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Public Provident Fund (PPF) Account – Benefits, Calculator, Interest Rate, Rules - YouTube
Channel: Asset Yogi
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Please press the bell icon while subscribing
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so that you will get notification of latest financial videos
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Namaskar, my name is Mukul and you all are welcome in Asset Yogi
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Friends, there was a request from many of our subscribers
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to make a detailed video on a PPF account
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So Public Provident Fund which is a long term investment
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Its biggest advantage is that it is a risk-free and tax-free investment
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But it also has some limitations with it
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So in this video, we will talk about both Benefits and Limitations
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Together we will see all the features which are important features of the PPF account
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You may know some of them but may not all, so you must watch this video completely
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So that you can get complete information about a PPF account
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Before talking about the features, let us know about the benefits of PPF account
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It has 3 major benefits
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First of all, you can consider it a risk-free investment
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because this government backed
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Secondly, it is a tax free investment
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that means no tax is applied on whatever investment you make on it
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That is, when you withdraw money after 15 years, after 20 years of maturity
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then whatever interest you will earn
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Or even if you withdraw money in between
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then no tax is on whatever interest you run
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Otherwise, all the rest of the investment we say as your fixed deposit is also a risk-free
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investment but on that, you have to pay an interest payable tax
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There are some tax-free funds too but they have a lock-in period of 5 years
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So there is definitely a lock-in period inside the PPF account
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but on this you get better interest rate than FD
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And thirdly its big benefit is that you also get a tax rebate under section 80C
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So within the investment of 1.5 lakhs, they get a rebate from 80C
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then you can invest up to 1.5 lakhs inside the PPF account also.
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And on that entire amount, you will get a tax rebate under 80C
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Now let's talk about the features
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First of all, we will talk about eligibility that who can open a PPF account
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So any Resident Indian Individual can open a PPF account
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And that one person can open only one account
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That is if you have opened an account in one of your banks
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then you cannot open another account by going to another bank
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Yes you can definitely transfer that account
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And secondly, if you want to open an account for a minor, then you can also open that
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You can also deposit money inside it as well
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but only a parent can operate the minor account, you should also remember this
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And thirdly, NRIs can no longer open a PPF account
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by chance, if you have opened a PPF account before having NRI status
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Then You Can Operate It For 15 Years
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But after that it will end automatically, it can't be extended
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Now the question arises that where can you open this account
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then you can open it in the post office or any of the authorized bank
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any of the popular banks
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Whether public sector banks are SBI, PNB
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private sector banks, ICICI, HDFC Bank, Axis Bank, or IDBI
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You can also open an account inside all of these
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Now the second important feature comes
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that how much money you can you put and how can you put it
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So you can transfer a minimum of 500 Rs per financial year
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and maximum you can do lent up to 1.5 lakhs
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If you put more than 1.5 lakhs inside the PPF account then you do not get the interest
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The second important thing to know is that if you have also opened a minor account
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let say if you have a child's account and you operate it
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then you can invest 1.5 lakhs by combining both the accounts
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And how can you put this money
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You can have monthly installments, quarterly installments
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half yearly instalments or anually instalments
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Minimum one and maximum 12 installations you can do here
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And how you have to put this money
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you can also put it in cash or you can also put it by cheque
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You can also put from DD or you can also transfer online
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Now let's talk about the maturity period because it is a long term investment
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so you have to invest it for a minimum period of 15 years
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So your lock-in period is 15 years, after that, you get an extension of 5-5 years
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So in a block of 5 years, you can also extend it
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Now on this, I would like to tell you one more thing which most people missout
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That this period of 15 years, it is 15 full financial years
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Suppose you invest in July in any year, then that financial year will not count
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Let’s say If you invest on 1st July 2019, then the financial year 2019-20 will not count
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In its calculations
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And your actual period will start from 1st April 2020
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The period of 15 years which will end on March 31, 2035
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Let us now talk about the interest rate
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in today's date you are getting an interest rate of 8%
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but it keeps on fluctuating, The interest rate depends on the market
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And this is the interest rate is decided by the central government quarterly
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So in the last 15 years, this fluctuated from 7.5% to 9% as much as I have seen
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So you can expect that it will give you more return than FD
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As we talked about earlier that it is risk-free and tax-free too
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So on this, your PPF definitely has benefits in the long term.
