The Public Provident Fund (PPF) is a voluntary savings-tax-reduction social security instrument in India,[1] introduced by the National Savings Institute of the Ministry of Finance in 1968.
The scheme's main objective is to mobilize small savings for social security during uncertain times by offering an investment with reasonable returns combined with income tax benefits.
Balance in the PPF account is not subject to attachment under any order or decree of court under the Government Savings Banks Act, 1873.
Individuals who are residents of India are eligible to open their account under the Public Provident Fund and are entitled to tax-free returns.
[4] An amendment to earlier rules allowing NRIs to invest in PPF was proposed in the 2018 Finance Bill, but has not yet been approved.
[7] Subsequently, the ministry issued an office memorandum in February 2018 keeping the above notification in abeyance until any further order on this matter.
Thereafter it can either be closed and the entire amount can be withdrawn or on application by the subscriber, it can be extended for 1 or more blocks of 5 years each, with or without making further contributions.
In case of the account holder's death, the balance amount will be paid to his nominee or legal heir even before 15 years.
If balance amount in the account of a deceased is higher than ₹150,000 then the nominee or legal heir has to prove the identity to claim the amount[3][48] The 2016 amendment to the Public Provident Fund Scheme introduced changes to Paragraph 9, Sub-rule 3(C), allowing for the premature closure of PPF Accounts.
[49] Premature closure is now permitted after 5 years for the medical treatment of family members or for the higher education of the account holder.
As per GOI, 12 December 2019 NOTIFICATIONS some new rules for prematurely withdrawal added The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber.
[3] Step 1 – Approach the bank or post office branch where the PPF account is held and ask for the form for making the transfer.
[3] According to R.K. Mohapatra, General Manager-Finance,[50] IRCON International,[51] and author of the award-winning book ‘Retirement Planning: A Simple Guide for Individuals’, in the falling interest rate era, investment in PPF make senses for people who are in higher income tax brackets because of the advantages of exempt-exempt-exempt (EEE) scheme, which means they get tax deduction under Section 80C when they invest, and the accrual of interest as well as withdrawal is completely tax-free.