Public Provident Fund, or PPF, as it is more popularly known, is a savings-cum-tax-saving instrument. It also serves as a retirement-planning tool for many of those who do not have any structured pension plan covering them.

RATE OF RETURN:
9.5 %p.a. (Compounded annually)

TAX CONSIDERATION:
Interest is totally exempt from income tax, upto a maximum investment of Rs. 60,000 per year .
No TDS on interest.

MODE OF ACCOUNT-HOLDING:
An individual, including a Hindu undivided family can open only one account. A person having a GPF, EPF, CPF accounts can also open a PPF account. More than one account/joint accounts are not permitted. Both, the parents and the child, can contribute out of their respective incomes chargeable to tax and earn rebates.

The PPF account can be opened in a Head post office, or in a branch of the SBI or its subsidiaries (excluding offices managed by single officer or clerk), and also at specified branches of some other nationalised banks.

MODE OF PAYMENT:
Every subscription shall be made in cash or through a crossed cheque or draft or postal order, in favour of the accounts office, at the place at which that office is situated. In case of any cheque, draft or postal order should be drawn at a bank or post office at that place.

NOMINATION:
Nomination facility is available in case of the PPF account.

INVESTMENT LIMITS:
The contribution to the account can vary from year to year, from a minimum of Rs 100 to a maximum of Rs 60,000 in any given year.
Investments in a PPF account can be made in multiples of Rs 5, either lumpsum, or in installments (not exceeding 12 in a year). The credit to the PPF account is made on the date of presentation of the cheque and not on the date of its clearance.

TENURE:
The tenure of the PPF account is 15 years, which can be further extended in blocks of 5 years each for any number of blocks.

LOANS:
A loan repayable in 36 months can be obtained in or after the 3rd year, up to 25 per cent of the balance at the end of the preceding financial year. The interest charged on the loan is 12 per cent (1 per cent +11 per cent), for the first 36 months, and thereafter, an additional 6 per cent on the outstanding amount. A second loan can be obtained before the end of the 6th financial year if the first one is fully repaid.

WITHDRAWLS:
A withdrawal is permissible every year from the 7th financial year of the date of opening of the account. Only if the amount does not exceed 50% of the balance at the end of the 4th preceding year, or the year immediately preceding the year of the withdrawal, whichever is lower, less the amount of loan if any.

DEFAULTS & REVIVAL:
If the PPF account-holder fails to deposit the minimum Rs 100 in a given financial year, the account is considered as discontinued but the interest will continue to accrue and paid at the end of the term. The default can be got condoned on payment of a fee of Rs 10 for each year of default, along with the arrears of subscription of Rs 100 for each such year.