroad.
- PPF ( Amendment Scheme) 2016 and other Small Savings schemes are implemented by National Savings Institute, under Ministry of Finance. Patrons are requested to visit their site for latest instructions regarding these schemes, said SBI. Recently, the government proposed a new bill to merge PPF accounts as well as small savings schemes under a single act.
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