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Public Provident Fund (PPF) Scheme in India


A top government official recently indicated that investors in the popular small saving schemes Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA), whose rates have not been hiked since January 2019, are unlikely to get higher returns anytime soon.


GS II: Government Policies and Interventions

Dimensions of the Article:

  1. Public Provident Fund (PPF) Scheme
  2. Sukanya Samriddhi Yojana

Public Provident Fund (PPF) Scheme in India

The Public Provident Fund (PPF) Scheme is a long-term savings scheme that is popular in India. Here are some important facts about the scheme:

  • Introduction: The PPF Scheme was introduced in 1968 by the Finance Ministry’s National Savings Institute to encourage individuals to save and earn returns on their savings.
  • Objective: The primary objective of the PPF Scheme is to help individuals make small savings and provide returns on the savings.
  • Safety: The PPF Scheme is considered to be one of the safest investment products as the government of India guarantees investments in the fund.
  • Tenure: The tenure of a PPF account is 15 years, and it can be renewed in blocks of 5 years.
  • Interest Rate: The interest rate payable on PPF accounts is currently 7.1%.
  • Investment Amount: The minimum investment amount for a PPF account is Rs. 500, and the maximum investment amount is Rs. 1.5 lakh per annum.
  • Eligibility: Any Indian citizen can open a PPF account.
  • Account Holder: PPF accounts cannot be held jointly, but it is possible to make a nomination.
  • Tax Exemption: Investments in PPF are tax-exempt under section 80C of the Income Tax Act (ITA), and the returns from PPF are also not taxable.

Sukanya Samriddhi Yojana:

  • Sukanya Samriddhi Yojana is a savings scheme launched by the Government of India on January 22, 2015.
  • The scheme aims to promote the welfare of the girl child in the country and prevent gender discrimination.
  •  It encourages parents to save money for the future of their girl child and promote their education and other fields.
Features of Sukanya Samriddhi Account:

Here are some essential features of the Sukanya Samriddhi Account:

  • Minimum and Maximum Deposit: The minimum deposit required to open a Sukanya Samriddhi Account is Rs. 250, and the maximum deposit allowed in a financial year is Rs. 1.5 lakh.
  • Account Opening: The account can be opened in the name of a girl child until she attains the age of ten years.
  • One Account per Girl Child: Only one account can be opened in the name of a girl child.
  • Opening of Account: The account can be opened at any Post Office or authorized bank.
  • Withdrawal: Withdrawal from the account shall be allowed for the purpose of higher education of the account holder to meet education expenses.
  • Premature Closure: The account can be prematurely closed in case of the marriage of the girl child after she attains the age of 18 years.
  • Transfer of Account: The account can be transferred anywhere in India from one Post office/Bank to another.
  • Maturity: The account shall mature on completion of a period of 21 years from the date of opening of the account.
  • Tax Benefits: Deposits made to the Sukanya Samriddhi Account qualify for deduction under Section 80-C of the Income Tax Act. Also, interest earned on the account is tax-free under Section 10 of the Income Tax Act.

-Source: The Hindu

March 2024