Today, we will discuss all the points of PPF. What are the returns, risk, lock-in period, term of lock-in, who all can invest, what are the tax benefits, procedure and all the things you all need to know.

Now, we will discuss about the return. The scheme return is revised in every 3 months or every Quarter by the Government. Currently, this scheme is giving returns of 7.1% annually which is around 7%. Few months back the return was 7.9%. Usually, you can understand that the return of this scheme is greater then 1 or 1.25% from major banks FD rate either it is SBI, HDFC, Axis, ICICI, etc. SBI is giving 5.8 or around 6% return in there FD and this scheme is giving return of 7.1%, but it is revised in every quarter. Now, you must be thinking that if this scheme is providing just 1-1.5% more return than SBI or any other major bank FD return then what is the benefit of PPF scheme? What is the benefit of this scheme. Rather, some small banks are providing up to 7% interest. So why we should invest in PPF. You will get the answer later that there are other reasons due to which if you are planning for a long term after your retirement, then it is far better than FD.

Now we will discuss about maturity and lock-in, which means the amount you invested in this scheme, when you will get your money back. In this scheme there is a lock-in of 15 years. In laymen terms, the amount you invested you can withdraw it only after 15 years are completed. But, there are some exceptions, we know PPF scheme is of 15 years but after 5 years then you can withdraw 50% amount. In second aspect, if there is any emergency like life threatening or any serious diseases or you need some founds for children's education, in such cases you can close your account  by opting for pre-mature closure but only after 5 years of opening a PPF account. And, you can withdraw all funds from your account, there is no withdraw limit of 50%. But this is possible in very extreme case. In third aspect, if you are depositing funds into this scheme for more than 2 years, for the 1st year, lets say you deposit Rs.1 lakh, for next year again you deposited Rs.1 Lakh, now you have Rs.2 lakh deposit in PPF scheme, for 3rd year, you can raise a loan of up to 25% funds in your PPF account which means you can take a loan of up to Rs.50 thousand from same bank where you have opened the PPF account, but you can't withdraw the amount. These 3 aspects are the exemption of lock-in.

Now we will discuss about the term of PPF, either scheme is for 15 years or is it possible for scheme to be of 10 years. Can this scheme term period can be increased or decreased. So, usually PPF scheme is for 15 years. Someone can take whole return at the age of 55 years If someone start investing at the age of 40 years. I have already told you that if you want the funds before term of PPF scheme, then you can opt for pre-mature closure. And, this scheme term can be extended for more than 15 years of term, suppose you started investing at the age of 25 years and term of 15 years is completed at the age of 40 years, and you don't need funds at the age of 40 years, then you can extend the scheme and invest for 5-5 more years by not withdrawing the funds and by just filling the form to extend the term. Interestingly, in that 5 years after extending the term, the funds which you have earned in a term of 15 years, you can withdraw anytime but only once in a year either whole amount or some amount from it. 

Now, we will discuss about tax benefits due to which this scheme is so attractive. PPF scheme is categorized into EEE(Exempt-Exempt-Exempt) category which means that old tax regime which you can opt now also, if you are on that regime, and if you don't want to opt ELSS or taxable mutual fund or NPS and think if you earn Rs.10 lakh annually and from that Rs.1.5 lakh you invested in PPF scheme, so for that Rs.1.5 lakh you don't have to pay tax for that which means that invested amount is not your income and you earned only Rs.8.5 lakh and have to pay tax only for balance amount. Second benefit, why this scheme is better than FD? The interest of 7.1% you are earning from the scheme. Like you got 7.1% interest, the interest which is deposited into your account, you don't need to pay tax for that interest. In FD, the interest you are earning, you have to pay for that interest but no tax payable for the PPF scheme. Third benefit, after 15 years your account is mature and you withdraw the capital plus interest income or shift the PF account into your bank account, for that lumpsum corpus, there is tax exemption at the time of lumpsum withdrawal. That is why this scheme is better than FD if you are planning for retirement.

Now, two important questions. Can we open PPF account for children, can we open PPF account in the name of our children, how much we can invest? The answer is YES !! we can open the account in the name of our children. There is no minimum/maximum age limit, if children is not an adult which means not more than 18 years, the account can be in the name of your children but can be operated by parents/grandparents and you can deposit maximum Rs.1.5 lakhs, after your children is of 18 years, by filling form the account can be operated by children and limit of Rs.1.5 lakhs is exempted. Second thing, how much you can deposit in a year? You can deposit max of Rs.1.5 lakhs, you can deposit more amount than Rs.1.5 lakhs but tax exemption limit is only up to Rs.1.5 lakhs and and Rs.500 minimum has to deposit in a year to make this scheme active. 

Now question in your mind will come what if we will not deposit minimum amount into the scheme? So, suppose we deposit minimum amount for 2 years but for 3rd year we didn't deposited Rs.500, will our investment of 2 years will sink? The answer is NO !! But the interest which you will get will no longer be paid to your account, and Rs.1000 will be left as it is. But, whenever you have money to invest you have to invest minimum amount for which you have not invested in a particular year. Like, you invested for 2 years but not able to invest for 3rd, 4th and 5th year and in 6th year you have funds to invest, then you have to invest Rs.500 minimum for each 3rd, 4th and 5th year or Rs.1500 minimum to activate the account so that you can get the interest. 

Now, I will tell when you need to invest in a PPF account. So, you can either invest monthly in 12 installments or yearly, but important thing is you have to deposit minimum Rs.500 in a year. No joint account opening is applicable in this scheme with spouse, relatives, or any other person, only an individual can open this account in his/her name. One person can hold only single account. NRIs can't invest in this scheme but NRIs who have invested in this when they were Indian citizen, when they were living in India, in that case only they can continue with this scheme. NRIs can't open fresh PPF account. Hindu Undivided families, or HUF also can't open the account in this scheme.

How to open PPF account and where it can be opened? This account can be opened online or offline in both the ways. Mostly major banks either private or public banks, nationalized or scheduled commercial banks, PPF scheme is available in such banks and in major post offices also have facilities in it. Major banks providing online account opening facility which is convenient is better according to me. No such documentation is required. Aadhaar card, driving license or voter ID card(any one) or pan card, electricity bill, telephone bill for current residence address proof and a photograph and a PPF form to open PPF account.