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7 Lesser known Facts about PPF

Public Provident Fund or PPF is hugely popular among Indians. And rightly so...
... It offers quite attractive and competitive interest rates.
... It is one of the rare products where returns are tax-free
... Besides, investment in PPF is also eligible for tax deduction
... And with Govt. of India guarantee, it is one of the safest investments.

PPF has been available for many years and is widely invested in. So its day-to-day operational features are practically known to one and all. However, there are certain aspects that many people may not be fully aware.

So, here's a list of some of the lesser known facts about PPF.

1. The interest is calculated on the minimum balance between the 5th and last day of the month. As such, you should make your investments before the 5th. Any amount invested thereafter will not earn interest for that month.

2. It is NOT a 15-year scheme as is normally understood. Rather, it is a 16-year scheme. As the scheme's maturity is fixed at 15 years from the end of the Financial Year in which the first deposit was made, you can effectively make 16 deposits.

3. PPF Scheme does not allow joint holding of the account. All PPF accounts are opened in a single name.

4. You are limited to open only one account [except those opened as a guardian in the name of your minor children] and limited to invest only Rs.1 lakh / financial year [in all accounts, including the spouse's / children's, put together]. No interest would be paid on the additional accounts or additional amounts, if any.
[UPDATE (Jul 2015): The investment limit in PPF is now Rs.1.50 lakhs / financial year.]

5. It takes just Rs.500 as the contribution and a penalty of Rs.50 for each year of non-payment of subscription to revive an inactive PPF account.

6. You can make your subscription every year as either lump sum or in maximum up to 12 installments. These, however, need not be monthly installments. You can invest even more than once in a month.

7. NRIs are neither eligible to open a new PPF account nor can they extend their existing account at maturity. They can, however, continue to make deposits in their PPF account opened prior to turning into an NRI.
[UPDATE (Oct 2017): The existing accounts, if any, have to be closed the day they become an NRI.]

So set your things right, so as to avoid any unnecessary loss of interest.

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