PPF account with SBI? Know eligibility, interest rates and more

Public Provident Fund or PPF, which is backed by the government to mobilise small savings, is one of the most favoured investment schemes, as it offers attractive interest rates and complete safety and security of the investment. The PPF is also the most preferred mode of investment as it remains unaffected by existing market volatility, and one can benefit from no tax deduction on investment as well as returns. 

PPF is a long term investment scheme, hence the account cannot be closed before the maturity period of 15 years. So to say, you can avail the returns as well as the entire amount standing post the maturity period of 15 years. The State Bank of India, among other services, provides the service of opening a PPF account.

Eligibility: An individual can open a PPF account either on his/her name or on behalf of a minor.

Investment limits: For one to open a PPF account, an investment of minimum to Rs 500 or a maximum of Rs 1,50,000 per annum is required. In other terms, one can invest up to a maximum of Rs 12,500 per month. However, if the amount is excess, it will not earn any interest. Further, the amount will not be eligible for rebate under Income Tax Act.  

Interest rate: The interest rate for the first quarter of the financial year 2019-20, that is between April 1 to June 30 is 8%. The interest rate on PPF is determined by the Central government on a quarterly basis.

Duration and Maturity period: The maturity period for the PPF to reap returns is 15 years. Thereafter, the subscriber with an application can extend the account for 1 or more blocks of 5 years each.

Income tax benefits: Income tax benefits are available on the PPF account under Section 88 of IT Act. Interest income is totally exempt from Income Tax. Amount outstanding to the credit is fully exempted from Wealth Tax also.

Premature payment: This option is only available when the account or the account of minor has completed five financial years.

Transfer of Account: The PPF account can be transferred from one branch/bank to another, and this service is extended free of charge.

Loan and Withdrawals: Individuals can have loans or withdrawals on their PPF account, depending upon the age of the account as well as balance.