How To Open A Public Provident Fund Online

By | February 29, 2016

How to open a PPF online

Are you looking forward to a long-term investment with good returns and tax benefits as well? A safe and popular option to consider is a Public Provident Fund. This is a Central government backed small savings scheme, launched to provide old age security to both employed and self-employed individuals in the country.

Before you start thinking about opening a Public Provident Fund account at a bank or post-office, it might be a good idea to understand a little more about them.

What’s a Public Provident Fund?

As we mentioned earlier, a Public Provident Fund (PPF) is a long-term investment plan, launched by the government of India. It’s absolutely risk-free and offers attractive interest rates.

  • The current rate of interest is around 8.70% (until March 2015) which is compounded annually.
  • The lock-in period is 15 years from the end of the year in which the account was opened. You cannot close the account before the initial lock-in period comes to an end.
  • On maturity, you can choose to extend the tenure of your PPF account any number of times, for a period of five years each time.
  • The minimum deposit that you can make to a PPF account in a financial year is Rs. 500. The maximum amount can go up to Rs. 70,000.
  • An individual can open only one PPF account under his name, to which he makes his contributions.
  • Your first withdrawal can be made after the completion of five financial years from the year in which you opened the account.
  • You can claim a tax deduction of up to Rs. 1, 00,000 under Section 80C. On maturity, the entire amount including the interest is non-taxable.
  • You can also apply for a loan against your PPF account from the third year of opening the account. The loan amount will be a maximum of 25% of the balance in your PPF account.

Additional reading:  National Pension Scheme vs Public Provident Fund

How to open a PPF account online?

As only some banks provide you with the option of opening a Public Provident Fund account, it’s easier to open one online. These are the documents that you will need to submit:

  • Any of the following KYC documents (driving licence, PAN Card, voter ID card or passport) as your identity proof.
  • Account opening form duly filled and signed (preferably use a black pen to fill the details).
  • Address proof document (ration card, electricity bill or telephone bill).
  • Two recent passport photographs.
  • Bank challan mentioning the initial amount with which you will open the account.

Apart from these documents, some banks may require additional documents to be submitted.

Once you open the PPF account online, you will have to visit the bank branch with the original documents to get them verified. A PPF account passbook will be issued after your account is successfully opened and you will need this passbook to claim your tax deductions.

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