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And how is this interest rate calculated?
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First of all, you should know that this is monthly compounding
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Interest will be charged on the amount you make every month
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And on what amount will the interest be charged?
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Whatever is the minimum amount from 5 of every month to the last day of every month
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On that you will be taxed
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So if you have put any amount from your 5th to 30th date
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then you will not get the interest for that month.
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Therefore, if you money in any month from 1st to 5th
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then you get the interest for that month on that money
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Guess what could be its repercussions
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Assume that in a financial year you put money towards the end of January or February
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So you will get that interest-only for 2 months
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But if you give your money in April from 1 to 5
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If you put money from April 1 to April 5
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then you get the interest rate for the whole year
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Thus talk about the interest is over
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Now let's talk about how we have to open an account, so there are 2 ways
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One, you can visit the branch of any authorized bank or you can visit the post office
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On that you have to submit some documents
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documents to be submitted are
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One is your Form A which is the application of your PPF account, you will fill it and give it
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Apart from that your 2 photographs are applied
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And the rest of the documents that you have to give for a normal bank account
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are also applicable on your accounts such as PAN, address proof, and ID proof
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Another easy way is that in today's date you can also open a PPF account online
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If you have already had a bank account in any authorized bank
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So when you go to your online portal then you get the option on that
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For example, in ICICI Bank, you get an option of PPF account on the left-hand side
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and you can open your PPF account instantaneously by clicking on it
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Because on that your KYC is already done
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Now let's talk about Prematur Withdrawal
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If you get the requirement before 15 years
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if you have some urgent requirement then how can you withdraw money
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In this you get 2 options
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One is you have the option of loan
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You can take a loan from the 3rd financial year to 5th financial year since opening of your account
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On that, the interest rate that charged is
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2% more than the interest you are getting on the PPF account
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And if your requirement comes after 6th years
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Lets say your requirement is from 7th years to 15th years
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in that case, you get the facility of partial withdrawal
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7th year onwards, You can do partial withdrawal
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Now, what are the limits of loans and partial withdrawal?
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I will make a short video about it sometime
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In this video, let’s understand a little more in detail according to the timeline
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In this timeline, lets understand how we get loans and partial withdrawals
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Suppose in 1st financial year some of your money is invested in PPF
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When you opened the account and let’s say
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you have opened the account on 1st July 2019
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then your first financial year is 2019 - 20
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Now from this when you see your 3rd financial year it will be your 2021 - 22
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So from April 1, 2021, which is your 6th financial year i.e. 2024-25
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you can take a loan till its end
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So from 1st April 2021 to 1st April 2025, you get the facility of loan
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after that, if your requirement comes
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so 7th years onwards upto 15 or 16 years
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you get the facility of partial withdrawal
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Now why am i saying 16 years?
lets discuss
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Partial withdrawal i.e.
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What has been your seventh year
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2025-26 has become your 7th financial year since when you have opened your account
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From that to then from April 1, 2025, whenever you will have your full tenure
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Till then you can do partial withdrawal
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Now see why I have written this 16 financial year on it
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as I told you earlier at the beginning of the video
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When the financial year in which your interest is not calculated
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you have to complete 15 full financial years
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So from 2nd financial year to 16th financial year, you have to be fully invested at least
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But it is not that you will not get the interest for this financial year
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You will also get interest on this
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So you will get full interest from July to March 31
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And in this let’s say if you are invested it for 15.75 years
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then you will get full interest for 15.75 years
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Apart from this, let us talk about other important details
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PPF account cannot be attached against any dept and liability
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Suppose you have got a lot of debt
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then even the court will not give this direction
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that you pay by withdrawing the money from the PPF account
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Even if you are facing bankruptcy
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the PPF account is always there for you for the long term.
