Step-By-Step Guide To Online PPF Account Opening For Maximising Tax Exemptions

Why open a PPF account?

Here are the major reasons why you must open a PPF account:

• Competitive Interest Rates

PPF accounts are known to offer higher interest rates compared to traditional Savings Accounts and Fixed Deposits (FDs). For example, while a savings account may give an interest rate of around 3-4%, a PPF account usually provides an interest rate of about 7-8%. This makes PPF accounts a more lucrative option for those looking to maximise their returns on savings.

• Avail Tax Benefits

Investments in PPF accounts are eligible for deductions under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh per year. Additionally, the interest earned on the investment and the maturity amount are exempted from tax. This dual tax benefit makes PPF an attractive option for tax-saving investments.

• Get Long-term Savings

PPF accounts are designed to encourage long-term savings and disciplined investment habits, with a mandatory lock-in period of 15 years. This long-term commitment helps investors build a decent corpus over time, enhancing a healthy habit of regular savings.

• 100% Secure Investment

PPF accounts are backed by the Government of India, ensuring a safe and secure investment. Unlike stock market or mutual fund investments, which are subject to market fluctuations and risks, PPF accounts guarantee returns and protect the principal amount. This makes PPF a reliable and low-risk investment option.

• Enjoy Loan Facility

PPF account holders can avail themselves of a loan against their PPF balance after the completion of one year from the end of the year in which the initial subscription was made. The loan can be taken up to 25% of the balance at the end of the second year immediately preceding the loan application year. This feature provides liquidity and financial support when needed

• Make Partial Withdrawals

PPF accounts allow partial withdrawals after the completion of five years from the end of the year in which the account was opened. The account holder can withdraw up to 50% of the balance at the end of the fifth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower. This facility can be availed once a year and only from accounts that are active and not discontinued.

Eligibility to open a PPF account

Check if you are eligible to open a PPF account:

• You must be an Indian citizen

• You can open only one PPF account

• HUFs cannot open PPFs after 13th May 2005.

• Minors can also open a PPF account through parent or guardian.

• NRIs who opened a PPF account when they were Indian residents can operate the account for 15 years without an extension option.

Documents required to open a PPF account

Here are the documents needed to open a PPF account:

• Provide your PAN card, Aadhaar card, passport, or voter ID.

• Submit your Aadhaar card, passport, utility bills, or rental agreement.

• Include a few recent passport-sized photos.

• Fill out and submit the account opening form.

• Provide details of the nominee for the account.

Steps to open a PPF account

Want to open a PPF account soon? Major banks such as ICICI Bank and post offices offer this facility of opening a PPF account in India. Here is a guide to opening it online:

• Log into your bank's internet or mobile banking account offering a PPF account.

• Select the ‘Open a PPF Account’ option.

• Choose ‘Self Account’ if opening for yourself, or ‘Minor Account’ if for a minor.

• Fill in the required details on the application form and verify them.

• Enter the amount you plan to deposit each financial year.

• Set up standing instructions to automatically debit the specified amount from your savings account to your PPF account. Prominent banks such as ICICI Bank provides the facility to set up automatic debit facility for this.

• Apply and wait for an OTP to be sent to your registered mobile number.

• Enter the OTP to confirm your identity.

Your PPF account is now created! You will get a notification and receive an email confirmation with all the details.

Conclusion

Public Provident Fund (PPF) is a decent financial tool which can help you save and invest your money for a long term growth. These offer tax deductions under section 80C of the Income Tax Act and have a lot of other benefits mentioned above. This is a highly recommended form of money saving instrument and with many major banks offering the facility to open a PPF account, people can easily open an account online without much hassles.