PPF is one of the most popular investment vehicle, mainly because of its EEE (exempt-exempt-exempt) tax status. However, there are many lesser known facts associated with Public provident fund. Read through to learn more.
The Maturity Date:
PPF comes with a 15-year lock-in period. As per the rules, the maturity date is calculated from the end of the financial year in which the deposit was made, irrespective of the date or month of the account opened. For instance, if you opened the PPF account on 26 July 2017, the 15-year lock-in period would begin from the 31 March 2018 and the date of maturity would be 1 April 2033.
According to the rules, the account holder can deposit a minimum of INR 500 every year and a maximum of INR 1.5 lakhs. So make a lump sum or monthly contributions, exceeding not more than 12 per financial year.
One has to make monthly PPF deposits by 5th of each month to ensure that timely payment is received. The balance for interest calculation is made on the minimum amount available in the account between fifth and last day of each month. If lump sum investment is made, better to deposit before 5 April of the financial year to get the benefit of maximum interest.
PPF offers partial liquidity through partial withdrawals and loans. However, the availability is subject to certain conditions based on the PPF balance and years completed. From the 7th year the account holder is allowed to avail a loan. But, the subscriber cannot get a fresh loan until the previous loan gets cleared. And only single withdrawal is allowed for a financial year.
Premature closure is allowed only under certain conditions. One should have completed at least five financial years to gain eligibility for premature closure. In case of discontinuation of your account, one will not be eligible for withdrawals, loans, until required penalty fees and minimum contributions are made. But the account holder would be accumulating the interest as per the prevailing rate.
The account holder can nominate anyone for his or her account. Even a minor can be nominated. But, none can be nominated for the account opened by the minor.