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so that your retirement goals are fulfilled
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PPF account is kept for marriage, education, serious illness
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So it cannot be attached against any dept and liability
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And there is a chance that you are not able to maintaining the PPF account
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and you have to fill in the minimum 500 per financial year with
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Lets say even if you are not filling it
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then your PPF account becomes inactive and if you want to revive it
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so you can do that, you just have to pay a small penalty
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For any financial years for which you have not made your minimum payment
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500 rupees, which you have to pay for the financial year
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you will have to pay that up first.
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Consider that your account has been inactive for 5 years
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So 500 * 5 i.e. 2500 Rs you will have to fill
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Plus you will have to pay a penalty of 50 Rs per financial years
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So Rs.250 you will have to give
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Suppose you say to close the PPF account Premature
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you do not want to maintain it even for 15 years
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So in this case you can close it Prematurely in only 2 conditions
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First of all, you should have at least 5 years, you can close only after 5 years
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And secondly, you can close it within 2 conditions only
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Firstly serious illness of any family member
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if it happens then you have to put some documents
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And you will be able to close the PPF account
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And the second one is Higher Education of Account Holder
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higher education means
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If you yourself are paying for higher education, then you can close
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Or if you are operating an account for any of your children operating for a minor
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then if the account holder of that minor goes for any higher education
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then you can still close the account.
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And the second thing you have to keep in mind is that
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if you close Premature then you get a penalty of 1% on the interest rate
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So if suppose you had an interest rate of 8%, then you will get only 7%
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But if you want to transfer that account, then you can definitely do it
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in any other branch of any bank or
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if you ask to change bank then the bank can also be change
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And if you ask to transfer the PPF account inside the post office, then that is also possible
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Now we have completed our talk about all important features
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So now let’s quickly understand the calculations of the PPF account
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Let’s say in a PPF account If you put some money every month or
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if you put some money every year, then how much does it become?
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Maturity amount after let’s say in15 years or 20 years, whatever is your investment period
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see this I have made a PPF calculator on it, a simple one
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I have made for monthly calculations
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if you put some money every month in the PPF account
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So how will you calculate this maturity amount
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Inside the yellow section, you will enter all your inputs
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First of all, you will enter the interest rate
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whatever the current interest rate of PPF is going on
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will put a period, I have taken the minimum of 15 years on this
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You can also take 20 years 25 years because 5-5 years can also be extended
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How much do you want to deposit every month, you will put an amount on it
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I have taken a per month amount of 10,000 for 15 years
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So after 15 years, our amount will become Rs.34,60,382
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For this, I have given this formula for future value to him.
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Now I have made this calculator for monthly investment only
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In this, if you invest manually or quarterly, then you cannot do that directly
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For that, you have to change this in future value
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You can watch my video for how to calculate the future value
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Otherwise if you want to do those calculations quickly and
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If you do want to make a calculator yourself
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then you will find many calculators online too
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Now because most people prefer monthly in PPF, I have made a simple calculator on it
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If you put money every month, then you can calculate your maturity amount
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On this, you get the total deposit amount in 15 years with 10,000
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how much will you deposit, 18 lakhs
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How much will you get in total interest
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Deduct this amount from your Maturity Amount
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your total interest amount, you will get this much
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So if you have not opened your PPF account yet
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then I will recommend that you must open an account
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Because it helps you definitively in long term financial planning
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Because you do not have any risk on this and you also get tax free returns
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Any of your long-term financial goals, Like retirement planning, children's education marriage
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If you want to make a fund for any serious illness
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So it will definitely help you in future
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If you liked this video then do like and share it with your friends and family members
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So that those people can also take advantage of it
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If you have some suggestions related to this video or related to the channel
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then you can tell us in the comment section below
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You can also suggest topics for future videos
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and if you have not subscribed to this channel
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then kindly subscribe to it and press the bell icon on your phone
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so that you will get the notification of the latest video
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So see you in the next informative video
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till then keep learning, keep earning, and be happy as always
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