PPF: The Public Provident Fund (PPF) has always been considered a safe and tax-free investment option. It is a small savings scheme of the Government of India. It offers government-guaranteed returns. Due to the tax exemption and government guarantee, everyone wants to invest in it. People often wonder whether an individual can open more than one PPF account?
In fact, anyone can start investing in the Public Provident Fund (PPF) scheme . You have to invest annually in this scheme. The maturity period of the PPF scheme is 15 years. Additionally, you can extend your investment twice for 5 years each. This means you can invest in this scheme for up to 25 years. The interest rate is 7.1%.
Can you open more than one account in PPF?
First, let us tell you that no one can open more than one PPF account. According to government regulations (Public Provident Fund Act, 1968), only one PPF account can be opened in a person’s name. Whether you go to different banks or post offices, two accounts cannot be opened in the same name. What happens if two accounts are opened by mistake? The second account will be considered irregular and will not earn any interest. For example, if you have a PPF account with SBI, you cannot open another account in your name with PNB or a post office. Similarly, if you already have a PPF account with a post office, you cannot open a PPF account with a bank.
What will happen if you open a second PPF account?
If you have opened a second account , it is not considered valid. In such a case, you can merge the two accounts by obtaining permission from the Ministry of Finance (DEA). You must apply for this with your account details. If you don’t merge, the second account will have to be closed. Only the principal will be returned, no interest.
A PPF account can be established in the name of children
Parents have the option to open a distinct PPF account for their minor child (who is under 18 years old). However, the total investment across both your account and your child’s account must not exceed Rs 1.5 lakh in a single fiscal year. For instance, if you have already deposited Rs 1 lakh in your account, you would only be able to add Rs 50,000 to your child’s account.
Tax advantages of PPF
PPF is categorized under the Triple-E (Exempt-Exempt-Exempt) framework. This indicates that it provides tax exemptions at three different stages. Firstly, you can claim a tax exemption under Section 80C for investments up to Rs 1.5 lakh annually. Secondly, the interest accrued on your investment is entirely tax-free. Lastly, there is no tax on the total amount received upon maturity after 15 years. This is one of the reasons why PPF is viewed as more advantageous compared to options like fixed deposits.
Refrain from early withdrawals
PPF is designed as a long-term and secure investment option with a maturity period of 15 years. Nevertheless, if needed, you can make partial withdrawals after 5 years, but be aware that this may impact the compound interest accumulated on your investment.
Related Stories
Business
Business
Gadgets
Education
Gadgets
Business
Gadgets
Business
Education
Gadgets