Post Office PPF Account

Learn how to open a post office PPF account.
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Post Office PPF Account
OPEN FD
3 min
18-November-2024

Saving for the future is important, but finding the right investment options can be confusing. If you are an Indian resident seeking tax benefits and steady returns, the government's Public Provident Fund (PPF) scheme is worth considering.

Public Provident Fund (PPF) is a popular savings scheme known for its guaranteed returns and tax benefits. To ensure wider accessibility, including for those in rural areas, the government allows individuals to open PPF accounts at post offices. A Post Office PPF Account is identical to one opened with commercial banks in terms of core features, interest rates, and regulations. The process of opening a PPF account at a post office is also straightforward and requires the same documentation as a bank account. Here's a comprehensive guide to opening a PPF account at a post office.

What is Post Office Public Provident Fund?

The Post Office Public Provident Fund (PPF) is a long-term savings scheme offered by the Indian government through post offices. It provides individuals with a safe and reliable investment option with attractive interest rates and tax benefits. The PPF comes with a 15-year lock-in period, making it ideal for long-term financial goals like retirement planning or funding your child's education. Contributions to PPF are eligible for tax deductions, and the interest earned is tax-free, making it an attractive option for those looking to save on taxes.

To diversify your portfolio, you may consider fixed deposit, which offer a reliable option with competitive interest rates and flexible terms.

Pro tip

Bajaj Finance launches a new variant, "FD Max", for investments upto Rs. 25,000 . Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a.for senior citizens and 8.60% p.a. for non-senior citizens , in this variant.

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Features of post office PPF account?

1. Minimum & maximum investment

Requires a minimum annual deposit of Rs. 500 and a maximum of Rs. 1.5 lakh.

2. Tax benefits

 Offers triple tax benefit:

  • Contributions up to Rs. 1.5 lakh annually are deductible under Section 80C of Indian Income tax Act
  • Interest earned is tax-free
  • Maturity amount is tax-free

3. Partial withdrawals

Premature withdrawals are allowed from the 7th financial year onwards.

4. Loan facility

Post Office PPF account holders can take a loan between the 3rd and 6th year from the account opening. The loan amount is limited to 25% of the balance at the end of the year prior to your loan application.

The following table shows the hypothetical investments of an individual in a Post Office PPF account.

Year

Opening Balance (Rs.)

Investments (Rs.)

Closing Balance (Rs.)

2019 – 20

0

1 lakh

1 lakh

2020 – 21

1 lakh

50,000

1.5 lakh

2021 – 22

1.5 lakh

80,000

2.3 lakh

2022 – 23

2.3 lakh

50,000

2.8 lakh

2023 – 24

2.8 lakh

1 lakh

3.8 lakh


If she applies for a loan against her PPF account in the 2023-2024 financial year, she will be eligible for a loan of up to 25% of her second-year closing balance, which is Rs. 2.3 lakh.

The loan will accrue interest at the applicable Post Office PPF interest rate plus an additional 1% per annum. It's important to note that the PPF deposit will cease to earn interest until the loan is fully repaid.

The entire loan amount, including interest, must be repaid within 36 months. The interest will be repaid in two equal installments after the principal amount is settled.

5. Interest rate

The PPF interest rate is set by the government and may change every quarter. Currently, as of March 2024, the interest rate stands at 7.1% per annum.

How to open PPF account in Post Office?

Opening a PPF account in a post office involves the following steps:

  • Visit your nearest post office or download the PPF application form online.
  • Fill out the form and provide necessary KYC documents and a passport-sized photo.
  • Open your account with a minimum deposit of Rs. 500. Remember, the annual deposit limit is Rs. 1.5 lakh.
  • Upon submission, you will receive a PPF passbook.

What are the eligibility criteria for PPF Post Office?

  • Eligibility:
    • Any resident Indian (salaried, self-employed, pensioner, etc.)
  • Account restrictions:
    • Only one PPF account per individual
    • No joint accounts allowed
    • One minor PPF account per child
    • Non-residents cannot open new accounts
    • Existing resident PPF accounts can be continued by NRIs until maturity

Documents Required for Post Office PPF Account

  • Identity Proof (any one):
    • Voter ID
    • Passport
    • Driving License
    • Aadhaar Card
  • Address Proof (any one):
    • Voter ID
    • Passport
    • Driving License
    • Aadhaar Card
  • PAN Card
  • Passport-sized Photograph
  • Nomination Form (Form E)

How to open PPF account in Post Office?

To open a Post Office PPF account, aspirants can follow the steps mentioned below –

Step 1 – Visit the nearest post office or sub-post office and collect the PPF application form.

Step 2 – Fill out the application form and present it with other necessary documents.

Step 3 – Provide an initial deposit amount of Rs. 500 in cheque or cash.

Once the concerned person verifies all documents and finds every formality in order, such a PPF account will be operational. Following that, the account holder shall receive a passbook, containing details of the PPF account. Note that one can also download the form for a Post Office PPF account online.

The documents one may require to fill and provide for PPF account application are –

  • Form B (pay-in-slip)
  • Form E (if declaring a nominee)
  • Address proof
  • ID proof
  • PAN
  • Two passport-sized photos

Post Office PPF vs Bajaj Finance Fixed Deposit

Feature

Post Office PPF

Bajaj Finance FD

Interest rate

7.1% p.a. as of June 2024

Up to 8.85% p.a.

Minimum investment

Rs. 500

Rs. 15,000

Maximum investment

Rs. 1.5 lakh in a financial year

Rs. 3 crore

Maturity period

15 years

12 months to 60 months


Also read: Difference between EPF and PPF

How to close a PPF account?

You can fully withdraw funds and close your PPF account after the 15 year maturity period.

It is not possible to close your account and withdraw all your funds before maturity. However, under specific circumstances, you may be able to make a partial withdrawal of up to 50% of the balance.

How to withdraw money from your PPF account

  1. Download Form C from your bank/Post Office website or get a copy from your branch.
  2. Provide all the necessary information
  3. Submit the completed Form C to the bank or Post Office branch where you opened your PPF account.

Conclusion

The Post Office Public Provident Fund (PPF) offers a unique combination of security, tax benefits, and steady returns. If you prioritise long-term savings goals and prefer lower-risk investments, opening a PPF account can be a smart choice. It is advisable to do your own research before making any decision.

Calculate your expected investment returns with the help of our investment calculators

Investment Calculator

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Lumpsum Calculator

Recurring Deposit Calculator

Sukanya Samriddhi Yojana Calculator

PPF Calculator

Employee Provident Fund Calculator

Frequently asked questions

Is post office PPF better than banks?

Both post office and bank PPF offer the same benefits in terms of interest rates, tax advantages, and rules. The choice ultimately depends on your convenience and preference for accessing services.

Is post office PPF safe?

Yes, post office PPF is entirely safe as it is a government-backed scheme. Your investments and returns are guaranteed by the government, making it one of the most secure investment options available.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.